By MELISSA GOLDIN, Related Press
President Donald Trump incorrectly positioned the blame for prime prescription drug costs within the U.S. on overseas nations, making the feedback Monday when signing an govt order meant to decrease their value.
The order units a 30-day deadline for drugmakers to electively decrease costs within the U.S. or face new limits sooner or later over what the federal government can pay. If favorable offers usually are not reached, Well being and Human Companies Secretary Robert F. Kennedy Jr. will likely be tasked with growing a brand new rule that ties costs the U.S. pays for medicines to decrease costs paid by different international locations.
Right here’s a better have a look at the information.
CLAIM: “We were subsidizing others’ healthcare, the countries where they pay a small fraction of what — for the same drug that what we pay, many, many times more for, and will no longer tolerate profiteering and price gouging from Big Pharma. But again, it was really the countries that forced Big Pharma to do things that frankly, I’m not sure they really felt comfortable doing. But they’ve gotten away with it, these countries. European Union has been brutal, brutal.”
THE FACTS: That is deceptive. Costs for many prescribed drugs — unbranded generics are the exception — are greater within the U.S. than they’re in different high-income international locations. However, consultants say, it’s largely the way in which drug costs are negotiated within the U.S. that drives up prices.
“There are structural differences in the way that we price drugs in the United States and in the way that other developed, industrialized countries price drugs,” mentioned Mariana Socal, an affiliate professor of well being coverage and administration on the Johns Hopkins College who research the U.S. pharmaceutical market. “And those differences really are the ones that account for these differences in price that we see at the end of the day.”
A 2024 report printed by the RAND analysis group discovered, utilizing 2022 information, that costs within the U.S. have been 2.78 instances greater than these in 33 comparable international locations throughout all medication. Model-name medication represented the most important hole. The U.S. made up 62% of gross sales out of $989 billion of whole drug spending among the many international locations studied, in accordance with the report, however solely 24% of quantity.
In accordance with consultants, drug firms within the U.S. are usually capable of worth medicines greater within the U.S. as a result of the nation’s drug market operates as a fragmented system the place firms negotiate with particular person insurers or pharmacy profit managers, generally referred to as PBMs. Many international locations with decrease prices have one regulatory company that negotiates costs on behalf of your entire inhabitants, a major bargaining chip provided that drug firms can’t divide and conquer as they will within the U.S. If a regulator walks away, the corporate loses out on earnings solely — in different phrases, one thing is best than nothing.
“Anything you can do to kind of bring more bargaining power to the table against the drug companies by making a decision for more beneficiaries, or more patients, that’s going to put more downward pressure on drug prices,” mentioned Courtney Yarbrough, an assistant professor of well being coverage and administration at Emory College.
Because it stands, drug prices within the U.S. and different international locations usually are not instantly linked, although they will have an effect on one another. Trump’s govt order establishes a “most favored nation” pricing mannequin ought to drugmakers not voluntarily decrease prices. Because of this the U.S. would peg the price of prescribed drugs to the bottom costs in comparably developed international locations. It’s unclear what — if any — affect the order could have on hundreds of thousands of Individuals who’ve non-public medical insurance. The federal authorities has essentially the most energy to form the worth it pays for medication lined by Medicare and Medicaid.
However the U.S. paying much less for prescribed drugs doesn’t imply different international locations will robotically pay extra. For instance, Yarbrough defined that as an alternative of agreeing to greater costs, different international locations may merely enter into secret preparations for elevated reductions after which disguise what they really pay.
“We’re not in a static global pharmaceutical market,” she mentioned.
Producers, wholesalers, PBMs and different members of the provision chain even have a motivation to maximise earnings, not decrease prices for customers. On this spirit, producers typically use patents to make it unattainable for cheaper variations of medication to come back to market. Though he repeatedly defended pharmaceutical firms at Monday’s information convention, Trump concurrently threatened the businesses with federal investigations into their practices.
“There are no saints in this industry, these are all for-profit companies,” mentioned Geoffrey Joyce, director of well being coverage on the College of Southern California’s Schaeffer Middle. “Their incentives are all wrong. Everybody makes more money off of higher list prices, so they just push list prices up.”
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