President Donald Trump announced measures to “drastically” lower the prices of prescription drugs to Americans, a double-edged sword that could hit the pharmaceutical industry and the population causing everything from the disappearance of laboratories to shortages on the shelves.
Instead of boosting investments and incentives for the pharmaceutical industry, creating competition, reducing taxes and all this influencing the decrease of drug costs; Trump bets on controlling the prices of such an important sector and has also been a pioneer in the global fight against Covid-19.
“Until now, Americans have often been charged more than twice as much for the same drug sold in other medically advanced countries…” Trump said after announcing measures that will control prices and reduce costs.
Trump’s first action ends reimbursements to Medicare intermediaries and provides for that money to be given directly to Americans. The second measure, known as the “Most Favored Nation” rule, seeks to have Medicare match the lowest price charged for the same drugs in other developed countries.
Government intervention in drug prices could hit the pharmaceutical industry with consequences ranging from reduced investment and research to the disappearance of drugs from U.S. shelves.
Pfizer and Moderna are the first American companies to see their vaccines through phase III clinical trials; in fact, according to advisors on the Coronavirus, from the White House, the Pfizer vaccine will begin to be supplied next December 11; a fact that places Americans in a privileged position in front of the world. A situation that could change in the future.
An editorial in the Wall Street Journal ironically analyzed the measures taken by the Executive and pointed out that Trump’s announcement would be a gift for Joe Biden to become President of the United States, since it would open the door to more controls over the industry.
“Congratulations to the pharmaceutical companies for their tremendous work in developing Covid-19
vaccines and therapies in record time. Your reward from the Trump Administration is a new regulation that imposes price controls on drugs, which will make it easier for Joe Biden to go for more next year,” the WSJ said.
The newspaper assures that Trump’s intervention in drug pricing will result in fewer advanced treatments. “It doesn’t take a surgical brain to understand that drug makers will spend less on new drugs if the government reduces the return on its investment,” the WSJ said.
And while it is true that in the United States, Medicare users pay more for drugs, this is also the country that has pioneered life-saving treatments. “According to the Galen Institute, 96% of new cancer therapies are available in the United States; compared to 73% in Germany, 66% in France and 54% in Japan,” recalls the WSJ.
In response to Trump’s announcements, according to The Epoch Times (TET), the pharmaceutical industry criticized the measures saying that the decision to “copy the prices of other countries” would give foreign governments the “advantage” in deciding the value of medicines in the United States. They called it an illegal attack on medical advances.
“The administration is prepared to bring down the entire system of a reckless attack on companies working day and night to end this pandemic,” the U.S. Pharmaceutical Research and Manufacturers said in a statement, adding that they are “considering all options to stop this illegal attack on medical advancement and to maintain our fight against COVID-19.
Meanwhile, the U.S. Chamber of Commerce said the “most-favored-nation” rule would lead to harmful price controls that could jeopardize access to new life-saving drugs at a critical time.
Green light for Biden’s driver plan
Trump’s new measures to reduce drug costs could open the door for an eventual Joe Biden administration to intervene further in the healthcare industry. The Democrat’s measures will include fines on pharmaceutical companies for raising prices.
It should be remembered that Biden’s plans include extending the health care reform known as “Obamacare” and creating a new health insurance option run solely by the public sector in competition with the private sector.
“The Biden Plan will put a stop to drug prices and the pharmaceutical sector,” the Democrat’s plan says.
It highlights that another objective will be “to restrict prices to the launch of drugs that have no competition and that manufacturers are quoting in an abusive way”, so the State could define the prices of new medical treatments.
“Limiting price increases for all branded, biotech and inflation-intensive generic drugs (…) will prohibit all branded, biotech and inflation-intensive generic drugs from increasing their prices beyond the general inflation rate. The Biden plan will also impose a tax penalty on drug manufacturers that increase the costs of their brand, biotech, or price-abusive generics above the headline inflation rate”.Joe Biden’s Economics Program
Thomas Philippon, professor of finance at New York University, has already warned how the United States is abandoning the benefits of free competition with more regulations every day.
“Truly free and competitive markets keep profits in check and motivate companies to invest and innovate,” Philippon said in an article published for The Atlantic.
Trump’s recent measures, and those Biden intends to implement if he becomes president, would do the opposite of what Phillippon has set out in his articles: they would deal blows to the world’s largest economy by reducing freedom of enterprise, driving businesses out of business and increasing unemployment.