On Monday, the soaring cost of prescription drugs was thrust back into the limelight when hedge fund manager turned-serial pharma startup mogul Martin Shkreli made the rounds to explain why his company, Turing Pharmaceuticals, decided to raise the cost of a 62-year-old treatment for life-threatening parasitic infections from $13.50 to $750 a pill virtually overnight.
Shkreli’s answer: “This is still one of the smallest pharmaceutical products in the world. It really doesn’t make sense to get any criticism for this.”
Unfortunately for Shkreli - who also said the price increase is just Turing “trying to stay in business” - some people aren’t buying the idea that unbridled free market principles should pertain wholesale in life or death situations.
As it stands, the industry’s structure essentially allows drug companies to simply charge the highest price they believe the market will tolerate which, pretty much by definition, means that manufacturers are intentionally pushing patients to the financial breaking point. For her part, Hillary Clinton says she would solve the problem in the (increasingly unlikely) event that she becomes President. Here’s more from The Washington Post:
Democratic presidential candidate Hillary Rodham Clinton is proposing a $250 monthly cap on the amount patients with chronic and serious medical problems would have to pay out of pocket for prescription drugs as a way to reduce the effect of skyrocketing drug prices on consumers.
The cap is part of Clinton’s program to alter and expand the Affordable Care Act, the signature domestic policy achievement of President Obama, if she is elected to succeed him. Clinton will discuss the prescription drug plan Tuesday in Des Moines, Iowa. Some details were provided by her campaign in advance.
Clinton is calling her health-care ideas a way of refining the Affordable Care Act, the sprawling 2010 law that is reshaping parts of the U.S. health-care system. But her ideas would navigate the law into a realm of drug prices that its authors largely sidestepped.
Parts of Clinton’s proposal reprise ideas for controlling the cost of prescription drugs that Democrats have advocated for years and that have been the subject of heated debates on Capitol Hill.
Many congressional Democrats also have long contended that Medicare should be given power to negotiate directly the price of drugs that are sold to the older and disabled Americans insured through the program. This idea, too, was part of the political struggle over the law that created Medicare drug benefits. In the end, that law specifically banned the government from negotiating with pharmaceutical companies. When he first ran for the White House in 2008, President Obama said that he wanted to rescind that ban. But to avoid antagonizing the pharmaceutical industry, the idea of allowing Medicare to negotiate drug prices was never seriously debated as part of Affordable Care Act.
Clinton’s campaign said her prescription drug plan would be modeled on state plans, such as those in California and Maine, that limit patient out-of-pocket costs. The campaign said Clinton would also seek to end a tax credit for direct-to-consumer drug advertising and allow Americans to import drugs from abroad.
Drug makers often argue that their prices reflect the need to recoup huge investments they pour into developing drugs, most of which fail. But at the same time, critics argue that the high prices of new drugs often bear little resemblance to their actual value. While some breakthroughs have offered huge benefits or even cures for a condition, others have produced only marginal benefits for patients, if any at all.
Pharmacy benefit manager Express Scripts released a study earlier this year that found more than a half million Americans have yearly prescription drug costs of $50,000.
This was of course tipped on Monday via Twitter and the reaction in Janet Yellen's "subtantially stretched" biotech space was one of the more notable events from yesterday's session. Here's what we said when Clinton's tweet hit:
So who is the most powerful woman in the world now?
Hillary Clinton tweets....
Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H https://t.co/9Z0Aw7aI6h— Hillary Clinton (@HillaryClinton) September 21, 2015
And this happens?
So much for the flight to safety bid for Biotechs.
Yes, so much for that.
Here's a look at how the biotech ETF is trading pre-market:
We'll await the details of the former First Lady's plan which, as mentioned above, are due later today and in the meantime we would ask whether, when Clinton says that "nobody in America should have to choose between buying the medicine they need and paying rent," she intends to also do something about the following chart...