Unbiased Analysis of Today's Healthcare Issues

“An astonishingly naïve approach”

Written By: Jason Shafrin - Sep• 27•15

That was Amitabh Chandra’s comment on Hillary Clinton’s plan to reign in drug prices and I don’t disagree.

According to the N.Y. Times, her plan:

…includes regulating the percentage of revenues pharmaceutical companies must spend on research and development, instituting a cap on the cost of many out-of-pocket drugs for chronic and serious health conditions, and allocating additional funding to put more generic versions of drugs on the market…

That plan includes a monthly cap on the amount insurers could ask people to pay out of pocket for specialty drugs, and increased competition for generic versions of specialty drugs.

The plan would also allow Americans to import lower-cost drugs from abroad, within the confines of Food and Drug Administration safety regulations, and prohibit drug companies from keeping generics off the market, which would save an estimated $10 billion, according to her campaign.

Capping out-of-pocket costs will reduce payments for sick patients but will raise premiums for everyone since insurers will need to cover costs. Allowing patients to buy drugs abroad could reduce drug safety. Even if US patients are able to import safe drugs, this policy could increase drug prices worldwide if innovators are not able to earn sufficient worldwide returns on investment due to reduced returns in the US.

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