The head of Pfizer Inc., America’s biggest drugmaker, said that Democratic presidential nominee Hillary Clinton’s proposals to contain the price of pharmaceuticals would be “very negative” for the industry and are a step toward single-payer health care.
Pfizer CEO Ian Read criticized Clinton’s plan, which she released earlier this month, at an investor conference hosted by Wells Fargo in Boston on Thursday. Clinton’s prescription drug policy would give the government a broad role in overseeing drug prices, including a board to monitor sharp cost increases, and would specifically target price hikes on older medicines.
“The Clinton approach to health care drives you to a one-payer system, and drives you to rationing, drives you to a place where most consumers don’t want to be,” Read said. “In its totality it would be very negative for innovation.”
Clinton’s criticism of drugmakers has set up a showdown between the nominee and the industry going into the November election. Pharmaceutical companies, particularly ones that have raised prices on older drugs, have been frequent targets of politicians in both parties.
Indianapolis-based Eli Lilly and Co. is among the companies who have received criticism over price hikes for older drugs, including its insulin drug Humalog, attention deficit disorder drug Strattera and osteporosis drug Forteo.
While Read has occasionally waded into debates about U.S. tax and health policy, the remarks about Clinton are some of his strongest yet on the topic.
In a written statement, Clinton campaign spokeswoman Julie Wood said the candidate has called for expanding investments in innovation for health care.
“She’s said clearly that our pharmaceutical and biotech industries are great sources of innovation and she wants to support their development of new treatments,” Wood said. “But she shares the outrage of Americans who have been subjected to unjustified price hikes for treatments that have long been on the market, and she’s going to hold drug companies accountable when they put profits before patients.”
Pfizer’s employees have contributed $115,091 to Hillary Clinton’s campaign, compared with $2,100 to Republican Donald Trump, according to Center for Responsive Politics, which tracks campaign donations. In total, the drugmaker’s employees or political affiliates have given $1.25 million this election cycle, with the majority of those dollars going to Republicans. The center’s data runs through June 27, according to its website.
The industry has also started television ad campaigns in an effort to defend what it says are breakthrough, life-saving cures that the country needs to support. Pfizer has a series of ads titled “Before It Became a Medicine” that emphasizes the long effort and expense that goes into drug development.
Read said that costs on new drugs will come down if there’s enough competition from other drugmakers.
“The way you reduce cost to society is having more products in the same category,” Read said. “So the way you get more value is by having more money in innovation.” He pointed to greater discounts on some new hepatitis C drugs, which were introduced with prices of more than $1,000 a pill, as one example.
Clinton’s proposals have already hurt some drug stocks. Last month, she said that Mylan NV’s price increases for the allergy shot EpiPen were the “latest troubling example of a company taking advantage of its consumers.”
Mylan’s shares, along with the broader 184-member Nasdaq Biotechnology Index, went tumbling. In September 2015, she called out Valeant Pharmaceuticals International Inc. over its aggressive price increases, helping set off fresh scrutiny of the industry.
Pfizer, in many ways, is different than Mylan and Valeant. The New York-based drugmaker is primarily focused on the development of new medicines rather than the acquisition and management of older ones. It does, however, raise prices on products, and has introduced expensive treatments such as Ibrance, a breast cancer treatment with a list price of $9,850 a month, before discounts and rebates.
Read in part blamed consolidation by pharmacy benefit managers, or PBMs, in recent years for some of the criticism. The companies, such as Express Scripts Holding Co. and CVS Health Corp., negotiate drug prices and coverage on behalf of employers and insurers.
As the number of payers declined and negotiating power of PBMs became more dominant, a “perfect storm” was created in which there was a backlash by consumers against the industry.