Prescription drugs are costly in the United States. In an effort to lower the prices Americans pay at the pharmacy, President Trump pledged to end “the global freeloading that forces American consumers to subsidize lower prices in foreign countries.”
Unfortunately, a new plan from the Department of Health and Human Services undermines this goal.
HHS Sec. Alex Azar unveiled a new Medicare proposal that simply copies the foreign price-control policies that have enabled other countries to underpay for drugs. Not only does the change fail to hold “freeloading” countries accountable — it will undermine access to life-changing medicines here in the United States.
Why are brand-name drugs cheaper in foreign countries? Simply put, it’s because of price controls. In countries like the United Kingdom, Canada, and Sweden, the government dictates what drug companies can charge for their products.
The prices of prescription drugs sold in Sweden, for instance, are determined by the Pharmaceutical Benefits Board. Canada’s Patented Medicine Prices Review Board plays a similar role.
The single-payer healthcare systems in these countries are what make such price controls possible. When the government is the sole administrator of prescription drugs, it has extraordinary bargaining power to secure below-market prices.
American patients pick up the tab by shouldering much of the burden for global research and development. This is unfair — and something that President Trump is right to condemn.
HHS’ new Medicare proposal does little to rectify the situation. The policy would change what the government pays for drugs under Medicare Part B — a part of the program that covers medicines administered at a doctor’s office, such as cancer therapies.
Under HHS’ plan, Part B would base its drug payments not on a drug’s average domestic price, as the program does now, but on what other countries pay for the same medicine.
Patients often lose access to the best medicines when their government adopts price controls. Of the drugs launched since 2011, only 60 percent were available in Sweden. And only half made it to patients in Canada.
In the United States, meanwhile, nearly 90 of those medicines were available. Americans will no longer enjoy generous access to the newest drugs if we embrace price controls.
It costs an estimated $2.6 billion to create a single new medicine. That investment is only worthwhile if drug companies are confident that they’ll have a chance to recoup their upfront costs.
Importing the socialist pricing tactics of foreign governments is no way to stand up for Medicare patients. The Trump administration should explore policies that ensure all patients pay a fair price at the pharmacy counter.
Peter J. Pitts, a former Food and Drug Administration associate commissioner, is president of the Center for Medicine in the Public Interest.
