Trump Reduces Drug Prices-Not!


Leonard Zwelling

The vagary with which both The Wall Street Journal and The New York Times covered the announcement by Donald Trump that his administration would reduce the price of drugs is only accurate reporting. Most of the president’s proposals are pretty vague. They do not include drug re-importation (allowing the purchase of lower priced foreign drugs) or the ability of Medicare to directly negotiate with the pharmaceutical industry for lower prices.

Instead, as Katie Thomas outlines in the above link from The Times, the proposals are more modest. Modest means more in line with what the drug companies wanted because Trump and his Secretary of HHS are nothing if not protectors of those that contribute to their campaigns. Once again, an opportunity to create some sanity in the price of drugs has been squandered.

The proposals are more modest than useful by logs.

There are proposals on the use of value-based purchasing in Medicare—paying less for drugs that don’t work. Generic drugs might be cheaper. Mr. Trump wants the prices of drugs to rise in other countries so that the United States is not the sole provider of money to big pharma. However, if that even happened, there is no guarantee that prices here would drop. Big pharma always favors more profits, not less.

There is a proposal to put the price of drugs in the ads for them. Which of the many prices would be used is unclear and it would probably go by so fast you would miss it—like the side effects. Pharmacists may be allowed to suggest that payment for drugs be in cash which sometimes lowers the price. This is not allowed by the pharmacy benefit managers now. Some of the games the drug companies use to extend the lives of their patents may end.

This is all just nibbling around the edges and far less than Mr. Trump proposed when he was running for president. Wow! What a surprise! The drug companies get their way.

The solution here is quite clear. There needs to be more competition in the drug space and that is hard to do when any entry to the market is blocked by the huge costs of drug development and the fact that your competitor may have a patent that precludes your entry anyway.

This is one of those areas where the government has to step up.

Medicare should be able to negotiate drug prices and act as a massive buyers’ club for those over 65. The government may have to limit profits in the US or better, allow free trade across borders so that Americans can buy drugs off-shore for less than they have to pay here. Inherent in the drug business, or any endeavor where patents rule, there is limited competition and thus the major mediator of price limits is gone.

The way we pay for drugs in America is broken. The pharmaceutical companies are in the driver’s seat with the pharmacy benefit managers riding shotgun. Along with the rest of health care delivery and regulation in America, this is a jungle and the big beasts are feeding at the waterhole made safe by the lack of any meaningful intervention by the government.

How to fix this is clear. It will also cost the drug companies money. Thus, it is unlikely to occur.

Leonard Zwelling