Hillary Clinton wants to alter and improve Obamacare, and capping the cost of prescription drugs is her first step.
A Monday morning tweet from Clinton stated that “price gouging like this in the specialty drug market is outrageous” as she linked to a New York Times article on a large increase for a drug that fights parasitic infections.
To fight high drug prices, Clinton proposes a $250 monthly cap, according to the Washington Post.
Capping the cost of drugs has been a goal for Democrats in the past, but they haven’t had enough support to push through it. Pharmaceutical companies oppose the restrictions.
Clinton’s proposal would also end tax credits for direct drug advertising to consumers and allow Americans to import drugs from foreign countries.
Spending on prescription drugs has been creeping up; the Washington Post notes that it increased more than 13 percent in 2014. As the population ages, more Americans use prescription drugs as a whole. As drug companies innovate and produce more effective drugs and more specialty drugs, costs can rise.
To invent a new drug, the process to get approved by the FDA is costly, so companies try to recoup their investment before the drug becomes available in generic form. By capping the cost, it could hurt innovation in the long run.
Reforming the FDA’s approval process would be a step in the right direction. The FDA can be overly cautious when approving drugs, for instance. The FDA doesn’t get much criticism if it doesn’t approve a drug that could save more lives because the people it could help aren’t seen. If it approves a drug that has unintended consequences and harms a lot of people, however, bad press can put the agency under heavy criticism. The pressure incentives the agency to be more conservative and less liberal.
Whether a cap would kill innovation entirely is less probable, but on the margins, if profits were hurt, drug companies might attempt fewer risky, specialty drugs. If that happens, fewer specialty drugs will be available.