The Wall Street Journal: Marco Rubio Latest to Speak Out on Prescription Drug Prices

The Wall Street Journal
Marco Rubio Latest to Speak Out on Prescription Drug Prices
By Joseph Walker and Heather Haddon
October 19, 2015
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U.S. Senator Marco Rubio (R-Fla.) became the latest presidential candidate to speak out on prescription drug prices, saying that some pharmaceutical companies are engaging in “pure profiteering” and that high prices threaten to “bankrupt our system.”

At a campaign event in New Hampshire last week, a member of the audience asked Sen. Rubio to characterize his “free-market solution” to bringing down the high-cost of lifesaving medicines, according to a video of the event posted online. A spokesman for Sen. Rubio said the exchange occurred at a campaign house party on October 14.

Sen. Rubio replied that part of the problem was “government inflicted,” because of the high cost and long wait to gain regulatory approval for generic versions of brand-name drugs. In some cases, drug makers are charging high-prices for “miracle drugs” to recoup their investments in developing the medicines, he said.

But another part of the problem, Sen. Rubio said, was that pharmaceutical companies will raise the prices of their medicines to offset declining consumer demand as their products lose market share to newer rival treatments.

“You ask yourself, how is this possible? There are less prescriptions being written for that drug and yet you’re making more money on it than you ever have,” Sen. Rubio said. “The answer is they’re raising the prices dramatically, and the reason they’re raising the price dramatically is because they can…The market will bear it.”

“It’s just pure profiteering,” he added.

Sen. Rubio’s remarks were the latest sign that drug prices have become a political issue. During a televised debate hosted by CNN this month, Democratic presidential nominees Hillary Clinton and Senator Bernie Sanders both cited pharmaceutical companies as among the enemies they were most proud of having.

In an August survey of 1,200 U.S. adults, 72% called drug costs unreasonable, according to the Kaiser Family Foundation, which conducted the poll.

“Marco was obviously talking about specific companies who are gouging consumers,” Rubio campaign spokesman Alex Conant said in a statement Monday. “America’s pharmaceutical industry saves countless lives but it is no secret that there are some bad actors who put profits ahead of patients.”

The emergence of drug prices on the campaign trail has created upheaval in the share prices of biotechnology companies and is being closely watched by equity analysts. The Nasdaq Biotechnology Index has fallen more than 11% since Mrs. Clinton released a plan in September to rein in drug costs, including by allowing Medicare to negotiate drug prices.

Sen. Rubio’s comments “maintain the drug pricing topic as a key debate for the upcoming 2016 election cycle amongst both Democrats and Republicans,” said Liav Abraham, a Citi analyst, in a note to clients Monday. While there is little that can be done “on the regulatory front to address drug prices,” Mr. Abraham wrote, it is likely that “companies will increasingly ’self-regulate’ pricing increases going forward amidst the increasing scrutiny.”

The use of price increases to boost revenue growth, even when prescription volume goes down, was the subject of a page-one Wall Street Journal article earlier this month.

One of the drugs highlighted in the Journal’s story was Biogen Inc.’s multiple sclerosis treatment Avonex, whose revenue more than doubled to $2 billion over a decade in which unit volume declined each year.

Drug prices have become an increasingly hot-button issue. State Medicaid programs, which are jointly funded by the federal government, have complained about the high-cost of hepatitis C treatments.

Texas, for example, last year refused to pay for Gilead Sciences Inc.’s drug Sovaldi, a powerful treatment against the liver disease, because of its $84,000 cost for a full treatment course, the Journal reported in April. Gilead has said the price of its drugs reflect their value to patients and the health system. The per patient net price of hepatitis C drugs has come down this year as Gilead has given greater rebates in response to competition from AbbVie Inc.

At the campaign event, Sen. Rubio said drug prices are “frustrating” because the “same exact medicine just across the border is a quarter of the price, so you realize America is subsidizing health care for the world.” Sen. Rubio was apparently referring to Canada, where brand-name drugs are often significantly cheaper than in the U.S.

At a town-hall meeting in New Hampshire earlier this month, Republican Gov. Chris Christie was also asked about prescription drug pricing by a man who spoke about his family’s struggles with paying for cancer treatments. The man also asked what Gov. Christie thought about “price gouging” by drug companies.

The New Jersey governor said there should be more transparency in how much U.S. health care costs.

“We have got to be smart about the way we do it and we can’t just put price controls on it, that’s the easy Democratic way to do it,” Mr. Christie said about health care costs during the Manchester forum. “It’s a real balance here.”

“They have to make some of that money back. We are a capitalist society,” Mr. Christie said of health care companies.