The U.S. drug industry breathed a big sigh of relief when President Trump strode to a Rose Garden rostrum earlier this month and made it clear he doesn’t plan to do anything meaningful to address the skyrocketing cost of pharmaceutical drugs.
During the campaign, of course, Trump had promised he was going to end the drug companies’ greedy exploitation of American patients. He was going to negotiate a better deal for the American people, like most other advanced countries do. So, when he announced his plan to address drug prices last week, Big Pharma execs were understandably nervous— until the substance (or lack, thereof) of Trump’s plan became clear.
Trump can talk a good game, but in the end, he reverted to form on the issue of high drug prices. He didn’t blame the drug companies for charging hundreds of dollars for medications that cost pennies to manufacture. Instead, he blamed the problem on foreigners.
That’s right. According to the president, when other countries negotiate better prices for their citizens, it prompts drug companies to charge Americans more to make up the difference.
“In some cases, medicines that cost a few dollars in a foreign country cost hundreds of dollars in America for the same pill with the same ingredients in the same package made in the same plant, and that is unacceptable,” said Trump.
Trump’s analysis is correct. It’s his solution that turns logic on its head. Rather than Americans paying less, Trump argues that foreigners should pay more. Forget going to Canada to stock up on cheap medications. If Trump has his way, there will be no escape from the predatory pricing of American drug companies. No wonder drug company stocks soared on the president’s announcement.
There is no doubt that if other countries paid more for pharmaceuticals that drug companies would make bigger profits. Yet there is no rational basis for believing that such a fact would lower drug prices here at home. Drug companies aren’t non-profits, looking to make just enough to pay the bills. They’ll charge exactly what they can get away with here in the U.S., regardless of what they make elsewhere. If the U.S. government truly wants to lower drug prices in America, it needs to use its massive bargaining power to get a better deal. Period. End of story.
That’s what Trump said he would do during the campaign. His latest proposal is a promise broken.
It’s also an example of the confusion and misunderstanding that seems to drive policy development in this administration. His Council of Economic Advisors recently reported that drug prices should reflect their actual value in the marketplace and should not be artificially set by government-controlled markets, an opinion that signaled Trump’s subsequent decision against negotiations. Yet the drug marketplace has never been competitive— in fact, the entire economic model of most drug companies is focused on the lack of competition created by patent rights. Drug companies game the system all the time, paying off competitors not to produce cheaper, generic alternatives, or extending patent protections through minor modifications that often have little therapeutic benefit, except to their bottom line. The abuses are legend, and certainly not limited to the Martin Shkrelis of the world. If Trump’s economic advisors don’t recognize such basic realities of the drug market, it’s no wonder their policy proposal is so off-base.
This kind of abuse doesn’t take place in other advanced foreign countries— because their governments don’t allow their citizens, nor their public budgets, to be so abused. Only in America, where Big Pharma pours billions into lobbying and campaign contributions in Congress, are these corporate predators allowed to run amok.
Trump, the self-proclaimed champion of the forgotten man, said he would go toe-to-toe with them. Instead, he took the easy way out. Toss out a few platitudes and do-nothing policy proposals, then blame it all on foreigners. That may sell with much of his base, but it will do absolutely nothing to bring down the cost of prescription drugs.