Specialty medicines have been attracting some unwanted attention recently. Purchasing underappreciated drugs then raising their prices isn't an uncommon practice, but Turing Pharmaceuticals CEO Martin Shkreli took it to a new level. Outrage over a proposed 5,000% price hike for toxoplasmosis treatment Daraprim wasn't lost on Hillary Clinton. The presidential candidate jumped at the opportunity to unveil a comprehensive plan to lower healthcare costs associated with drug spending. One of her proposals would allow Medicare to finally negotiate with drugmakers over pricing.

If you're not entirely familiar with the convoluted nature of healthcare spending in the US, you might think the last sentence contains a typo. It doesn't.

It's a real shocker, but Medicare -- despite boasting over 55 million members -- can't go to drugmakers and say, "you know we've got all these seniors, and a budget. Now sweeten the deal or we'll go with a competitor that will," due to a bill Congress passed in 2003. Because of this "unique" legislation, Medicare is left paying the prices that smaller private insurers negotiate.

Now, private insurers cover roughly 100 million Americans, so on the surface this might not seem like such a big deal. Take a step closer and you'll quickly realize that Medicare represents a much older, more illness-prone demographic. Compounding the matter is the simple fact that private payers negotiate individually. Combine these factors and you can see how Clinton's proposals have some drugmakers shaking in their boots.

Earlier this year the Centers for Medicare & Medicaid Services, or CMS released prescriber-level Medicare data for the first time ever. It included a handy breakdown of the top ten drugs by cost to Medicare. The figures go back to 2013, but still give us a handle on which drugs are costing taxpayers the most today, and which drugmakers have the most to fear. Lead product lines from pharma giants GlaxoSmithKline (GSK 0.69%) and Merck (MRK 0.26%) were in the list, along with blue-chip biotech Celgene (CELG). Here's a look at what an empowered Medicare could mean to these industry leaders.

Difficulty breathing
The past few years haven't been kind to GlaxoSmithKline. Company sales and the stock price are roughly where they were a decade ago.

Advair is the company's biggest seller, and near the top of the list of drugs by cost to the CMS, despite its slide in recent years. Sales of the asthma/COPD blockbuster in the first half of this year suggest an annual run rate of $5.6 billion. That's impressive but well below the $7.8 billion seen in 2010. 

Glaxo's intended follow-up, Breo, failed to significantly improve mortality rates among high-risk COPD patients earlier this month. Without a viable followup, the years ahead are going to be tough for Glaxo investors. If Clinton's proposals succeed, Glaxo's lost decade might extend even further.

Type-2 diabetes
According to the CDC about 26% of Americans age 65 and older have some form of diabetes, and about 95% of all cases are type-2. Merck's Januvia does a fine job of treating the disease, but at an enormous cost that earned seventh place on the CMS list of drugs by cost.

Sales have stagnated somewhat this year, but at an annual run rate of about $6 billion, the Januvia line is responsible for at least 15% of Merck's top line.

Unlike Glaxo, Merck is enjoying success in other fields, namely immuno-oncology. The company showed some uncharacteristic hustle over the past couple years, and can now boast a first-in-class melanoma therapy. Following approval last September, sales of Keytruda reached just $110 million, but that figure is widely expected to rise in the near term. The FDA is currently mulling over a label expansion in melanoma that would go a long way to mitigate potential pricing pressures for its diabetes franchise.

Odd one out
Given that seniors generally experience malignancies at a higher rate than the general population, it's a little surprising that Celgene's Revlimid is the only cancer therapy in the top ten list of drugs by cost to the CMS. With somewhat limited number of beneficiaries, potential pricing negotiations for the multiple myeloma therapy could be tense.

Second quarter Revlimid sales of $1.4 billion represent a 19% gain compared to the same period last year.  Even though the drug is responsible for nearly two-thirds of Celgene's total revenue, the company is hardly a one trick pony. The more recently-launched Pomalyst is on pace to reach blockbuster status this year. Beyond oncology, the company has made important headway into the immunology space. A successful launch of oral psoriasis therapy Otezla, and the recent purchase of multiple sclerosis candidate ozanimod should help offset pricing pressure from a potentially empowered Medicare program.

We've been here
This is hardly the first time politicians have railed against the rising costs of specialty medicines. Given past failures, I doubt Medicare will be able to engage drugmakers with pricing negotiations in the years ahead.

From an investor's standpoint, it's important to remember aging baby-boomers and longer life spans are rapidly changing the U.S. demographic. Over the next 15, years the number of Americans over 65 years old is expected to reach one-fifth of the total population. Political posturing may batter drugmaker stock prices in the short term, but going forward the industry's prospects remain strong.