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riversedge

(76,620 posts)
5. "The order amounts to a strongly worded request that the pharmaceutical industry slash its own profit margins. Indeed, a
Wed May 21, 2025, 10:18 AM
May 21

Trumps EO is laughable but we will all suffer higher drug prices!! yes. we. will.


https://www.theatlantic.com/politics/archive/2025/05/trump-drug-prices/682863/?utm_source=newsletter&utm_medium=email&utm_campaign=the-atlantic-am&utm_term=The+Atlantic+AM

..........The executive order directs Kennedy, the secretary of Health and Human Services, to identify a “price target” for a given drug, and then asks the pharmaceutical industry to voluntarily charge that price. There is no enforcement mechanism, only a vague promise to “propose a rulemaking plan to impose most-favored-nation pricing” if companies don’t comply. The order amounts to a strongly worded request that the pharmaceutical industry slash its own profit margins. Indeed, after the text of the order became public, drug-company stocks, which had dropped amid rumors of a real most-favored-nation policy, rebounded. “We see President Trump’s tone as relatively positive for the industry,” a pharmaceutical analyst for UBS Investment Bank wrote. “This is one of the least thought-through executive orders I’ve ever seen,” Stacie Dusetzina, a professor of health policy at Vanderbilt University, told me.

But even before the text circulated, Trump’s lack of seriousness should have been apparent. During the press conference announcing the order—the one that made RFK’s Bernie-loving children tear up—Trump conspicuously avoided directing any ire toward Big Pharma. “I’m not knocking the drug companies,” he said at one point. The real enemies, according to Trump, are European leaders who engage in hardball negotiations to lower drug prices for their own people, leaving the heroic American pharma industry with no choice but to charge American consumers exorbitant prices to make up for the shortfall. “It was really the countries that forced Big Pharma to do things that, frankly, I’m not sure they really felt comfortable doing,” Trump remarked. The result, he said, is a system in which American patients are “effectively subsidizing socialist health-care systems” across the world while our so-called allies free ride on our generosity.

The president went on to announce that the administration would launch investigations into “foreign nations that extort drug companies.” If those inquiries conclude that Europeans are paying below what Trump thinks are fair prices, he said, he will threaten to raise tariffs until they agree to pay more for drugs. Once foreign nations give in, American pharmaceutical companies will start making more money overseas, and thus will be happy to charge Americans lower prices. The result will be what Trump called “equalization”: higher prices for Europeans, lower prices for Americans, and steady profits for Big Pharma.

To describe this theory as economically illiterate would be too kind. Even if European countries did agree to willingly accept higher drug prices, to expect pharmaceutical companies to respond by charging American consumers less is delusional. Those companies would still be in the business of maximizing their profits. The real reason Americans pay so much for prescription drugs is that, unlike in basically every other rich country, the U.S. government mostly does not negotiate prices with drug manufacturers. The few exceptions are revealing. In 2022, the Biden administration passed legislation allowing the federal government to negotiate the prices Medicare pays for 10 top-grossing drugs. Last summer, new prices for those drugs, effective 2027, were announced, each more than 60 percent lower on average—an outcome that occurred without a single European country paying more.......................

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