This is one of those policy breakthroughs that seem so obvious that one wonders why it didn’t happen a long time ago. The U.S. has had two serious issues with regard to drugs. The first is cost: many foreign countries have imposed pharmaceutical price controls, so that Americans have disproportionately paid for the innovation that benefits everyone. The second is access: we have become much too dependent on other countries, mainly China, for drugs and drug ingredients that are necessary for national security and well-being.
The Trump administration moved on Friday to address both of these issues. The White House’s fact sheet explains:
Today, President Donald J. Trump announced nine new agreements with major pharmaceutical companies to lower prescription drug prices for Americans in line with the lowest prices paid by other developed nations (known as the most-favored-nation, or MFN, price).
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The agreements ensure foreign nations can no longer use price controls to free ride on American innovation by guaranteeing MFN prices on all new innovative medicines the nine companies bring to market.
The government will also set up a web site called Trump RX where Americans can buy pharmaceuticals. The discounts that the drug companies have agreed to are remarkable. For example:
* Amgen will reduce the price of its cholesterol-lowering drug Repatha from $573 to $239 for patients purchasing directly through TrumpRx.
* Bristol Myers Squibb will reduce the price of its HIV medication, Reyataz, from $1,449 to $217 for patients purchasing directly through TrumpRx.
* Boehringer Ingelheim will reduce the price of its type two diabetes medication, Jentadeuto, from $525 to $55 for patients purchasing directly through TrumpRx.
* Genentech will reduce the price of its flu medication, Xofluza, from $168 to $50 for patients purchasing directly through TrumpRx.
* Gilead Sciences will reduce the price of its Hepatitis C medication, Epclusa, from $24,920 to $2,425 for patients purchasing directly through TrumpRx.
The administration is also moving to ensure that we have adequate stock of pharmaceuticals here in the U.S.:
The pharmaceutical manufacturers involved in today’s announcement are committing to invest at least $150 billion collectively in U.S. manufacturing in the near term. Additionally, as part of the agreements, several companies are donating active pharmaceutical ingredients for key products to the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR) to reduce reliance on foreign nations and ensure the United States has an adequate supply of such products in the event of an emergency.
What’s not to like? If you are an American, nothing, as far as I can see. Reuters reports:
Deals between pharmaceutical companies and Washington to reduce prices for medicines in the United States will likely push up the cost of new drugs in Switzerland, the CEO of Swiss pharma giant Roche, opens new tab was quoted as saying on Saturday.
Under the deals announced on Friday, drugmakers including Roche’s U.S. unit Genentech will slash prices on drugs sold to the U.S. Medicaid program for low-income people.The White House said the accords meant other countries could no longer use price controls to take advantage of U.S. innovation, and in an interview with Swiss newspaper Tages-Anzeiger, Roche CEO Thomas Schinecker said Washington’s aim was for other wealthy nations to contribute more to innovation.
Schinecker said the U.S. would look at the economic strength of other countries in determining where prices should be. If a country’s gross domestic product per capita is above that of the United States, Washington would expect the price of medicines to be higher in line with greater prosperity, he said.
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“For Switzerland, this would mean more; for Italy, less than in the U.S. All economies would make a relatively comparable contribution to investments needed for developing new therapies. Prices won’t change overnight, but I’d expect it to happen gradually with each new launch over the coming years,” he said.
It will take some time to see how all this works. But it seems beyond dispute that Americans will benefit. In pharmaceuticals, like defense, President Trump has moved to require other countries to pay their fair share.
It is remarkable that the Democrats are trying to make an issue out of “affordability” in the midterms, when the inflation of the Biden era is the source of the problem, and the Trump administration has taken unprecedented measures to help bring prices under control.
