As Americans grapple with the expanding cost of brand-name prescription drugs, Democrats and free-market-leaning Republicans share similar complaints about efforts to bring down those costs.
President Donald Trump has been pushing for the codification of most-favored-nation drug pricing (MFN) and making deals with drug makers to sell their drugs directly to consumers through TrumpRx.
On February 24, House Energy and Commerce Committee Democrats issued a press release stating, “TrumpRx is all hype and no true action.” A report published by Democrats finds, “Trump RX serves as an advertisement for expensive brand-name drugs without mentioning more affordable generic drug options.”
The report found seven drugs listed on Trump RX that have “pre-existing coupons on GoodRx at the same or nearly the same price.” Three other drugs, says the report, “are either the same as or much more costly than pre-existing deals directly through their manufacturers.”
Trump has secured lower prices by negotiating with drug makers and pushing MFN drug pricing. The policy lowers U.S. drug prices by pegging them to the lowest prices paid in other developed countries, given their socialized health care systems. TrumpRx also avoids middleman fees because drug makers sell directly to patients.
In a March 5 letter, House and Senate Democrats demanded Trump release details of his drug pricing deals. “If you truly believe that the deals you struck are in the best interest of the American people and should be codified by Congress, you will promptly provide them to Congress without limitation or redaction,” the letter stated.
‘Price Controls’
In a similar vein, a coalition of 50 conservative and free-market organizations is urging members of Congress to reject any attempt to codify MFN drug pricing into law to lower drug prices.
A letter, signed by Ryan Ellis of the Center for a Free Economy, Grover Norquist of Americans for Tax Reform, Stephen Moore of Unleash Prosperity, Phil Kerpen of American Commitment, and others, states such a policy will do more harm than good.
“If the U.S. implements the same price controls utilized by foreign
countries, companies cannot expect to recuperate the R&D costs for the medicines they create,” the letter states. “This will depress innovation and reduce cures available to patients while causing an unacceptable degree of drug shortages.
Such policies amount to “price controls,” which would shield the public from “real price signals,” wrote former House Speaker and Republican Newt Gingrich in a March 3 commentary.
“As Republicans build an affordability agenda, they should resist the temptation to imitate left-wing economics dressed up as consumer protection,” wrote Gingrich. “The conservative answer has never been to freeze prices. It has been to unleash production, expand competition, and let markets work.”
‘Most Favored Patient Plan‘
Unlike the Democrats, the signers and Gingrich have stopped short of attacking Trump.
Instead, Moore, Kerpen, and economists Tomas Philpson and Steve Forbes have unveiled the “Most Favored Patient” Reform Initiative, a “blueprint” to achieve Trump’s “bold goals” of “reducing healthcare costs, boosting U.S. innovation and manufacturing, eliminating waste, fraud, and abuse, and ensuring big insurance conglomerates cannot take advantage of American patients.”
The blueprint includes nine proposals, such as giving patients control over the health care dollars from a secondary source and cutting waste, fraud, and abuse. Democrats could align with another proposal, ending MFN pricing.
“Everyone agrees that foreign countries are ripping us off on Rx drug prices,” Ellis told Health Care News.
“Trump talks about it all the time, and I’ve never heard a Dem disagree,” said Ellis. “These countries price control the U.S. drugs down to 20, 30, or 40 percent of FMV (fair market value). Then, that causes our guys to jack up their list price to make up for it
Trump Deals
The March 5 letter sent to Trump by House and Senate Democrats doesn’t attack MFN directly but focuses more on the aspect that Trump may use MFN in “secret deals.”
The lawmakers wrote, “As Ranking Members of the committees with jurisdiction over health care, we write to request copies of the most-favored-nation agreements that you struck with pharmaceutical companies and have kept hidden from Congress and the American people.”
Trump may be getting a bad rap, says Ellis. “If the foreigners were paying something close to FMV price, U.S. prices could come down without price controls, and without endangering a dollar of research or profits,” said Ellis. “Only the president, using soft power, can make this happen. Trump’s the first one willing to.”
Reform cannot be a one-president effort, says Devon Herrick, a health care economist who posts on The Goodman Institute Health Blog.
“Although I welcome the Trump administration taking an interest in lowering the cost of new drugs, I worry that any progress will fade away with the end of his presidency,” said Herrick. “In addition, MFN runs the risk of importing price controls and cedes control of drug pricing to other nations.”
Trump would do well to remove the obstacles to producing cutting-edge drugs at affordable prices, says Herrick.
“Remove regulations that inhibit bringing new drugs to market, speeding generic drugs to market, and stop facilitating the ability of drug makers to price discriminate (i.e., set higher prices at home),” said Herrick. “Another way to lower drug costs would be to aggressively switch more drugs over the counter, including some older, safe drugs, even if the manufacturer does not want to switch.
AnneMarie Schieber ([email protected]) is the managing editor of Health Care News.
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland’s monthly newspaper for health care reform.
