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Hillary Clinton's prescription drug plan not what the doctor ordered

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Democratic presidential candidate Hillary Clinton's plan to curb rising prescription drug costs does little to lower costs, and instead could harm innovation and lead to hikes in insurance premiums, experts say.

Ms. Clinton on Tuesday announced a multipronged plan to curb prescription drug costs by setting a $250 monthly cap on what insurers can require individuals to pay out of pocket for prescription drugs, and by increasing competition for generic pharmaceuticals in the market.

She also called for a stop to excessive profiteering by drug companies, by eliminating subsidies for direct-to-consumer advertising, and by requiring drug companies that benefit from federal support to invest in research.

Her announcement comes on the heels of public backlash against New York-based start-up Turing Pharmaceuticals L.L.C., which bought 62-year-old anti-parasitic drug Daraprim in August and raised the price to $750 a tablet from $13.50 — a move that is far from unique, experts say. Following the backlash, Turing announced late Tuesday that it would lower the price of Daraprim to make it more affordable.

Ms. Clinton's plan to cap out-of-pocket costs at $250 month, or $3,000 annually, doesn't differ much from the limits already set by the Patient Protection and Affordable Care Act, said Ed Kaplan, New York-based senior vice president and national health practice leader with The Segal Group Inc.

The health care reform law sets the maximum out-of-pocket expenses employers can require employees to pay for both medical and drug costs before health plan coverage kicks in at $6,850 for single coverage and $13,700 for family coverage, effective in 2016. And most employers already put annual limits on what their employees pay out of pocket for medical and drug costs, though there are no monthly limits, Mr. Kaplan said.

Ms. Clinton's plan “doesn't get to the heart of the matter,” Mr. Kaplan said. Capping the “employee's exposure” to the cost of the drug does nothing to help the employer, who will pick up the tab, he said.

The $250 cap on out-of-pocket expenses would give immediate relief to individuals taking expensive medications, but “it doesn't solve the problem,” said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington. “The price of the medication is still being absorbed by the (health) plan and will be reflected somehow in the premiums,” he said.

In a blog post Tuesday, Dr. Steve Miller, chief medical officer of Express Scripts Holding Co., said federal price controls “erode pharmaceutical innovation in the U.S. and around the globe.”

And in a statement Tuesday, Marilyn Tavenner, president and CEO of insurers' advocacy organization America's Health Insurance Plans, said placing “arbitrary caps on insurance coverage” increases costs for individuals and families.

“These provisions will not make drug prices more affordable,” Ms. Tavenner said. “We strongly believe that greater transparency around drug pricing and more competition in the market are critical to support sustainable, private-sector solutions that deliver the best value for patients and the health system.”

Ms. Clinton also plans to prohibit “pay for delay” agreements that allow drug companies to keep generic drug competition off the market and allow Medicare to negotiate drug and biologic prices directly with manufacturers.

Rising health costs, driven in part by expensive specialty drugs, have been a major headache for employers. According to an August study by Aon P.L.C., pharmacy cost trends will increase by 10% when employers renew their health benefit plans in 2015, up from 6.3% at renewal in 2014.

The cost of specialty drugs, including treatments for cancer and hepatitis, will increase 22.7% compared with an 18.2% increase in 2014, according to the study.