Clinton aims to lower drug costs, end industry 'profiteering'

Reuters News
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Posted: Sep 22, 2015 12:25 AM

By Amanda Becker

LITTLE ROCK, ARKANSAS (Reuters) - Democratic presidential candidate Hillary Clinton on Tuesday will propose a plan to lower the cost of prescription drugs, in part by ending pharmaceutical companies' ability to write off consumer-directed advertising as a business expense.

At a campaign stop in Iowa, Clinton will take aim at drug companies for what her campaign called "excessive profiteering," and outline a plan to encourage the development and use of generic drugs and leverage the buying power of the U.S. government.

"It is time to deal with sky-rocketing out-of-pocket costs," Clinton said during a campaign stop in Little Rock, Arkansas on Monday.

Earlier in the day, after Clinton tweeted a link to a New York Times story about steep drug prices and called the situation "outrageous," shares in biotech companies such as Immunogen and Gilead Sciences dropped. [USN: L1N11R1PF]

A background document on Clinton's proposals provided by her campaign makes clear the front-runner for the Democratic nomination believes marketing drugs to consumers is problematic. "Almost every country in the industrialized world bans or severely restricts" the practice, said Clinton's campaign notes.

Critics of marketing drugs to consumers say it encourages the use of costly brand names over generics and can be confusing or misleading. A series of court decisions has determined the practice cannot be banned outright because it is a form of commercial speech protected by the U.S. Constitution.

Clinton says the government could save billions of dollars by no longer allowing pharmaceutical companies to deduct what they spend marketing drugs to consumers and those funds could be redirected into encouraging research and development.

The largest pharmaceutical companies are collectively earning $80 billion to $90 billion per year at higher margins than other industries, while average Americans struggle to pay for medicine, Clinton's campaign said.

While Clinton has maintained her front-runner status, she has been under pressure to take more populist stances to widen her lead over U.S. Senator Bernie Sanders, her second-place rival for the Democratic nomination.

Clinton's plan would encourage the development and use of generic drugs. Her plan would redirect funds to a U.S. Food and Drug Administration office with a backlog of generic drugs awaiting approval. She would also prohibit what the campaign called "pay-for-delay agreements," in which the company of a brand-name drug pays a generic competitor to keep its product off the market for a period of time, usually as part of a litigation settlement.

Clinton wants Medicare, the U.S. government's health insurance program for the elderly, to be able to negotiate with pharmaceutical companies over drug prices and require more generous rebates, driving down overall costs.

Consumers would also be allowed to purchase drugs from other countries, where medicine is often less expensive, so long as there are sufficient safety standards in place, Clinton's campaign said.

For more on the 2016 presidential race, see the Reuters blog, "Tales from the Trail" (http://blogs.reuters.com/talesfromthetrail/).

(Reporting By Amanda Becker; Editing by Michael Perry)