Mrs Clinton's proclamation was motivated by Turing Pharmaceuticals, whose chief executive Martin Shkreli had managed to inflate the price of a decades-old medicine by 50 times. While this is an extreme case, drugs price inflation is not uncommon in the US where prices are regularly higher than they are elsewhere in the world. For example, cancer drug Rituxan costs the NHS in England $1,364 per person, while the US Medicare programme shells out $3,678 for the same treatment.
So why are prices so high stateside?
The problem is the fragmented nature of the US healthcare system. In the UK, the government is solely responsible for negotiating drugs prices for the whole of the country, which gives it leverage to drive down prices. Across the pond, multiple organisations are responsible for drugs pricing and federal organisations such as Medicare are banned from using their position to negotiate lower prices. Many argue that this leaves Americans paying for the majority of the research and development expenses of pharma companies, while new drugs are cheaper in Europe.
Are times a-changing in the US drugs market?
Investors clearly think Mrs Clinton's declarations of a regulatory shake-up carry some weight; every time she has taken to social media to express her views, pharma indices around the world have dropped. Throughout this year the sector has traded sideways: the victim of a nervous attitude among investors ahead of the US election.
Reform proposals include limits to the patentability of trivial changes in innovative medicine and stronger sanctions on deals that delay the introduction of generics. Democrats also want Medicare to be given more power to negotiate lower prices, which many assume will lead to a single payer system, more reflective of that seen in the UK or elsewhere in Europe. The Food and Drug Administration would be given extra funding to speed up the approval of unbranded medicines - where there is a substantial backlog - which would increase competition for individual drugs.
Should these policies come into effect, pharma companies would certainly see US profits dented. For UK behemoths GlaxoSmithKline (GSK) and AstraZeneca (AZN), both of which have wobbling earnings and cash flows, the repercussions could be heavy.
But Hillary Clinton isn't the only candidate
Republicans are also seeking to shake up the US healthcare system, which they believe has faltered under the Affordable Care Act, which many commentators call Obamacare. GOP candidate Donald Trump and his team have laid out a very different approach to tackling the healthcare price problems in the US. They have proposed to "completely repeal Obamacare" and set up a new government initiative to help control pricing. The Republican candidate has also proposed to abolish the ban on importing cheap (but still well regulated) medicine.
Lose-lose for big pharma?
Investors and analysts in the US do hold some concerns, perhaps because the issue of healthcare pricing affects so many American people. Analysts at Bernstein have said that companies likely to be hit by pricing changes are not just those that dramatically inflated prices over the past few years, but also those with a high impact on total healthcare costs. The Office of Enterprise Data and Analytics has already compiled a list of drugs that could potentially be hampered by new healthcare regulations, including GSK's top selling asthma drug Advair.
But pricing changes are not inevitable. President Barack Obama's relationship with a majority Republican Senate has epitomised gridlock. A similar stalemate in the next four years would suit pharmaceutical companies - and polls suggest this is a likely outcome.
Is it time to get out of UK healthcare stocks?
No. Regulatory upheavals could cause certain headwinds for Britain's small innovative biotechs and big powerful pharma giants, but US regulators are far more likely to focus their attention on curbing perceived inflated prices at companies such as Turing, Mylan (US:MYL) or Valeant (Can:VRX). Plus, there is likely to be a huge backlash from pharma companies, physicians and patients if new policies risk stifling innovation.
David Pinniger, biotech fund manager at Polar Capital, argues that the current market stagnation presents an opportunity for investors to take advantage of the sector's long-term growth prospects. In an environment characterised by low global economic growth, pharma and biotech stocks - both established and emerging - will remain for many a compelling proposition.
