In his latest effort to lower prescription drug costs, President Donald Trump has unveiled “Most Favored Nation” pricing deals with nine major pharmaceutical companies, in addition to five other drug companies that have previously signed similar reduced pricing agreements with the Trump White House. The “Most Favored Nation” pricing standard calls for drug makers to price their medications sold in the U.S. at the lowest cost available in other developed countries around the world, and to extend that reduced pricing policy to other new drugs that they bring to market.
These drug price reductions come at a crucial time for President Trump, who has been losing support in the public opinion polls due to the so-called “affordability crisis.” It is based upon the public’s perception that Trump has not done enough to keep his campaign promise last year to bring the cost-of-living down, even though the rate of inflation has been sharply reduced 2.7% from the peak of 9.1% that it reached during Joe Biden’s presidency.
The drugs whose prices are being lowered by these agreements are currently being taken by hundreds of millions of Americans to treat such conditions as cancer, diabetes, as well as autoimmune, dermatologic, neurologic, cardiovascular, and respiratory diseases. However, the price reductions are being applied on a drug-by-drug basis and will not change the costs of most drugs already on the market that are covered under private insurance plans or other government health insurance programs such as Medicare.
The impetus for the lowered pricing agreements was a letter that President Trump sent to 17 drugmakers in July with a specific list of demands to reduce prices. Back in May of this year, President Trump signed an executive order calling for drug prices to be increased outside of the U.S. to enable a reduction in domestic drug costs, and to “end global freeloading” on the American investment in medical drug research and development.
American paying far more for drugs than in any other country
It has long been well-established that U.S. prescription drug prices, on average, are nearly three times higher than in other countries. According to a 2024 study by the Rand Corporation, prices for all drugs in the U.S. were, on average, 278% higher than in other countries, while brand-name drug prices were 422% of the international average. For example, Humira, a brand-name drug for rheumatoid arthritis, costs $7,300 in the U.S. but only $1,089 in Germany and just $689 in France.
Those excessive drug prices are having a serious impact on the health of the American people. A recent Politico poll found that 22% of patients surveyed admitted that over the last two years, they felt obliged to skip taking the prescribed dosage of their medications because of the high cost.
Because American prescription drugs are so overpriced, American drug sales account for an estimated 50% of all global drug company profits, even though the U.S. has just 4% of the world’s population. In addition, half of the 10 largest drug companies based in Europe generate a majority of their sales in the United States.
President Trump has long complained that American consumers have been unfairly forced to buy overpriced prescription drugs to subsidize the sale of the identical drugs, often made in the same factories, at much lower prices in European countries.
Corporate executives trade lower drug prices for tariff exemptions
Trump praised the leaders of the nine drug companies who appeared with him at the White House for the drug pricing announcement last week. They included: Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech, Gilead, GSK, Merck, Novartis, and Sanofi. Five other drug companies, including Pfizer, AstraZeneca, Eli Lilly, Novo Nordisk, and EMD Serono, had previously signed similar voluntary agreements in which they promised to sell certain drugs they make directly to patients at a steep discount, in exchange for a three-year exemption from new tariffs Trump has said he would place on the drugs they manufacture abroad. Trump also enabled fast-tracking the reviews of new drugs that the companies submit for FDA approval.
As of today, 14 out of the 17 largest pharmaceutical companies … have now agreed to drastically lower drug prices for … the American people and the American patients,” Trump said at last week’s White House event. “This represents the greatest victory for patient affordability in the history of American health care, by far, and every single American will benefit.”
This is the second time that Trump has tried to force down the cost of prescription drugs. During his first term as president, Trump tried to reduce drug prices for Medicare to European levels through regulation, but a federal court blocked the effort because of the shortcuts the administration had used in the policymaking process. This time, the administration has been far more careful to follow the established rules in order to achieve the same drug cost-reducing goals.
Johnson & Johnson, AbbVie, and Regeneron are the three remaining drug companies that received Trump’s July letter that have not yet signed a drug price-reducing deal with the White House. But President Trump noted that Johnson & Johnson “will be here next week,” and is expected to join the other companies in offering selected discounted drug prices. The two other drug companies confirmed that they are also in talks with the administration about lowering some of their drug prices.
After President Trump’s initial remarks, executives for each of the nine drugmakers at the White House ceremony delivered a short speech thanking the president for negotiating the agreement, and declaring it to be an honor for their companies to lower drug prices for the American people.
Many of the drugs were nearing the end of their patent protection
Each of the participating drug companies has selected those drugs whose prices they are prepared to reduce. In many cases, the newly discount-priced drugs were nearing the end of their patent protection, meaning that the arrival of low-cost generic equivalent drugs on the market would soon have prompted the original drug manufacturers to lower their prices to remain competitive.
Merck said that it will reduce the price of its Januvia diabetes drug to $100 from $330. Gilead will sell its Hepatitis C medication, Epclusa, for $2,425, rather than $24,920. GSK will make its asthma inhaler Advair Diskus 500/50 available for $89, from $265. Amgen has announced that it will reduce the price of Repatha, for lowering cholesterol, from $675 to $239 a month.
These price reductions only apply to individuals who are paying the full retail price, but not to the more than 90% of Americans whose drug costs are mostly covered under their private Obamacare or employer-provided health insurance, or a government health insurance program such as Medicare or Medicaid.
Discounted drugs to be available through a Trump website
However, to make those savings more readily available to people without prescription drug coverage and willing to pay cash, the White House has announced that it will be launching a new website in January called TrumpRx.gov. It will direct patients to the drugmakers’ own websites, where members of the public can then buy those drugs at their discounted new prices directly from the manufacturer.
While the vast majority of Americans with drug insurance coverage will find it less expensive to buy their drugs through their insurance, the exception to that rule may be the GLP-1 weight-loss drugs, such as Wegovy and Zepbound, which are not covered by most prescription drug insurance plans. Because of the newly announced price reductions, some of those medications will be available for as little as $149 per month through TrumpRx.gov, compared to their current list prices, which range from roughly $1,000 to $1,350. However, the manufacturers of those GLP-1 drugs, Eli Lilly and Novo Nordisk, were already offering their products to the public at steep discounts through their own direct-to-consumer websites.
Some of the drug companies that are participating in Trump’s price-cutting initiative are using the opportunity to launch new or expand direct-to-consumer marketing programs for some of their drugs. Gilead said it will launch a program enabling patients to access its hepatitis C treatment, Epclusa, at a discounted price. Sanofi said it will offer nearly 70% discounts on its medicines that treat infections and cardiovascular and diabetic conditions. Merck said it will offer three diabetes medications, Januvia, Janumet, and Janumet XR, at a roughly 70% discount to patients paying cash through its direct-to-patient program, and do the same for its experimental daily cholesterol pill if and when it wins approval from the FDA. Amgen has also announced price reductions for its existing direct-to-patient program, which will market its migraine medication, Aimovig, at a 60% discount and its autoimmune treatment, Amjevita, at an 80% discount off their listed monthly prices.
Some drug companies are moving their production back to the U.S.
Trump has repeatedly threatened to levy tariffs on imported medications, but it appears that his main goal in threatening those tariffs was to encourage the drug companies to bring back the manufacture of their products to factories located in America. In that regard, the nine drug companies signing the pricing agreement last week have also agreed to invest more than $150 billion in new manufacturing capacity and research and development projects in the United States.
The 14 participating drug companies have also agreed to sell most of their prescription drugs to state-run Medicaid programs, which provide health insurance for low-income Americans, at Most Favored Nation prices.
Medicaid recipients already pay nothing or very little in out-of-pocket drug costs, which are capped by federal law at no more than $8 per prescription for people at the lowest income levels.
Bristol Myers Squibb said it would provide its popular blood thinner, Eliquis, to Medicaid programs for free, as compared to the lowered price that it negotiated with Medicare, starting in 2026, of $231 per month.
In addition, several of the drugmakers have agreed to donate the active pharmaceutical raw ingredients (APIs) used to make certain critical medications, such as blood thinners, asthma inhalers, and antibacterial medications, to a national emergency medical stockpile, which Trump established during his first term.
Trump planning to meet with health insurance executives
President Trump also announced at the White House drug price reduction event that he is calling a meeting with health insurance executives to talk them into lowering the monthly premiums they charge their subscribers. This is coming at a time when temporary federal premium subsidies passed by President Biden and the Democrats during the pandemic emergency are set to expire, exposing Obamacare insurance subscribers to huge monthly premium increases due to the fundamental flaws in the Obamacare system.
“I’m going to call in the insurance companies that are making so much money, and they have to make less — a lot less,” Trump said. He then repeated his call for the federal government to give the money that extending the subsidies would cost directly to the American people instead of the insurers, so that the people could then shop for the health coverage they want at the best price. Following that comment, stock prices of the largest health insurance companies, including UnitedHealth Group, CVS, and Cigna, fell sharply.
Meanwhile, in an effort to justify the excessively high prices they charge Americans for their prescription drugs, American pharmaceutical companies point out that they carry out 55% of global drug research and development (R&D) in this country, compared to 29% in Europe and 15% in the Asia-Pacific. The problem with this argument is that the major drug companies are multinational corporations that sell their drugs, at a profit, to customers around the world, and there is no connection at all between the amount that they spend on research in a given country and the price for which they sell their drugs there. Prescription drug prices are so much higher in the United States primarily because pharmaceutical companies in the United States are free to charge “whatever the market will bear,” while in most other countries around the world, drug prices are kept affordable to the people thanks to government regulation.
Drug research would still be profitable even with lower prices
Furthermore, the American market is so large that even if retail drug prices here were reduced to levels comparable to those in the rest of the world, any successful new drug would still generate more than enough profits to justify the cost of the research to develop it. Thus, there is no basis for claims by the drug companies that reducing the price of their drugs and their profits to more reasonable levels would wind up reducing the incentive for them to invest in the development of new lifesaving drugs.
Pharmaceutical companies that develop successful new drugs are routinely granted 20-year patents during which time they enjoy a monopoly on their sale in order to enable the companies to recoup their R&D costs and make a reasonable profit. Only after that 20-year period are generic drug manufacturers permitted to copy and mass-produce the medication, generally at an incremental cost of only pennies per pill. Typically, once generic versions of a drug become available, it can be sold at a profit at a much lower price point than the original brand-name version, often forcing the price of those original versions to come down as well to remain competitive in the marketplace.
The founders of this country believed that incentives for research and innovations are so important to the health of the nation that in Article I, Section 8, Clause B, of the U.S. Constitution, they authorized the granting of patents “for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Less than 20% of drug company income goes into research
The claim by American pharmaceutical companies that the exorbitant prices they charge for their drugs reflect the cost of the research they are doing is refuted by their own financial statements. Between 2009 and 2018, the top 18 members of the U.S. Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s powerful lobbying organization, reported that they had invested only 17% of their revenue into research and development, while spending 19.4% of their income on the distribution of profits to their shareholders in the form of dividends and stock buybacks.
That trend has continued. In 2021, the House Committee on Oversight and Reform found that over the previous five years, the top 14 drug companies in the country spent $577 billion on dividends and stock buybacks for their shareholders compared to $521 billion on R&D costs.
Furthermore, a 2022 study published in the journals of the American Medical Association (JAMA) found that for 63 drugs, one-fifth of all of the new drugs the FDA approved between 2009 and 2018, “there was no association between estimated research and development investments and treatment costs based on list [retail] prices at the launch of the product.”
The increase in the cost of these medications is particularly outrageous in cases when a widely used prescription drug already on the market is purchased by another company, which then arbitrarily increases the price just to boost the profits for the company’s shareholders.
The most notorious example of this practice was the sale of marketing rights for a drug called Daraprim (pyrimethamine), which was first introduced in 1953 to treat the common parasitic disease known as toxoplasmosis. In 2010, GlaxoSmithKline, which had originally developed the medication, sold its marketing rights to a series of companies. The rights to Darapin ultimately wound up, in 2015, in the hands of Turing Pharmaceuticals, which was owned by a corrupt speculator named Martin Shkreli. Until that point, Daraprim was being sold for a list price of $13.50 a pill, generating a healthy profit margin, compared to its production price of about $1 a pill. Turing then arbitrarily raised the list price of the medication by 500% to $750 a pill just to raise his company’s profits. Shkreli eventually served a seven-year federal prison sentence, but not for his price gouging on the cost of Daraprim, which was legal, but rather for committing an unrelated crime involving securities fraud.
Drug prices inflated by industry middleman
Further complicating the drug pricing problem is the controversial role of the middlemen known as pharmaceutical benefits managers (PBMs). Most health insurance companies outsource the management of the drug coverage they provide for their subscribers to the PBMs. The PBMs decide which prescription drugs are covered by being listed in an insurance policy’s drug formulary, usually based on the PBM’s ability to negotiate deep discounts with the drug companies. The PBMs also set the drug portion of a subscriber’s monthly health insurance premium, as well as the policy’s annual drug deductible (initial out-of-pocket charge) and the individual drug copays charged to the subscribers for filling each prescription and renewal.
The contracts that the PBMs negotiate with the drug companies and the insurance companies that they serve are secret. This has led to allegations from the Kaiser Family Foundation (KFF)and the American Medical Association (AMA) that the PBMs are not fully passing along the savings that they have realized from the discounts and price rebates that they have negotiated with the drug companies to the insurance companies or their subscribers. Instead, KFF and AMA accuse the PBMs of keeping much of these savings and rebates for themselves in order to boost their own profits. The PBMs are also accused of inflating the cost of specialty drugs to health insurance subscribers, making them much more difficult to obtain, even with their doctors’ prescriptions.
Another problem is that two out of the three largest PBMs (Optum Rx and Express Scripts) are owned by large insurance companies, and all three of the largest PBMs (including CVS Caremark) own major retail pharmacy chains. This vertical monopoly creates a conflict of interest in which health insurance subscribers are routinely steered to PBM-owned pharmacies and mail order drug operations by the promise of lower drug co-pays.
Why independent pharmacies are becoming an endangered species
This has put independent pharmacies across the country at a serious competitive disadvantage. In addition, local independent pharmacies accuse the PBMs of failing to pay them for the full cost of fulfilling more complicated prescriptions. Taken together, these policies have forced many independent pharmacies to go out of business in recent years. As a result of these complaints, the Federal Trade Commission has launched investigations and administrative complaints against the major PBMs.
Unlike other economically developed nations, the United States does not have a central government mechanism to control the monopolistic pricing power of big drug companies. The Centers for Medicare and Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS) do have a limited ability to negotiate the prices of a limited number of the most expensive prescription drugs, under the provisions of the Inflation Reduction Act (IRA) of 2022.
Under the terms of the IRA legislation, Medicare was only permitted to negotiate down the prices for 10 of the highest-cost drugs starting in 2026 (Eliquis, Enbrel, Entresto, Farxiga, Fiasp/NovoLog, Imbruvica, Januvia, Jardiance, Stelara, Xarelto) and 15 more in 2027 (Ozempic/ Rybelsus/Wegovy; Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo/Austedo XR, Breo Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet/Janumet XR, Otezla).
As a result, U.S. drug prices as a whole remain 78% higher on average than in the next highest priced Western nation. The pharmaceutical companies still retain the ability to charge whatever the market will bear for their newly approved drugs. Working in cooperation with the big insurance companies and the PBMs, which reduce subscriber access to the most expensive drugs and medical providers, and by engaging in cost-shifting to consumers, the drug companies also maintain their huge profit margins by charging uninsured individuals much higher drug prices to compensate for any discounts that they may have been forced to grant to insured individuals.
Why has it taken so long to bring down the price of drugs?
The exorbitant price of prescription drugs in this country is not a new problem. American voters have been complaining bitterly about it for more than two decades. So why have federal elected officials from both parties and government regulatory agencies done nothing significant to address the issue?
The answer is the political power that the pharmaceutical industry lobby wields in Washington, D.C. It has succeeded in corrupting and co-opting the entire federal establishment of elected officials, bureaucrats, and medical experts. Between 1999 and 2019, the pharmaceutical and health product lobby spent a total of $4.7 billion at the federal government level, or an average of $233 million a year, to protect their monopoly pricing power and control over the prescription drugs available to treat American patients. In 2017, PhRMA lobby alone spent more lobbying Congress than the oil and gas, finance, telecommunications, and defense contractor lobbies combined.
In 2022, the pharmaceutical lobby poured $371 million into a failed effort to prevent the Inflation Reduction Act from directing Medicare to negotiate a reduction in the prices for a limited number of the most expensive and widely prescribed drugs for Medicare patients.
For many years, pharmaceutical lobby campaign contributions have been generously showered on elected officials from both parties, based upon their power to pass or block legislation rather than any partisan political considerations. U.S. senators who received big pharma contributions between 1990 and 2024 included leading Democrats, such as Senators Chuck Schumer (D-NY), Ron Wyden (D-OR), and Michael Bennet (D-CO), each of whom received $1.5 million; Ben Cardin (D-MD), who received $1.2 million; and Dick Durbin (D-IL), who received $1 million. Republican senators who received generous drug industry campaign contributions were led by Mitt Romney (R-UT), who received $2.7 million, and Mitch McConnell (R-KY), who received $2 million. Even socialist Senator Bernie Sanders (I-VT), who has been an outspoken advocate for Medicare for All and a harsh critic of exorbitant drug prices, quietly accepted $1.9 million in contributions from the pharmaceutical industry lobbyists for his election campaigns.
Generous drug lobby contributions also present a potential threat
While the generous contributions from the drug industry have helped to perpetuate the power of these incumbent office holders, they also carry an implicit threat. If these elected officials were to refuse to submit to the pharma industry’s demands to maintain its monopolistic pricing power, they understood that those donations would likely be redirected to the campaigns of their opponents during the next election cycle.
Before the Covid pandemic, the American pharmaceutical industry, through its lobbying, influence-peddling, and public relations efforts, had been largely successful in its efforts to keep the issue of extremely high drug prices out of the national political spotlight. In fact, when the George W. Bush administration passed the law creating Medicare Part D drug coverage in 2003, drug company lobbyists were able to insert a special provision preventing the CMS from even trying to negotiate lower drug prices for Medicare recipients directly with the drug companies.
But the obvious failure of the federal government-supported public health establishment in the management of the Covid pandemic has seriously eroded the confidence of the American public in that establishment and the opinions of its “experts.” At the same time, it has raised anew the question of whether the extremely high prices members of the public are being charged for prescription drugs compared to the rest of the world are justified.
As a result of those growing doubts, Congress finally intervened. In addition to permitting Medicare to negotiate the price it is charged for the most expensive prescription drugs, the 2022 IRA legislation included a $2000 yearly cap on out-of-pocket prescription drug costs to Medicare recipients and limited the cost of life-saving insulin for those suffering from Type 1 diabetes to $35 a month. That heightened public interest in further lowering prescription drug costs, no doubt, is one of the main reasons why so many drug company executives are now willing to agree to President Trump’s demands to make prescription drugs more affordable for all Americans, regardless of their health insurance status.
Regulators have been “captured” by the pharmaceutical industry
“Regulatory capture” is another development that has compromised the ability of even the most well-meaning government officials to stand up for the best interests of the voters rather than obeying the wishes of the pharmaceutical industry. That is because of their well-founded expectation that the drug industry is likely to provide their next source of income after they have left their political positions and careers in public service behind.
In fact, more than half (58%) of recent senior Food and Drug Administration (FDA) officials have moved from their government positions through a revolving door to more lucrative jobs in the pharma industry. Instead of acting as neutral regulators protecting the best interests of the public, these “public servants” have profited from a corrupt form of delayed compensation for their favorable treatment of the drug industry by taking high-paying executive positions at companies such as Pfizer, Merck, Eli Lilly, and Novartis.
In 2024, nine of the past ten FDA commissioners had either worked for the pharmaceutical industry or served as highly paid members of a drug company’s board of directors. Furthermore, over the previous 20 years, 54% of Centers for Disease Control and Prevention (CDC) professional staff, 53% of CMS staff, and 32% of HHS staff have taken lucrative jobs in the private health care industry after leaving government service.
This corrupting revolving-door arrangement between government and the private drug sector also spins in the other direction. Many of those who are appointed to or hired by government health agencies to oversee the operations of the drug industry come from the ranks of employees and executive officers of the companies that they are supposed to regulate.
The pharmaceutical lobby also discreetly promotes its agenda through its support of a vast network of seemingly independent institutions and non-profit organizations, including so-called “patient advocacy groups,” think tanks, and supposedly “independent” industry pundits. The pharmaceutical industry also partially funds some of the federal agencies that are supposed to regulate it. It rewards doctors who prescribe their products for their patients by providing them with all kinds of professional perks, including research grants as well as direct payments. The industry also subsidizes the pay of some advisors to government agencies such as the FDA.
For example, in 2018, the magazine Science reported that 40% of 107 FDA physician advisors surveyed admitted that they had been paid over $10,000 by a drug company whose products they had earlier voted to approve for nationwide marketing.
Trump and RFK JR. cleaning up the FDA and the NIH
HHS Secretary Robert F. Kennedy Jr. (RFK Jr.) has long complained that these conflicts of interest should disqualify many of the government agency experts and outside consultants who recommend government approvals for vaccines and other prescription medications produced by companies from which they derive direct or indirect financial support. On that basis, RFK Jr. recently removed the entire FDA vaccine advisory panel and replaced it with scientists who share his skepticism over the safety of some of the vaccines that are now in widespread use.
Similarly, with RFK Jr.’s approval, President Trump appointed Dr. Jay Bhattacharya as the new director of the National Institute of Health (NIH). Dr. Bhattacharya, who was trained at Stanford University, was professionally blacklisted during the Covid pandemic for joining with two other internationally recognized public health experts, Sunetra Gupta from Oxford and Matin Kulldorff from Harvard, in signing the Great Barrington Declaration in October, 2020, which criticized the consensus of support within the federal government’s research establishment for Covid lockdowns and the government mandate for universal Covid vaccinations. Bhattacharya and his two colleagues recommended instead limiting the use of the new Covid vaccines to the elderly and others considered to be medically vulnerable to a Covid infection, while urging the government to allow schools and businesses to remain open. If their recommendations had been followed, they would have prevented much of the excessive economic and educational damage that was inflicted by the lockdowns.
RFK Jr. also supported President Trump’s selection of Dr. Marty Makary, a recognized health policy expert trained at Johns Hopkins Medical School, as the new commissioner of the Food and Drug Administration (FDA). In 2021, Makary was an outspoken critic of the federal government’s universal Covid vaccine mandate. He argued that the public health establishment was ignoring the value of natural Covid immunity in limiting the spread of the virus. Makary also disapproved of the two-dose vaccination requirement for children aged 12-17 for the new mRNA Covid vaccines due to the proven risk of cardiac complications for that segment of the population.
Since taking office, RFK Jr., Dr. Bhattacharya, and Dr. Makary have been harshly criticized for dismissing many of the experts who had been on the staff of their agencies and replacing them with less well-known people whose integrity and independence have not been compromised by financial support from the drug companies whose products they are supposed to regulate.
RFK Jr., Dr. Bhattacharya, and Dr. Makary have also redirected a portion of federal medical research funding to explore new approaches to chronic diseases and alternative medications to gain a better understanding of conditions that have so far defied the efforts of traditional researchers.
But while some progress has been made in lowering excessive prescription drug costs, much more work remains to be done. According to a recent Kaiser Family Foundation poll, 72% of Americans believe that drug prices are too high and want drug companies to be more transparent in determining how those prices are set.
While there is public support for the kind of one-time deals that Trump has just announced with the private drug companies to bring down the cost of some of the most expensive prescription drugs, industry experts argue that permanent drug price relief will require the passage of legislation by Congress similar to the bipartisan bill introduced by Republican Senator Josh Hawley of Missouri and Democrat Senator Peter Welch of Vermont, which would prohibit drug companies from charging more for their drugs in the U.S. than they do, on average, in other countries. Otherwise, some future president could easily undo all of the progress that Trump has accomplished in lowering prescription drug prices through executive orders and one-time agreements with drug company officials with the stroke of a pen.
Considering the Swiss system for all payer universal drug pricing
Writing on the topic of “The Drug Price Delusion,” published in the Commonplace magazine on the Substack website, Michael Lind recommends the drug pricing system used in Switzerland where the Federal Office of Public Health (FOPH) negotiates a uniform fair price for all medical goods and services, including prescription drugs, that applies to all payers, regardless of their health insurance status.
While Switzerland’s free-market healthcare industry does have individual mandates for private health insurance, Lind argues that setting the same drug prices for all Americans, regardless of what kind of insurance individuals may or may not have, would still be a long way from socialized medicine. “[It would be] perfectly compatible with America’s system of employer-provided health insurance and ACA [Obamacare] coverage,” he says, “but incompatible with [the current] cost-shifting and price-gouging [tactics being employed] by drug companies.
“Reasonable [Swiss-style] all-payer drug price negotiation. . . would have the potential to reduce drug prices in the U.S. without endangering innovation, while shrinking Big Pharma’s expenditures on marketing, buybacks, and shareholder distributions.”
Lind also suggests that, “Once [drug] price-gouging in the U.S. is brought to an end, lesser problems like abuses by pharmacy benefit managers and vertical monopolization in the pharma sector, along with corporate schemes to game the patent system. . . could be dealt with later.”
In the end, Lind argues that only an industry-wide system of federal drug price regulation “can compel the [pharmaceutical industry] to behave more like regulated public utilities which enjoy moderate profits while providing a public service. Bargaining between government and the pharma industry is the cure. . . for the toxic combination of raw market power with raw political power.”
While the retail prescription drug price reductions announced last week by President Trump and 14 drug companies cooperating with him are surely welcome, they still have only scratched the surface of the excessive prescription drug pricing problem.
A convenient opportunity to fix drug prices permanently
Fortunately, the Trump administration and Congressional Republicans are already engaged in an internal debate over the necessary reforms to the current healthcare insurance system due to the political crisis generated by Democrats over the January 1 expiration of Obamacare premium subsidies.
It would be natural, therefore, for Republicans to add a version of the bipartisan drug price control legislation already proposed by senators Welch and Hawley to the other free-market-based reforms to the overpriced American healthcare system that they are now considering. Mandating more reasonable prescription drug prices would also advance the Republican goal of giving American citizens more direct control over their health care and create more effective incentives and mechanisms to reduce its soaring costs under Obamacare and the current corrupt American drug pricing system.
