Former President Donald Trump rightly called for a fundamental change in the U.S. pharmaceutical pricing scheme. He called on drug manufacturers to supply more medications directly to patients. He noted that we need price reductions, not just industry hype to achieve prices that are closer to those of our peer countries.
For those of you keeping track at home, in a related directive Trump issued last month, he claimed that the U.S. should have “most favored nation” pricing. This innovative approach would ensure that American prices match the lowest prices paid by our economic competitors in similarly situated nations. His administration’s insistence on this model comes amid rising concerns over exorbitant drug costs that often leave American consumers with hefty bills.
Isn’t this what Trump promised? Trump did promise, over and over, to lower drug prices. In his administration’s failure to release the legal authority necessary to exert pressure on pharmaceutical companies to comply. In May, he followed that up with an executive order that called on drugmakers to reduce their prices. So far, there has been little flesh on these bones.
The drug industry has mounted a vigorous lobbying campaign against any policies that would tie U.S. prices to those abroad. Trump was ready to take this resistance on directly. He suggested that when drug companies raise prices in other high-income countries, they return those additional profits to American patients by bringing down prices right here in the US.
In the United States, the Trump administration has already added a 15 percent tariff on medicines imported from Europe. This new policy is expected to go into effect as soon as August. Some experts warn that these levies may inadvertently lead companies to increase drug prices for American patients, government programs, and employers. Large multinational pharmaceutical companies would stand to make billions of dollars out of new import duties. They produce most of their best-selling medicines on the continent.
Today, brand-name drug prices in the U.S. are roughly three times higher than those charged in our peer countries on average. Bowing to the inevitable Pascal Soriot, chief executive of AstraZeneca, praised Trump for “saying that indeed price equalization needs to happen.”
Prominent instances of medications already hitting the market directly to patients are Wegovy, Zepbound and Eliquis. Attempts to grow those types of programs often run into trouble. A federal court already ruled against Trump’s attempts to roll out similar policies for select drugs covered by Medicare in his first term. This regulatory process was met with fierce legal opposition.
In addition to announcing the program itself, Trump threatened to punish companies that refuse to enforce his proposed drug pricing.
“If you refuse to step up, we will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.” – Donald Trump
That’s why pharmaceutical executives have so far rallied behind Trump’s position. They claim that our European allies aren’t doing their part to help pay for the development of new drugs. Alex Schriver, a spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA), blasted Trump’s approach. He maintained that bringing foreign price controls here would undermine American leadership and in the end, hurt patients and workers.
