For a moment, Donald Trump finally seemed to be on the verge of real economic populism. The president announced last week that his administration would develop a "favorite country" policy that would make the U.S. drug costs less than the prices paid by other developed countries. "The prices of some prescription drugs and medicines will be reduced almost immediately by 50% to 80% to 90%." Robert F. Kennedy Jr.
These tears may be too early. When the text of Trump's execution of the order is available, the actual policy is very different from the one advocated by the president. In fact, this is not a policy at all. If the president seriously resolves the U.S. drug cost crisis, he can choose from a long list of options. Instead, he seemed content to blame foreign countries and hoped to achieve the best results.
Executive order directs Secretary of Health and Human Services Kennedy to determine the "price target" for a given drug and then asks the pharmaceutical industry voluntary This price is charged. There is no law enforcement mechanism, there is only one vague commitment to “propose a rule-making plan to impose the most popular national pricing” if the company does not comply. The order equals a strong wording requirement that the pharmaceutical industry cut its own profit margins. Indeed, after the text of the order became public, the shares of drug companies were bounced amid rumors of the truly most popular national policy. “We think President Trump’s tone is relatively positive for the industry,” wrote UBS Investment Bank pharmaceutical analysts. "This is one of the most unthinkable executive orders I've ever seen. ”
But even before the text is circulated, Trump’s lack of severity should be obvious. In a press conference announcing the order, the order (which made RFK's Bernie's favorite kids tear up the order - obviously avoided any anger towards the big pharma companies. "I'm not knocking on drugs companies," he said. Trump believes that the real enemy is European leaders who have had tough negotiations to lower the price of their own people, leaving the heroic American pharmaceutical industry with no choice but to charge American consumers high prices to make up for the shortage. "In fact, what forces big pharma companies to do, frankly, I'm not sure they're really comfortable," Trump said. The result is a system where American patients are "effectively subsidizing the socialist healthcare system around the world" while our so-called allies are generous.
The president continues to announce that the government will investigate “foreign countries that extort drug companies.” He said if the inquiries concluded that Europeans paid less than what Trump believed was a fair price, he would threaten to raise tariffs until they agreed to pay more for drugs. Once foreign countries succumb, American pharmaceutical companies will start making more money overseas, so they are happy to charge Americans at lower prices. The result will be what Trump calls “equality”: Europeans are higher prices, Americans are lower prices, and large pharmaceutical companies are stable profits.
Describing this theory as economic illiteracy would be too friendly. Even if European countries do agree to accept higher drug prices, it is delusion to expect pharmaceutical companies to respond by charging US consumers less. These companies will still be engaged in maximizing their profits. The real reason Americans pay too much for prescription drugs is that unlike essentially other wealthy countries, the U.S. government is not primarily engaged in price negotiations with drug manufacturers. A few exceptions are revealed. In 2022, the Biden administration passed legislation allowing the federal government to negotiate Medicare to pay the price of 10 highest-selling drugs. Last summer, new prices for these drugs were announced, effective in 2027, with an average of less than 60% per person per person, which is a result of no European country paying more.
Even if Trump eventually follows the threat of executive orders to develop the most popular national policy, it almost guarantees that the effort fails. The executive may not have the authority to implement such policies generally without Congressional legislation. (Trump attempted to use the administration during his first term to operate only Trial The order was blocked by the court for the most favorable state pricing in Medicare. ) Even if the court decides that the institution exists, the fine print of the policy must be inflated so that pharmaceutical companies can easily use the system (e.g., orders that have to lower the order in foreigners’ orders) to reduce the price of the order to avoid the price of the order, which is in an effort to ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' ”
More feasible ways to reduce the cost of drugs are provided. Most obviously, Trump can work with Congress to expand the federal government's ability to negotiate drug prices, a policy that will also reduce the deficit or help offset the extension of the 2017 tax break. If he hangs with the idea of most enjoyable dollar pricing, he can simply put his support behind a bill introduced by Bernie Sanders and Ro Khanna in 2021 that would allow manufacturers to price more than the median U.S. dollars in Canada, Japan, the UK, Germany and France. (If pharmaceutical companies try to play the system by raising prices elsewhere, the bill also lists a set of separate criteria that HHS secretary can use to determine if a drug is “overpriced.” The evidence for the claim is mixed at best, but if Trump is concerned about it, the administration may increase public funding for research or provide cash prizes for certain drug discoveries.
On the contrary, of course, Trump is the opposite of all of this. He issued an execution order that would slow down Biden's drug price negotiations and stop investigations on how to further reduce drug prices. Meanwhile, his administration has cut billions of dollars in research funding for the National Institutes of Health, the agency responsible for the basic scientific research behind nearly every new drug in the United States, and has proposed a budget to cut its funding. "If your goal is to completely destroy drug innovation in the United States, that's exactly what you're going to do," Dusetzina told me.
A unified Trump worldview treats almost every issue in the United States as a product of foreign countries to make us stand out. Trump hopes voters believe that high drug costs can be addressed through some combination of tariff threats and trade restrictions. Whether he himself believes this is the next one. If Trump really wants, Trump can offer the American people a lower drug price. Instead, he is providing snake oil.