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CLINTON EXPLAINS SUPPORT FOR PRYOR DRUG PRICING LEGISLATION AGAINST BACKDROP OF MERCK

Executive Summary

CLINTON EXPLAINS SUPPORT FOR PRYOR DRUG PRICING LEGISLATION AGAINST BACKDROP OF MERCK corporate headquarters in a campaign appearance by the Democratic presidential nominee on Sept. 24. In a lengthy speech focused on health care issues, Arkansas Gov. Clinton saluted Merck's earlier pledge to hold drug product price increases to general inflation and stressed his belief in the importance of research investments. However, Clinton declared, "not every company in the country has been as responsible as this one is in [controlling] the runaway costs" of drugs. "I think the market should pay what is appropriate to cover all research and development costs of bringing these drugs to market -- and they are enormous," he added, but indicated that he believes federal R&D incentives should benefit these companies which invest in experimental drugs. "That's why I have endorsed Sen. David Pryor's [D-Ark.] proposal to end special breaks for companies that do not keep the cost of traditional, already-established drugs within inflation." Focusing on the cost of mature products, Clinton declared: "We spend $50 bil. a year in this country on prescription drugs. We must get the cost of those that are already in the market in line with inflation." Clinton previously has indicated that he would support approaches such as Pryor's legislation, S 2000, that would reduce Sec. 936 tax credits provided for drug companies with manufacturing plants in Puerto Rico if those companies raise prices above general inflation. Despite talk of high price increases by some drug companies and a statement that "many European countries...are paying half what Americans pay for the same prescription drugs that are often actually made here in America," Clinton tried to emphasize the positive during his Merck appearance. Absent were the references to "drug price gougers" in some of his campaign literature or to the "health care profiteers" cited in his July 16 speech at the Democratic Convention. Although Clinton is already thinking about linking tax credits to a company's pricing policies, he declared elsewhere in his speech that "we should take the politics out of [research] and go back to a real commitment to research and development in our country." Those remarks were in the context of criticizing President Bush for his veto of an earlier version of the National Institutes of Health reauthorization bill because it would overturn the ban against federally-funded fetal tissue research. Clinton's health care proposals would require employers to provide health coverage for their employees on a phased-in basis; expand government coverage for the unemployed; and provide incentives for managed care networks. Though Clinton stressed that his plan provides for "personal choice, private care, private insurance, private management" in health care, his proposal also calls for a target ceiling on national health spending. He said the American College of Physician's recently-issued health care reform plan, which calls for global U.S. health budgets, is "remarkably similar to the one that I have recommended." Clinton suggested that he would develop a plan "that would have less micro-management by the federal government but more effective control of cost." In addition to cost control and access, Clinton said the goals of health reform must include maintaining quality. Clinton also emphasized his interest in "quality management." After noting Merck's frequent kudos from the financial press, Clinton remarked that Arkansas was the first state government to adopt the "Total Quality Management" concept. Clinton was accompanied at the appearance by New Jersey Gov. Florio (D) and Sen. Rockefeller (D-W.Va.). Merck was asked by the New Jersey Democratic Committee to host Clinton. The company has also been contacted by the Bush campaign; scheduling conflict prevented an appearance by the Republican candidate earlier this summer. Merck Chairman Roy Vagelos, MD, used his opening remarks at the event to emphasize that "we must preserve the system that has allowed the innovation that has made the pharmaceutical industry of the United States competitive worldwide with a very strong balance of trade." Research investment "is critical to this industry and critical to Merck," he added. Vagelos served on the 60-member steering committee for a Sept. 12 fundraiser that netted $1.5 mil. for the Clinton-Gore campaign. Organized by the Democratic National Committee and held at the Middleburg, Va. estate of Democratic Party doyenne Pamela Harriman, the $1,000-a-plate event exceeded its fundraising target by fifty percent.
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