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Clinton vs Trump Stand on Prescription Drugs

Prescription drugs are the third largest  area of U.S. health spending, and a main driver of growth. New drugs, which require significant research and development (R&D) investments, receive a period of patent protection and market exclusivity.

Following this period, the Food and Drug Administration (FDA) may approve generic drugs, which perform the same as the brand name product, often at much lower costs. The Affordable Care Act (ACA) includes a provision to fast-track approval of “biosimilars,” which are drugs that perform similarly to an existing biologic drug (one derived from living organisms). Since 2010, more new specialty drugs have been approved than traditional drugs. Unlike traditional drugs, specialty drugs (which are often biologics) require special administration (such as injection) or close observation by a physician.

Key Issues

Prescription drug spending and prices. Spending on prescriptions had grown slowly, even dropping at times in recent years, due to a number of drugs losing patent protection and substitution by more affordable generics. In 2014 and 2015, drug costs rose rapidly, driven by the introduction of high-cost specialty drugs as well as fewer drugs coming off patent. On average, generic drug prices have declined while brand name prices have increased, though there are several notable examples of generic price increases. The prices of many prescription drugs are higher in the U.S. than in similar countries, and the U.S. is one of only two developed nations that allow direct-to-consumer advertising.

Out-of-pocket drug costs.  Though most of the increase in drug spending was covered by insurance in 2014, out-of-pocket (OOP) spending on prescriptions also increased. In 2015, most people taking prescription drugs said they could afford their treatment, but about 1 in 4 people taking drugs have difficulty affording their medication.

Where the Candidates Stand

Hillary Clinton. To address drug prices, Hillary Clinton proposes to increase generic competition by prohibiting “pay-for-delay” deals whereby companies make payments to competitors for agreeing to delay market entry; increasing funding for the FDA Office of Generic Drugs to reduce their approval backlog; reducing the market exclusivity period for biologics; and directing the FDA to prioritize biosimilar drugs with few competitors. To address price increases for generic drugs, she proposes to establish consumer oversight in federal agencies; penalize drug companies for unjustified price increases; and allow importation of lower-cost drugs from countries with similar safety standards. She also supports eliminating tax deductions for direct-to-consumer advertising; requiring FDA approval of advertisements; tying federal support for drug companies to their investment in R&D; increasing transparency of the additional value new drugs have over existing treatments; and allowing Medicare to negotiate drug and biologic prices. To address OOP spending on prescriptions, Hillary Clinton proposes a $250 per month cap on cost sharing for covered drugs; and a rebate program for low-income Medicare beneficiaries that mirrors those in Medicaid.

Donald Trump. Donald Trump supports allowing importation of drugs from overseas that are safe and reliable but priced lower than in the U.S. He also supports greater price transparency from all health providers, especially for medical exams and procedures performed at doctors’ offices, clinics, and hospitals, but does not specify whether this policy would also apply to retail prescription drugs, which typically are not considered services or procedures.

Source: (The Henry J. Kaiser Family Foundation, [Updated: October 6, 2016)

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