Donald Trump promised to rein in drug prices. It was his only sensible campaign promise.
But the plan he announced last week 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 Secretary of Health and Human Services Alex Azar, who, perhaps not incidentally, was a former top executive at the drugmaker 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. This is nonsensical. It would just mean more profits for U.S. drug companies. (Revealingly, the stock prices of U.S. pharmaceutical companies rose after Trump announced his plan.)
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 that no other industry receives.
Trump’s plan nibbles at the monopoly power of U.S. pharmaceutical companies. It doesn’t deal with the central fact that those companies’ patents are supposed to run only 20 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 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 the introduction of 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.
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.
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