Trump’s Prescription Price Controls Would Lead to Fewer New Drugs
In an executive order last week, President Donald Trump effectively instituted price controls on prescription drugs—not just those purchased by the government through Medicare and Medicaid, but apparently all prescription drugs sold in the United States. The order directed the Department of Health and Human Services (HHS) to “communicate most-favored-nation price targets to pharmaceutical manufacturers,” meaning the companies must charge Americans the lowest price that any other country was getting for the same drug.
This week, HHS and the Centers for Medicare and Medicaid Services (CMS) announced they would being implementing the president’s order. While it remains to be seen what actual legal authority—if any—the president has to impose such a directive, it’s clear that if fully enacted, it would be detrimental to the American health care market.
“The Department has identified specific targets pharmaceutical manufacturers are expected to meet to satisfy the requirements of the Executive Order,” according to an HHS press release on Tuesday.
The order intends to correct an imbalance between prescription prices in the U.S. and in other nations, specifically members of the Organization for Economic Co-operation and Development (OECD). “The prices Americans pay for brand-name drugs are more than three times the price other OECD nations pay,” the White House claimed last week. “Americans are subsidizing drug-manufacturer profits and foreign health systems, despite drug manufacturers benefiting from generous research subsidies and enormous healthcare spending by the U.S. Government.”
The complaint is valid: Americans do shoulder the brunt of the costs of new drugs, which are largely developed in the U.S. But there’s a reason for that imbalance, which Trump’s likely unconstitutional order not only wouldn’t fix but would likely exacerbate.
In a Fox News op-ed, HHS Secreta
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