Attempting to Lower Drug Prices, President Trump Goes in Wrong Direction
By: Floridians Against Socialized Healthcare
Tags: Most Favored Nation, Socialism

Attempting to Lower Drug Prices, President Trump Goes in Wrong Direction

On September 13, 2020, President Trump signed the Executive Order on Lowering Drug Prices by Putting America First. With that EO, the President is attempting to lower prices by fixing them to the lowest available price of an ‘Organisation for Economic Co-operation and Development’ (OECD) member nation.

According to the Executive Order:

Sec. 2. Policy. (a) It is the policy of the United States that the Medicare program should not pay more for costly Part B or Part D prescription drugs or biological products than the most-favored-nation price.

(b) The “most-favored-nation price” shall mean the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.

As a follow-up to the President’s Executive Order, per the Health and Human Services press release on November 20, 2020, HHS Secretary Alex Azar plans to “lower Medicare Part B payments for certain drugs to the lowest price for similar countries and save American taxpayers and beneficiaries more than $85 billion over seven years.”

The HHS press release continues:

Starting in January, the model, known as the Most Favored Nation (MFN) Model, will test an innovative way for Medicare to pay no more for high cost, physician-administered Medicare Part B drugs than the lowest price charged in other similar countries. Following the President’s recent Executive Orders to lower drug prices and improve access to life-saving medications, the MFN Model will protect current beneficiary access to Medicare Part B drugs, make them more affordable, and address the disparity of drug costs between the U.S. and other countries.

Floridians Against Socialized Healthcare (FLASH) believes there are several problems with this approach.

Price fixing interferes with the free market. Importing prices from socialist countries equates to importing socialism. Prices from socialist systems will impede important R&D investments.

Price Fixing vs. The Free Market

Time and again history has taught those willing to learn that top-down price fixing simply does not work. The invisible hand of a free market by way of supply and demand is the only fair way to affect consumer prices.

We sincerely applaud President Trump’s call to reduce regulation. It was most certainly the right move as removing barriers to entry is key to unleashing the free market. Reducing unnecessary and costly hurdles brings important medicines to market faster, increases competition, and helps reduce prices significantly.

Free market competition, not the heavy hand of government, is the best way to unleash American ingenuity and innovation which will continue to produce better and better medicines.

National Review’s article, Big Pharma’s Hot Streak — and What Could Stop It, by Sally Pipes, reaffirms “Adopting the pricing policies of inferior healthcare systems is a mistake.” Sally continued by saying “drug prices are lower abroad because foreign governments forcibly cap them, which has all sorts of negative consequences for patients in those countries.”

Negative consequences by top-down price fixing will be disastrous for American medicine and patients.

Importing Socialism is Wrong

On numerous occasions, from press conferences to campaign rallies and the State of the Union, President Trump has declared “the United States will never be a socialist country.” We applaud the President for calling the Left’s policies by it’s name and standing firm against their schemes.

So why would he want to import socialism through price controls?

The reason a drug’s price in a “most favored nation” will be the lowest is because their socialist system will deem it so. They themselves will incorporate price fixing, they will have longer wait times for care, and rarely does a country with such a system ever invest and innovate.

Fixing drug prices to that of other socialist countries is the opposite of help.

Socialist Prices Stifle Innovation

In a post by Americans for Tax Reform, Alex Hendrie said, “The proposed ‘most favored nation’ rule would impose socialist price controls on America’s healthcare system by arbitrarily tying the prices we pay to the prices in foreign countries. This would cripple American innovation and delay access to new treatments and cures at a time when we need them most.”

The majority of global medicines are developed because of the massive investment U.S. pharmaceutical companies make each year in research and development. These R&D dollars are invested from profit and no other country invests as much as American companies.

The socialist countries and their socialist prices the President wants for American healthcare doesn’t include investment dollars for future innovations in medicine. This should concern every American.

Jared Whitley says ‘Free’ Healthcare would have a devastating cost. He suggests:

Bringing a new drug to market is time-consuming and expensive business: the average R&D for new medicine demands an investment of $2 billion over 10 years. It’s also risky: just 12% of experimental treatments that go into clinical trials end up with FDA approval. Given these massive costs, only the free market can offer the incentive to create the drugs of the future.

Even if America never goes full-on socialized medicine, something as tempting as price controls could destroy this pipeline of new medicine. Price controls would slash revenues at research firms by $1 trillion over 10 years, according to the Congressional Budget Office, profits which would come directly from their R&D budgets.

Bottom line: President Trump is right to fight against socialism. He was right to reduce regulation and unleash innovation and the free market. Why would he want to bring socialism to our shores through foreign price controls?

Please contact your Senator, Representative, and President Trump and tell them NO to the Most Favored Nation price-fixing policy.