The Clinton Drug Price Board, 23 Years Later

Presidential Candidate Hillary Clinton is getting very specific with her drug pricing proposals, including a new plan unveiled just before Labor Day weekend in response to the headlines about Mylan Pharmaceuticals Inc.’s EpiPen.

The centerpiece of the new plan is a new federal oversight board, consisting of “representatives of Federal agencies charged with ensuring health and safety, as well as fair competition, to create a dedicated group charged with protecting consumers from outlier price increases.” The board would be charged with identifying products with “an unjustified, outlier price increase” and take steps to encourage competition and impose penalties on the sponsor deemed guilty of outrageous price increases. (Also see "Clinton's Plan To Tame 'Unjustified' Drug Prices: Who's At Risk?" - Scrip, 2 Sep, 2016.)

The proposal brings back memories of an earlier Clinton plan to establish a new oversight board for drug prices: in the then First Lady’s 1993-94 health reform effort, one feature would have been a “breakthrough” drug pricing board.

This may be a case where the differences are more important than the similarities. Two decades ago, the focus of the board would have been investigating “unreasonable” prices for a “significant advance over existing therapy.” The current Clinton plan, in contrast, focuses specifically on older, off-patent brands. (The briefing document issued by the Clinton Campaign specifically cites Mylan’s EpiPen and Turing Pharmaceuticals AG’s Daraprim pricing controversies as prompting development of the plan.)

On the surface, the Daraprim and EpiPen controversies seem like almost polar opposite situations. Daraprim was a decades-old product acquired and immediately re-priced at many multiples of the prior price, while EpiPen is a rescue-product for use in emergency situations where the manufacturer, Mylan (which acquired the product from Merck KGAA in 2007), took large, steady price increases over almost a decade.

However, they share one important common characteristic: both are old brands, long off-patent, with no substitutable generic competition. That makes the products outliers from the core of the innovator biopharma sector.

It also means that there are potential levers for an administrative or legislative response that would not be available in the context of still-patented new therapies. While Clinton’s broader drug pricing plan includes proposals to address new, innovator therapies, the new plan appears to rely on the absence of enforceable patents as a key element of the response.

The timing of the announcement on Sep. 2 ensured media attention on a slow news day – though it also meant a limited audience heading into Labor Day weekend, suggesting an attempt to test a potential campaign theme rather than a full commitment to pricing themes heading into Election Day. (Also see "Clinton's Drug Price Plan: Threat Or Flash In The Political Pan?" - Pink Sheet, 2 Sep, 2016.)

While the biopharma industry is unlikely to support any form of price oversight board, if the new Clinton proposal were to be enacted its focus on older brands makes it far from a worst case scenario.

It is a heck of a lot better than a “Breakthrough” drug price board.