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Home » And speaking of deals

And speaking of deals

The New Neo Posted on by

There’s this explanation from Trump of the India/Pakistan ceasefire:

Simplicity itself.

And then there’s this, which I see as another opening move:

President Donald Trump declared Monday that the U.S. “will no longer tolerate profiteering and price gouging from Big Pharma” as he signed an executive order implementing what his administration is calling “most favored nations drug pricing.”

“The principle is simple – whatever the lowest price paid for a drug in other developed countries, that is the price that Americans will pay,” Trump said at the White House. “Some prescription drug and pharmaceutical prices will be reduced almost immediately by 50 to 80 to 90%.”

Trump said that “starting today, the United States will no longer subsidize the healthcare of foreign countries, which is what we were doing. We’re subsidizing others’ healthcare, the countries where they paid a small fraction of what for the same drug that what we pay many, many times more for and will no longer tolerate profiteering and price gouging from Big Pharma.”

I suspect – although I don’t know – that his goal is to even out the prices; in other words, to lower our prices and raise the prices in other countries, so that the disparity isn’t as great. For example, he also said this:

For years, pharmaceutical and drug companies have said that research and development costs were what they are, and for no reason whatsoever, they had to be borne by America alone,” Trump said. “Not anymore, they don’t.”

So it’s a question of who will bear the cost of innovation. I have no idea whether this order is enforceable, and whether it will have the desired effect.

But I’ve long felt that the situation is more complicated than the “stick it to Big Pharma” people think, and I believe Trump is aware of that. For example:

The Pharmaceutical Research and Manufacturers of America trade group opposes the order, saying, “This Foreign First Pricing scheme is a bad deal for American patients.”

“Importing foreign prices will cut billions of dollars from Medicare with no guarantee that it helps patients or improves their access to medicines,” the group’s president, Stephen Ubl, said in a statement provided to Fox News Digital. “It will jeopardize the hundreds of billions our member companies are planning to invest in America, making us more reliant on China for innovative medicines.”

“To lower costs for Americans, we need to address the real reasons U.S. patients are paying more for their medicines. We are the only country in the world that lets PBMs, insurers and hospitals take 50% of every dollar spent on medicines,” Ubl also said. “In fact, hospital markups in 340B and the rebates and fees paid to middlemen in the U.S. often exceed the total cost of medicines oversees. Giving more of this money to patients will lower their medicine costs and reduce the gap with European prices.”

Not my field of expertise. Have at it in the comments.

Comments

And speaking of deals — 16 Comments

  1. His story about his ‘fat friend’ buying the ‘fat drug’ in the UK was absolutely classic Trump.

  3. -Giving more of this money to patients will lower their medicine costs. Sure it will, sure: “giving more money to patients”? Typical leftist cost accounting.

  4. Healthcare in the US looks the way it does the various players involved who are usually not spending their own money on themselves.

    So here we see the pharmaceutical manufacturer trying to deflect blame onto hospitals, PBMs, insurers, everyone but them. But all these players, including employers, governments, and individuals, are all equally responsible for the mess we are in. They are all part of a system trying to do something for someone with someone else’s money. And they can all plausibly claim that they didn’t make the rules, they just are doing the best they can with what’s there.

  5. Whenever this comes up I think of all those so-called new drugs advertised on TV and their lists of warnings and side effects. I think, why would any patient take them and why would a doctor prescribe such?

    Then I recall Bernadette on the Big Bang Theory and how she worked for big pharma. She would say something like a new drug they had for arthritis, but the test mice grew a 5th leg, so the switched it to an asthma drug. The writers had big pharma nailed. I recall her company’s name was a play on Amgen.

  6. physicsguy,

    Do not take Xyxaltam if allergic to Xyxaltam.

    Do not set yourself on fire if you might react poorly to being set on fire.

    Do not wrestle an orangutan if your limbs may not stay attached.

  8. Over the last few years I’ve purchased the exact same ordinary generic drug from local pharmacies on three occasions, and from my Medicare part-D PBM.

    The prices I’ve paid: $10/pill, $1.10/pill, $3/pill from the PBM, but later $8.5/pill quoted from the same PBM (no thank you), and lastly $1.85/pill from a local CVS.

    Really? I suspect that a PBM will generally protect you from the very worst of the pricing excesses to some extent. But they have no interest in giving you great prices. They provide some conveniences if urgency is not an issue, but you pay dearly for that convenience.

  9. I hope there’s a way to do this – to bring down American prices, though I don’t believe it needs to be to the prices paid in sub-Saharan Africa (Europe is another matter) – without killing research into new drugs. Didn’t Trump either do or suggest Most Favored Nation pricing for drugs sold in the US in his first term?

  10. @TommyJay:I suspect that a PBM will generally protect you from the very worst of the pricing excesses to some extent. But they have no interest in giving you great prices.

    You are not their customer. Your part D carrier is their customer. Your part D carrier definitely wants to pay less for drugs across the board, but you specifically are only one element in that calculation. They don’t expect to, and can’t, lower prices for every individual. They negotiate with the PBM for possibly lower drug prices in aggregate. I say “possibly” because the PBMs offer blandishments that are not just lower prices, and the carrier is who gets those, not the individual.

  11. So why not fix both problems? Deal with the drug companies now, and then take on the hospitals and insurance companies later.

  12. Too many people assuming that ‘European Prices’ are fixed. Surely there are many medicines that are so important that they will pay more if that’s the only way to get them.

    In the case of poorer countries, it makes sense to allow for substantially lower prices than the US price. Most drugs have a high % of their cost in the up-front development and testing, with the incremental manufacturing and distribution cost per unit being relatively low. In businesses with this economic structure, it make sense to offer lower pricing to those who have lower ability to pay.

  14. @Abraxas:So why not fix both problems? Deal with the drug companies now, and then take on the hospitals and insurance companies later.

    Because the people who are happy with the current system will scream if they lose anything. Because hospitals and insurers are major employers with lots of money for lobbying. Because it’s all well and good for the mice to agree to put bells on the cat now and the dog later, but it’s a very different thing to actually do it.

  16. Somewhat related:
    Apparently a dynamite book on someone who survived the psych-med system…and how she did it…

    “Psych Meds And Veblen Goods”—
    https://www.zerohedge.com/markets/psych-meds-and-veblen-goods
    Key grafs:

    …Psych meds are now common among adults and children. It’s a massive industry: like cell phones and TVs generations ago, they migrated through the class structure year by year.

    Now comes “Unshrunk” by Laura Delano, a book that could change everything…

    …Nothing I say can possibly prepare you for the adventure this book brings. It is perfectly crafted almost in a poetic way to bring to the reader the actual feeling of going through each stage over a decade and a half of drug cocktails, mental institutions, hospitals, and much more, and finally to her self-motivated emancipation from the whole industry…

    … most, the social-register set in Greenwich, Connecticut, descendent of a three-term president, a prep-school educated and Harvard-bound beneficiary of every financial and social privilege, one afforded the best psychiatric care available anywhere.

    She was not mistreated. She was treated. She says this herself:

    “I was once mentally ill, and now I’m not, and it wasn’t because I was misdiagnosed…. In fact, I was properly diagnosed and medicated according to the American Psychiatric Association’s standard of care. The reason I’m no longer mentally ill is that I made a decision to question the ideas about myself that I’d assumed were fact and discard what I learned was actually fiction.”….

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