Return to the Full Article View You can republish this story for free. Click the "Copy HTML" button below. Questions? Get more details.

Can Drug Companies Survive Their Martin Shkreli Moment?

In September, a drug company executive named Martin Shkreli gave patients fits after hiking the price of a drug called Daraprim by more than 5,000% overnight.

He also gave politicians a gift: a scapegoat.

The high price of drugs isn’t a new problem; 72% of respondents to a Kaiser Family Foundation tracking poll in August said that drug costs are “unreasonable.” But since Shkreli’s price hike became a national news story, several presidential candidates have spent weeks skewering his behavior and scrutinizing his company, Turing Pharmaceutical. And they’ve also used it as a platform to take on the broader drug industry. Here’s a sample of what they’ve said.

Hillary Clinton: The leading Democratic candidate for president has led the recent round of criticism. In a much-watched speech, Clinton announced a new pharmaceutical industry reform plan, and she later ran a campaign ad that specifically blasted Shkreli’s price hike. And in response to a question at last week’s Democratic debate, Clinton also listed the pharmaceutical industry as among her top “enemies.”

Bernie Sanders: The Democratic candidate has spent the past several weeks touting new legislation, which he introduced before Shkreli’s decision became national news, that would allow the United States to import drugs from Canada and permit Medicare to negotiate drug prices.

Marco Rubio: The Republican candidate for president last week suggested that some drug companies are engaged in “pure profiteering” and that there should be more focus on paying for drugs that are proven to work. “Criticism of the drug industry has largely been the domain of Democratic candidates,” Drew Armstrong and Sahil Kapur noted at Bloomberg. “Rubio’s comments turn criticism of the industry bipartisan.”

Big Talk — But Little Action?

There’s some debate over whether any of the politicians’ proposals will actually address the core issues that have allowed Shkreli, and other drug companies, to dramatically hike the prices of their drugs in recent years. Clinton’s plan, for example, would cap out-of-pocket spending on prescription medications — but would do little to fix the regulatory loopholes that permitted Shkreli to essentially secure a monopoly on Daraprim.

And some warn that the side effects of politicians’ plans could be prohibitive.

“Drug prices aren’t sacrosanct and surely the behaviors of Turing Pharmaceutical and its CEO, Martin Shkreli, need to be addressed,” John LaMattina wrote in Forbes, responding to Clinton’s proposal to cap out-of-pocket spending on prescription drugs at $250 per month. (LaMattina is the former head of Pfizer Global Research and Development.) “But price controls for the drug industry will bring about the loss of jobs and billions of dollars invested in new drug R&D. Do we really want that?”

Meanwhile, it’s an open question as to whether promises made on the campaign trail will translate into action when taking office. Plans like Sanders’ proposals have been around for years with little legislative action. And while Clinton has been the most outspoken candidate about criticizing drug company behavior, she has also taken the most donations from the industry — more than three times as much as Rubio and nearly 20 times as much as Sanders. That’s made some observers skeptical of Clinton’s pledge to take on the industry. “With enemies like this, who needs friends?” Dan Goldberg asks at Politico New York.

However, observers point out that the ongoing focus on the pharmaceutical industry is likely at its highest level in years. And even if nothing is signed into law, the continuing scrutiny is at least bringing new ideas to control drug spending to the forefront.

For instance, economist Austin Frakt this week suggested that U.S. regulators adopt an idea imported from Europe: Reference pricing for drugmakers. Specifically, the model sets a standard price for similar drugs — and if a consumer wants a higher-priced drug, he or she ends up paying the difference.

“In pushing prices down, reference pricing doesn’t suppress innovation; it encourages a different form of it,” Frakt argues in the New York Times. “The market still rewards the invention of a cutting-edge drug with novel therapeutic effects.”

And given the industrywide shift toward value-based payments, John Tozzi writes at Bloomberg Business that hospitals and insurers are starting to lobby drugmakers to promise that their high-priced medicines will come with a “money-back guarantee.”

What’s Next

In a recent report, Moody’s projected that the drug industry would probably not be affected by reform proposals, noting the “political hurdles” such plans face before they can become law.

“While U.S. drug pricing is under increasing scrutiny following the price hikes of many pharmaceutical products, we see limited potential for a rapid drop in overall drug pricing levels or their upward trend,” noted Michael Levesque, a Moody’s senior vice president.

In the meantime, Shkreli isn’t helping his own cause. The executive has stayed in the public eye, arguing with reporters, feuding with presidential candidates — and providing fresh ammunition for political talking points.

Hoping to get a meeting with Sanders, Shkreli donated $2,700 to his campaign last month, David Nather reported for the Boston Globe — a donation that the Sanders campaign plans to give away.

“We are not keeping the money from this poster boy for drug company greed,” a Sanders spokesperson said.

Around the nation

Here’s what else is happening on the road to reform.

High-deductible health plans don’t do what policymakers want them to do. Economists expected HDHPs to encourage patients to do more price-shopping — but instead, consumers ended up skipping necessary care, Sarah Kliff writes at Vox.

Jeb Bush lays out Obamacare repeal-and-replacement plan. There is “no way to fix” the Affordable Care Act, and states should have more of a role in setting health care policy, Bush said in a speech last week and Nancy Cook reports for Politico.

Some elements may be removed from this article due to republishing restrictions. If you have questions about available photos or other content, please contact