P.S. The planned executive order seems to be more illegal than what was struck down in the first term. There then was at least an attempt then to go by the Administrative Procedures Act in promulgating a rule. This time it looks to be pure rule by decree.
I can’t imagine Trump facing down the pharmaceutical industry.
But, if he is serious I think he can find a way this time around.
He cannot legally impose an export tariff (unconstitutional) and he cannot price fix but he CAN impose fees on exports (inspections and the like). He could pile enough of those on to hurt a lot.
It would not lower prices here but raise prices elsewhere. With a wink and a nod the drug industry would have to concede to his price demands or be unable to sell anywhere.
As for Trump being on the side of big business moguls — some of them. Trump may care just a little if you are Black or white, gay or straight, rich or poor. But he mostly just cares whether you meet his needs.
Australia federal government operates a program known as the Pharmaceutical Benefits Scheme or PBS. Even passed a referendum in 1946 for a constitutional amendment to allow it after the scheme as initially successfully challenged by the British Medical Association.
The scheme is world’s best practice ranking medicines on their efficacy and price relativity. It caps the price Australians pay, and provides a co-payment, for something over 600 medicines offered as nearly 3,000 brands included in the PBS.
Consequently, every time since the when the US and AUS trade negotiators sit down to thrash out a new trade deal, the first item tabled by the US demands is that AUS dismantle the PBS.
And now 45/47 wants to adapt something similar … “Never be afraid of new ideas. If you see a good one, steal it.”
However, Trump may not care. If Donald gets away with his executive order tomorrow, I wouldn’t put it past him to lower some high profile price a few days before an election, with the idea that shortages take a bit longer than that to become pervasive.
In the pharmaceuticals case, we may not totally know the elasticity of demand for drugs. However, it isn’t zero:
Truly life or death drugs are almost always picked up at the pharmacy (or they are given in a clinic/hospital). So the shortages of cancer and sepsis drugs perhaps won’t get worse. But a cream for itching – expect a price decrease to result in a shortage there, since buying it is optional. And I expect that shortages of weight loss drugs will become severe again. This is not morally neutral! It will, if Trump gets aways with it, cause unhealthy weight yo-yoing. It is better to have the people on the drug to continue. Saxenda is due to go off-patent next year, and that will lower prices much more than Trump’s executive order.
Another reason that even progressives, who dislike big health care companies, should oppose the Trump executive order:
Most brand name drugs are purchased by patients with prescription plans. I don’t know about your plan, but on mine, most under-patent drugs are on a tier where I pay a fixed dollar amount regardless of the wholesale drug cost. So 100 percent of the Trump discount would then go in the pocket of my insurer.
There are a few drugs, on a higher tier, where I would pay 40 percent of the cost. So I would save money if on one of those. But 60 percent of the savings would go to my insurer, not me.
So…
Biden establishes a program to negotiate lower prescription prices for Medicare/Medicaid beneficiaries.
Trump orders it discontinued.
Instead he’ll just command that drug prices in the US be no higher than in other countries.
As Whack-a-Mole points out, that can be gamed by raising the prices elsewhere. But I suppose that part of the idea is that this time around the Pharmas, like already the media companies, law firms, etc. will run to beg for some sort of deal that he can then announce as The Best Ever Prescriptions Deal and “who said prices would drop 80% to the patient, I never did, fake news!”
Harris said, “I will work to pass the first-ever federal ban on price gouging.” So she would have gone through congress, which probably would voted down her bad idea. This illustrates the difference between a candidate who advocates some policies I may disagree with, and a dictator.
Actually, not so easy for the pharma companies to do that. The whole reason that drug prices are lower – often very much lower – in other counntries is that responsible governments monitor and regulate the prices charged for patent drugs. In Canada, for instance, this falls under the authority of the Patented Medicine Prices Review Board (PMPRB), which requires manufacturers to justify their prices. A sudden unexplained price increase on an existing drug just wouldn’t fly here.
Trump’s argument that this isn’t price fixing is brilliant:
He countered that the directive amounted to “price controls” by telling reporters that the current system involves price controls because drug companies set the price.
CNN sanewashing:
It’s unclear how quickly Americans will see lower prices and what authority the US government has to direct drug pricing in other countries.
It actually is pretty clear that the US government has no authority whatsoever to do so!
The reason we get charged so much more for drugs is because we don’t have universal health care, hence pharma companies can negotiate prices with a whole bunch of competing entities rather than with one government agency. Other countries aren’t “price fixing”, they’re just putting themselves in a much better negotiating position than we’ve chosen to.
The main thing to realize about this order, though, is that it actually does absolutely nothing. It suggests/orders that drug companies should lower prices on his say-so, and talks about various measures (most of them obviously illegal and/or stupid) he might take at some indefinite time in the future if they haven’t done so to his satisfaction. Pure PR.
Here we use previously non-publicly available data to describe levels and trends in the manufacturing locations of the most commonly used prescription pharmaceuticals, off-patent generic drugs, intended to be consumed by Americans. We find that the base ingredients required for the manufacturing of these prescription drugs are overwhelmingly and increasingly manufactured in non-domestic locations, specifically India and China. The manufacturing of finished prescription drugs for the American market is more equally split between domestic and foreign locations, but is increasingly foreign as well.
