By Robert Reich
Trump promised to rein in drug
prices. It was his only sensible campaign promise.
But the plan he announced on May 11 does little but add another battering ram to his ongoing economic war against
America’s allies.
He calls it “American patients
first,” and takes aim at what he calls “foreign freeloading.” The plan will
pressure foreign countries to relax their drug price controls.
America’s trading partners “need to
pay more because they’re using socialist price controls, market access
controls, to get unfair pricing,” said Alex Azar, Trump’s Secretary of Health
and Human Services, who, perhaps not incidentally, was a former top executive
at the drug maker Eli Lilly and Company.
By this tortured logic, if other
nations allow drug companies to charge whatever they want, U.S. drug companies
will then lower prices in the United States.
While it’s true that Americans
spend far more on medications per person than do
citizens in any other rich country – even though Americans are no healthier –
that’s not because other nations freeload on American drug companies’ research.
Big Pharma in America spends more on
advertising and marketing than it does on research – often tens of millions to
promote a single drug.
The U.S. government supplies much of
the research Big Pharma relies on through the National Institutes of Health.
This is a form of corporate welfare. No other industry gets this sort of help.
Besides flogging their drugs,
American drug companies also spend hundreds of millions lobbying the
government. Last year alone, their lobbying tab came to $171.5 million,
according to the Center for Responsive Politics.
That’s more than oil and gas,
insurance, or any other American industry. It’s more than the formidable
lobbying expenditures of America’s military contractors. Big Pharma spends tens
of millions more on campaign expenditures.
They spend so much on politics in
order to avoid price controls, as exist in most other nations, and other
government attempts to constrain their formidable profits.
For example, in 2003, Big Pharma got
a U.S. law prohibiting the government from using its considerable bargaining
clout under Medicare and Medicaid to negotiate lower drug prices. Other nations
with big healthcare plans routinely negotiate lower drug prices.
During his campaign Trump promised
to reverse this law. But the plan he revealed Friday seeks only to make it
easier for private health insurers to negotiate better deals for Medicare
beneficiaries.
In reality, private health insurers
don’t have anywhere near the clout of Medicare and Medicaid – which was the
whole point of Big Pharma’s getting Congress to ban such negotiations in the
first place.
In the last few years, U.S. drug
companies have also blocked Americans from getting low-cost prescription drug
from Canada, using the absurd argument that Americans can’t rely on the safety
of drugs coming from our northern neighbor – whose standards are at least as
high as ours.
Trump’s new plan doesn’t change
this.
To put all this another way, when
Americans buy drugs in the United States, they really buy a package of
advertising, marketing, and political influence-peddling. Consumers in other
nations don’t pay these costs. Which explains a big part of why drug prices are
lower abroad.
Trump’s so-called plan to lower drug
prices disregards this reality.
Trump’s plan nibbles at the monopoly
power of U.S. pharmaceutical companies, but doesn’t deal with the central fact
that their patents are supposed to run only twenty years but they’ve developed
a host of strategies to keep patents going beyond then.
One is to make often insignificant
changes in their patented drugs that are enough to trigger new patents and
thereby prevent pharmacists from substituting cheaper generic versions.
Before its patent expired on
Namenda, its widely used drug to treat Alzheimer’s, Forest Labs announced it would stop selling the existing
tablet form of in favor of new extended-release capsules called Namenda XR.
Even though Namenda XR was just a reformulated version of the tablet, the
introduction prevented generic versions from being introduced.
Other nations don’t allow drug
patents to be extended on such flimsy grounds. Trump’s plan doesn’t touch this
ploy.
Another tactic used by U.S. drug
companies has been to sue generics to prevent them from selling their cheaper
versions, then settle the cases by paying the generics to delay introducing
those cheaper versions.
Such “pay-for-delay” agreements are
illegal in other nations, but antitrust enforcement hasn’t laid a finger on
them in America – and Trump doesn’t mention them although they cost Americans
an estimated $3.5 billion a year.
Even after their patents have
expired, U.S. drug companies continue to aggressively advertise their brands so
patients will ask their doctors for them instead of the generic versions. Many
doctors comply.
Other nations don’t allow direct
advertising of prescription drugs – another reason why prices are lower there
and higher here. Trump’s plan is silent on this, too.
If Trump were serious about lowering
drug prices he’d have to take on the U.S. drug manufacturers.
But Trump doesn’t want to take on
Big Pharma. As has been typical for him, rather than confronting the moneyed
interests in America he chooses mainly to blame foreigners.
