Democratic presidential candidate Hillary Clinton speaks in the gymnasium of Moulton Elementary School in Des Moines, Iowa, on Sept. 22. (Brian Frank/Reuters)

Hillary Rodham Clinton proposed a new limit Tuesday on the amount that some of the nation’s sickest patients pay out of their own pockets for prescription drugs, in a direct challenge to big drug manufacturers that Clinton branded “profiteers.”

Under her proposal, the government would place a $250 per month cap on spending for prescription drugs by patients with chronic and serious medical conditions. Clinton described the plan at a community meeting at an elementary school here, in the state that holds the first 2016 presidential selection contest in February.

“That is not the way the market is supposed to work,” the Democratic presidential front-runner said. “This is bad actors making a fortune off of people’s misfortune.” She cited as evidence a recent increase of nearly 4,000 percent in the per-pill cost of a drug to treat parasitic infections, calling it “a bet on the fact that desperate people will find some way to pay for it.”

Clinton’s plan has several moving parts, some aimed at directly curbing profits of pharmaceutical companies and others to give the government a stronger role in constraining drug prices or making lower-priced medicine more available.
She would allow Americans to reimport U.S.-made drugs from countries where they tend to be sold at lower prices. She would also allow the Medicare program to negotiate prices with drug manufactures.

Her plan would end a tax credit that drug manufacturers can now claim for direct advertising to consumers. She says that money that the government saves from that change should be used to increase public investments in new drugs by making permanent an existing tax credit for pharmaceutical research and development. Her proposal also would compel drug manufacturers that receive such R&D tax credits to meet new targets, which she does not specify, for investing their own money in those activities.

Another aspect of the plan would increase funding of the Food and Drug Administration so that it could catch up on a backlog of generic drugs that have not been reviewed to determine whether they should be approved. And it would ban “pay for delay” agreements that allow drug manufacturers to stave off competition from generics, as well as shorten the number of years before generic versions of “biologic” drugs could come onto the market.

Her proposal drew an immediate rebuke from the pharmaceutical industry.

“Secretary Clinton’s proposal would turn back the clock on medical innovation and halt progress against the diseases that patients fear most,” John J. Castellani, head of the Pharmaceutical Research and Manufacturers of America (PhRMA), said in a statement Tuesday .

Biotech stocks fell Monday after Clinton posted a Twitter message pledging to go after “price-gouging” by drug companies.
Clinton has benefited from some companies in the industry that she is lambasting. She gave paid speeches last year to drug maker Novo Nordisk and other pharmaceutical firms and industry associations.

The insurance industry, an outspoken critic of escalating drug prices, issued a more muted response. A spokeswoman for America’s Health Insurance Plans, the insurance industry’s main trade group, noted that most elements of Clinton’s plan have been put forth in various forms in the past. “We are not aligning ourselves with any particular camp on this,” the spokeswoman, Clare Krusing, said. “There are policy solutions that work, and ones that do not.”

Specifically, Krusing said, the insurance group favors market-based approaches, such as efforts to expand consumers’ access to drugs and foster price competition. On the other hand, she said, the group opposes stronger regulation — including direct negotiations by Medicare of drug prices for older Americans — reasoning that such steps give drug manufacturers incentives to set higher prices.

Clinton is calling her health-care ideas a way of refining the Affordable Care Act, the sprawling 2010 law that is reshaping parts of the U.S. health-care system. But her ideas would navigate the law into a realm of drug prices that its authors largely sidestepped.

“As president I want to go further. I want to strengthen the Affordable Care Act,” Clinton said. “It couldn’t and it didn’t solve all of our problems.”

She claimed that the cost of prescription drugs rose 12 percent last year.

The strong endorsement of President Obama’s signature initiative represents a calculated political risk for Clinton and a departure for national Democrats who have been wary lately of too close an association with a still-divisive mandate in the law that most Americans carry health insurance.

“Every single Republican candidate for president has vowed that if elected, they'd get rid of the Affordable Care Act,” Clinton said Tuesday, adding that congressional Republicans have made scores of unsuccessful attempts to repeal the law.

Her proposal would let Americans “safely and securely import drugs for personal use from foreign nations whose safety standards are a strong as those” in the United States. And it says that the Food and Drug Administration and other regulatory agencies would “set careful standards.”

The idea of reimporting drugs as a cost-saving strategy goes back nearly two decades. A dozen years ago, it surfaced as a major dispute as Congress was designing the legislation that added Part D drug coverage to Medicare. At that time, Democrats pushed through the Senate a proposal that would have allowed pharmacists and drug distributors to reimport medicine manufactured in the United States from Canada, where pharmaceuticals usually are sold at lower prices. The idea was resisted by many Republicans, including the George W. Bush administration, and it never became law.

Few incentives exist for pharmaceutical companies to voluntarily keep prices down, and there are few mechanisms for government officials to stabilize prices. By law, the Food and Drug Administration cannot consider the cost of a new drug when deciding whether to approve it for the U.S. market. Medicare also cannot negotiate prices with drug companies.

Those limitations mean that companies themselves are left to determine the prices for their drugs, and they often settle on whatever amount they believe the market will bear.

Pharmacy benefit manager Express Scripts released a study this year that found that more than a half-million Americans have yearly prescription drug costs of $50,000. In addition, more than 100,000 Americans spent more than $100,000 on prescription medicines in 2014 – and that number tripled over the previous year, the company said.

Brady Dennis and Scott Clement contributed to this report.