Trump is right to tackle high drug prices
President-elect Donald Trump was right to throw down the gauntlet against Big Pharma over prescription drug prices last week, and it’s good to know he understands the lobbying juggernaut he’s about to battle. “Pharma has a lot of lobbies, a lot of lobbyists and a lot of power. And there’s very little bidding on drugs,” Trump said during the event at Trump Tower in New York. “We’re the largest buyer of drugs in the world, and yet we don’t bid properly.”
It’s not that we don’t bid properly, we don’t require bids at all when it comes to senior citizens. Congress has specifically banned Medicare, the governmentrun health care program for seniors, from negotiating drug prices.
As a result, Medicare pays higher prices for pharmaceuticals than private insurance companies and foreign governments. Taxpayers are subsidizing Big Pharma’s profits, and drug prices for the rest of the world. Just the hint of this pork-barrel
program going away sent pharmaceutical stock prices plunging.
Medicare is an entitlement program for senior citizens, not for drugmakers.
For a detailed history of how Big Pharma lobbyists persuaded lawmakers to ban Medicare from negotiating drug prices, Health Affairs has an excellent blog post on the topic.
Looking forward, Trump finds himself again proposing a measure opposed by Republicans and supported by Democrats. He’s also challenging an industry that spent $231 million on lobbying in 2015 and has spent more on lobbying than any other industry since 1998.
The Centers for Medicare and Medicaid Services attempted a pilot program to negotiate prices for only drugs covered by Medicare Part B, but Congress blocked it, costing taxpayers $395 million.
The New York Times, meanwhile, warns that if Trump keeps his promise to buy American drugs, instead of imported drugs, the cost to the taxpayer could skyrocket, even if the government negotiates prices. That’s because the government currently buys so much from foreign companies that charge less.
Convincing Congress to allow drug price negotiations, while implementing a Buy American policy that would protect Big Pharma’s profit margins, is exactly the lobbying jujitsu that drugmakers are famous for. Taxpayers need to keep a close eye on how Trump’s policy goal moves through Congress.
The general idea, though, that the world’s largest purchaser of pharmaceuticals should require competitive bidding for these huge drug contracts is a good one and deserves taxpayer support.
Chris Tomlinson is the Chronicle’s business columnist. His commentary appears on Sundays and Wednesdays. He also posts a daily news analysis at HoustonChronicle.com/ Boardroom. chris.tomlinson@chron.com twitter.com/cltomlinson