Clinton seeks federal panel to determine if drug price hikes are justified

Hillary Clinton wants a panel of federal officials to determine if price increases for certain drugs are justified — and, if not, take steps to punish the manufacturer and make the treatment cheaper.

The proposal released Friday, which builds on Clinton’s earlier plan to address prescription-drug costs, is a direct response to the controversy over EpiPen and its 500-percent price increase since 2007.

“Over the past year, we’ve seen far too many examples of drug companies raising prices excessively for long-standing, lifesaving treatments with little or no new innovation or R&D,” Clinton said in a statement.

The plan is lacking some details, but Clinton’s proposed solutions include having the federal government directly purchase drugs, importing competing drugs from other countries, and fining the offending companies to help pay for those actions.

Pricing experts said the plan had some laudable ideas, but also unanswered questions.

“There may be some issues with the determination of what is a ‘justified’ versus an ‘unjustified’ price increase,” Joshua Cohen, of the Tufts Center for the Study of Drug Development, said in an email. “And, would the policy be different for generics and branded drugs? Certainly it should be.”

Clinton would convene a group of federal officials to establish a criteria for evaluating whether price hikes are justified, particularly for a treatment that’s been on the market for a long time and has not been significantly changed. The criteria would be based on the “trajectory and scope” of the price increases; any changes in the costs to produce the drug; and the treatment’s importance to patients.

If the panel determined that a price increase was unjustified, the federal government could directly purchase alternative versions of the treatment. The goal would be both to make the drug available to consumers more cheaply to and to encourage other generic companies to enter the market by giving them a guaranteed customer base.

Clinton’s plan would also authorize the emergency importation of similar treatments from foreign countries. The Food and Drug Administration would be consulted to ensure the drugs had met adequate safety standards in their home country. (Republican presidential candidate Donald Trump has also called for importing medications from overseas.)

Lastly, the proposal would allow the federal government to fine the offending companies or increase the rebates they pay. The incoming revenue could then be used to pay for the other actions, such as direct purchasing or speeding approval of generic competitors, intended to lower costs.

The early response in D.C. to Clinton’s plan: It sounds great, but it’s hard to imagine it will actually be implemented.

“This is a terrific campaign proposal that appeals to her base, particularly those who used to be on [Senator Bernie Sanders’] team. It also strikes a chord with a broader audience given the recent uproar over the EpiPen,” said Ira Loss, executive vice president and senior health care analyst at Washington Analysis, a consulting firm that follows the drug industry.

“But implementation requires legislation. It creates a new federal bureaucracy with significant powers (not clearly defined in the fact sheet) over one of the most powerful industries in the country,” he wrote in an email. “I am certain the industry will strenuously oppose this.”

PhRMA, the drug industry’s trade group in Washington, said Friday afternoon that while it supported Clinton’s goals of encouraging competition and increasing access to generic medications, the “bureaucracy” that the Democratic nominee proposed was not the right answer to the problem.

“Creating a new government bureaucracy to set prices and determine the value of medicines would harm patients and limit their access to life-saving treatments,” Holly Campbell, a PhRMA spokesperson, said in an email. “That is the wrong solution for patients.”