Trump's Order Lowering Drug Prices Raises Drug Prices
The same executive order to make U.S. drug prices match lower European levels would also raise European prices
Pres. Donald Trump today issued an executive order that, if successful, will lower American drug prices to the lower levels paid in Europe and also raise drug prices in Europe.
This self-defeating aspect of Trump’s attempt to do something about high drug prices wasn’t exactly writ in neon in most of today’s news coverage. But this scattershot-in-a-circular-firing-squad approach is hardly a first1 for the ready-fire-aim president.
Here’s the deal with the drug prices.
European countries get better prices on drugs than we can for reasons I’ll get to. So Trump issued his order to both fight those European trade practices and force pharmaceutical companies to charge Americans no more than the lowest price charged in any other developed nation (this is what’s known as “Most Favored Nation” status).
It’s quite possible that the order will be shot down in court, but let’s play along just for imported shits and overpriced giggles.
The details are classically Trumpishly vague. He posted today that drug prices here will be cut “59%, PLUS!” And also said with his mouth — on the same same literal calendar day as his post — that prices would go down as much as 80%.
Was 80% Trump’s final guess? Newsfucker, it was not. “I guess even 90%.”
Set aside for a moment that MAGA militias would right now be handing out weaponry stored in their sad, unvisited man-cave basements for just such an occasion if a Democratic socialist president dared to use Big Government to force the sacred Invisible Hand to cut prices in The Holy Free Market by even as little as “59%, PLUS!”
The point is that, out of some weird notion of fairness, Trump is pegging the cost of drugs here to the cost of drugs in Europe. (Never mind the disparity in pharmaceutical executive compensation.)
In Trump’s framing — and Big Pharma’s — American consumers are subsidizing low European prices. Here’s how they figure that, and there is a certain capitalist logic to it.
Pharmaceutical companies will only do whatever research (“innovation”) they can profit off of. That’s why modern humanity dedicates vast treasure troves of resources to the crucial research fields of acne, belly fat, back-fat, fat-sucking, ass-fat, and sexy-time penis functionality.
In reality, Big Pharma gets you to subsidize research via the federal government, which they then cherry-pick for the most profitable market-winners. If you think they’re pouring their profits into R & D, you’re Rong and Dumb.
Now, if European countries can negotiate super-low (:::coughbullshitcough:::) drug prices from Big Pharma, then the only place the impoverished drug companies can turn for the obscene profits needed to keep shareholders at bay — with regular feedings of dividends and buybacks — is the American consumer, the only Homo sapiens too unsapiens to fight back like even the French do.
Thus, Americans are subsidizing European socialism. (Which is weird, because I could swear I’ve been told we can’t even afford to subsidize American socialism.)
Anyhoo, that’s their thinking. And in that “thinking,” it’s an unfair dynamic, which can only be remedied by eliminating tools that Europe uses to negotiate their low prices. (We could remedy the obscene profit-motive with high taxes on pharmaceutical executives, but imposing Eisenhower-era tax rates from 1950s America would be un-American.)
Here’s where Capt. John Yossarian would recognize the Catch-22 (or Catch-12 in Europe). Instead of getting Americans the same deal Europeans have won, Trump is fighting to get Europeans a worse deal…which Americans can then also have.
Trump is actually thisclose to figuring it out at the very top of today’s executive order:
“The United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits. This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.”
My presidude, if the U.S. is the source of three quarters of global pharmaceutical profits, the fix is to Just. Stop. Doing. That.
It’s worth noting that no one is forcing drug companies to charge low prices in Europe, even if Trump does call it a “scheme,” which is how you badmouth negotiating tactics you can’t or don’t want to use. If drug companies didn’t want to discount their products, and weren’t still making money off it, they’d just stop selling drugs there.
But instead of doing what Europe does — y’know, negotiate better — Trump wants to preserve Big Pharma profits, and just source them more evenly. But Trump’s proposed system only works to Americans’ benefit if European prices remain low. Which they won’t if Trump’s order is carried out!
Here’s where we get to how Trump says he wants to change Europe’s system.
His executive order directs Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer to…
“…take all necessary and appropriate action to ensure foreign countries are not engaged in any act, policy, or practice that may be unreasonable or discriminatory or that may impair United States national security and that has the effect of forcing American patients to pay for a disproportionate amount of global pharmaceutical research and development, including by suppressing the price of pharmaceutical products below fair market value in foreign countries.”
That’s an overdose of stupid. For one thing, no one is “forcing” American patients to pay a disproportionate amount. We stupidly keep choosing politicians who won’t save us.
And when Trump says other countries are “suppressing” prices “below fair market value,” that’s capitalism speak for: other countries are smart enough to act collectively to negotiate the best prices they can. Here’s how CNBC put it:
“Unlike the U.S., several foreign countries offer universal health coverage where the government is the sole payer, giving it significant leverage to negotiate or set drug prices.”
That’s right: Socialism. What CNBC didn’t mention is that if Trump can somehow literally block people in other countries from negotiating collectively, this will mean higher drug prices for everyone.
Trump even says in his own order that Big Pharma “fight against the ability for public and private payers in the United States to negotiate the best prices for patients.”
But so does Trump! And not just by trying to block Europe from negotiating the best prices. Back during Trump 1.0, he refused to use Medicare’s vast powers to leverage a better…what’s the word?…deal for drug prices.
And his fix for it now is to help Big Pharma fight semi-socialist Europe’s superior ability to negotiate better prices. Which means America’s Most Favored Nation status will make America the most favored among nations that are equally fucked.
TFN creator and writer Jonathan Larsen co-created Up w/ Chris Hayes and wrote for Countdown with Keith Olbermann at MSNBC, helped launch CNN’s Anderson Cooper 360° and Air America Radio, and has also worked at The Daily Show with Jon Stewart and The Young Turks.
The executive order on drug prices came on the same day Trump announced a tentative deal to undo his China tariffs that he announced just last month with great, imported fanfare.
Fucking Line of the Day: "If you think they’re pouring their profits into R & D, you’re Rong and Dumb."
Shouldn't there be one of those fast-talking disclaimers (like those at the end of drug commercials) at the end of Trump's speech about all the negative side effects caused by believing his bullshit?
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