The president has made another power move for the people regardless of the threat it poses to the all-powerful pharmaceutical industry. Many politicians have catered to the industry that basically steals from Americans who need certain high-cost medications to live a life without pain or even survive…but not this president.
At the White House on Friday, President Trump signed a combination of four executive orders intended to lower American drug prices. Trump says he has, “been waiting for this day for a long time,” as it “will lead to massive reduction in drug costs.”
While the vast measures detail quite a few actions, here is a breakdown of what the measures aim to accomplish:
- Allow states to import less expensive drugs from Canada
- Simplify the system by eliminating rebates
- Reduce the cost and increase accessibility to EpiPens and insulin
- Lower prices Medicare pays for drugs from average, to the lowest price that any country comparable to the U.S. pays
- Instruct HHS to test a “most favored nations” plan’s effectiveness for reducing drug costs
To reiterate the most significant part of Trump’s measures, he said, “It is the policy of the United States, that the Medicare Program should not pay more for costly Part B prescription drugs or biological products than the most-favored-nation price.” This new concept is a big deal because it innovates a way to reduce the power of the pharma companies who control most drug pricing.
Pharmaceutical companies did not waste time in expressing their contempt for the orders – even before Trump announced it Friday evening.
Just hours prior to Trump’s landmark announcement, Big Pharma companies preemptively started running ad campaigns to criticize the president’s decision, which is to be expected from greedy companies that make massive profits off sick people who need medications.
The National Association of Manufacturers went so far as to launch a whopping six-figure ad campaign that basically tells Americans that price control is not the solution. One advertisement says, “Want to lower drug costs? Some in Washington wrongly think price controls are the solution. Price controls dictated by other countries are a hidden tax on manufacturers that harms innovation, competitiveness and investment in new cures.”
Personally, I think it’s pretty disgusting to try to convince Americans that limiting drug prices will stunt innovation in finding cures. Big Pharma must be pretty terrified if they have to sink that low, especially prior to any official word from the president.
From the MarketWatch angle, pharmaceutical companies took a dip amid anticipation of the order. Pharma stocks were trading at about 1.7% lower, while the S&P 500 fell 0.5%.
However, what Big Pharma didn’t predict was an unexpected contingency Trump added to his orders. The president announced implementation of the measures will not happen immediately. The pharmaceutical companies have until August 25th, 2020 to propose an alternative to the sweeping measures that would undoubtedly decimate their profit margin.
This is the art of the deal. Trump is forcing big pharma to work with him by coming up with a counteroffer that is more conducive to what they want, but also accomplishes the goal of lowering drug costs for Americans. While Trump is within his power to do a total crackdown on the drug companies, he is giving them a chance to negotiate.
Reducing drug costs was one of the president’s biggest campaign promises in 2016, but it has also proven to be one of his biggest challenges. Trump’s order three years later is proving to be another promise made, promise kept as he has gets the drug price gougers under control.