September 28, 2016
“Hillary Clinton’s Plan for Lowering Prescription Drug Costs” — a campaign briefing — is a blueprint for destroying our pharmaceutical industry. And it isn’t just drug companies that should be scared. The plan sets a precedent for destructive command and control in every part of the economy.
Citing ACA provisions that limit health insurance companies’ margins as a model, Clinton claims that because drug companies benefit from federally funded research and R&D incentives, they should not be allowed to reap “excessive profits” or spend “unreasonable amounts” on marketing, and should be required “to invest a sufficient amount” in R&D. I have no idea what level of drug company profits is “excessive,” what is “reasonable” to spend on marketing, or what is “sufficient” R&D investment. But I doubt government bureaucrats do either.
Two Clinton proposals — the importation of drugs from overseas and Medicare negotiation of drug prices — amount to price controls that will lower prices in the short-run but destroy drug development in the long-run, resulting in fewer choices for physicians and patients. Many countries’ governments set drug prices and ration coverage either by being the sole large drug purchaser or through regulation. Importing these countries’ cheaper drugs imports the shortcomings of their price control regimes. Allowing Medicare, as Clinton describes it, to “use its leverage [to] drive down drug and biologic prices” would be more akin to the government price setting that occurs overseas, rather than a negotiation. The over 55 million Medicare beneficiaries are older and sicker than the rest of the population and consume a disproportionate amount of all drugs used. As a result, Medicare would effectively dictate drug prices nationwide and decree which drugs would be available.
Read the full article at the American Enterprise Institute: The dangers of Clinton’s prescription drug plan