In a fulfillment of one of his lesser talked about campaign promises from 2016, President Donald Trump signed an executive order this weekend designed to lower prescription drug prices in the United States.
“Just signed a new Executive Order to LOWER DRUG PRICES! My Most Favored Nation order will ensure that our Country gets the same low price Big Pharma gives to other countries,” Trump tweeted on Sunday. “The days of global freeriding at America’s expense are over and prices are coming down FAST! Also just ended all rebates to middlemen, further reducing prices.”
The official White House website announcement explained why there is such a need for this order:
Americans pay more per capita for prescription drugs than residents of any other developed country in the world. It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places. Other countries’ governments regulate drug prices by negotiating with drug manufacturers to secure bargain prices, leaving Americans to make up the difference — effectively subsidizing innovation and lower-cost drugs for the rest of the world.
The Council of Economic Advisers has found that Americans finance much of the biopharmaceutical innovation that the world depends on, allowing foreign governments, many of which are the sole healthcare payers in their respective countries, to enjoy bargain prices for such innovations. Americans should not bear extra burdens to compensate for the shortfalls that result from the nationalized public healthcare systems of wealthy countries abroad.
Trump first signed an order with this title back in the middle of the summer, but he withheld it in the hopes that he could lure American pharmaceutical companies to the table for negotiations. Unfortunately, it seems that the companies were unwilling to lower prices on their own, giving Trump no other choice but to use his “pen and phone” to get it done by executive order.
The drug companies, as you might have guessed, are not pleased.
“The focus of any reforms must be on lowering costs for patients, ensuring patients’ access to medicines, addressing the misaligned incentives in the pharmaceutical supply chain and protecting the critical work being done to end COVID-19,” said Stephen Ubl, the president of lobbying group PhRMA. “Unfortunately, instead of pursuing these reforms the White House has doubled down on a reckless attack on the very companies working around the clock to beat COVID-19.”
Whether or not this order will lead to the actions spelled out on the marquee is somewhat uncertain. The hope, undoubtedly, is that pharma companies will finally recognize that they’re under the gun and come make a deal with the White House. But our guess is that they’ll wait until after the election to make that determination.