Curb­ing out-of-con­trol health-care costs

Maybe we can lower drug prices by rais­ing them around the world.

The Washington Post Sunday - - SUNDAY OPINION -

AMER­I­CANS SPEND ap­prox­i­mately 90 per­cent more for the medicines they use, as a per­cent­age of in­come, than do cit­i­zens of the five largest European mar­kets, ac­cord­ing to a re­cent study by Univer­sity of South­ern Cal­i­for­nia (USC) ex­perts. This con­trib­utes to the high cost of health care in the United States and to chronic dis­par­i­ties in health out­comes. Pres­i­dent Trump on Fri­day un­veiled a plan to tackle these high pre­scrip­tion-drug prices.

Its most provoca­tive idea is its call to con­front what Mr. Trump called “global freeload­ing” off of Amer­ica’s phar­ma­ceu­ti­cal pro­duc­tion and dis­tri­bu­tion. While fram­ing the is­sue in char­ac­ter­is­ti­cally in­cen­di­ary terms, Mr. Trump is speak­ing the truth about it. Almost ev­ery other wealthy, de­vel­oped coun­try has a na­tional health-care au­thor­ity of some kind which ne­go­ti­ates drug prices on be­half of its pop­u­la­tion. The author­i­ties use that lever­age, if not to “ex­tort” U.S. drug mak­ers as Mr. Trump put it, then cer­tainly to pre­vent them from charg­ing more to off­set the high cost of de­vel­op­ing drugs. Con­se­quently, those costs are borne dis­pro­por­tion­ately by cus­tomers in Amer­ica, where price con­trols are com­par­a­tively weak; the largest gov­ern­ment health-care plan, Medi­care, is statu­to­rily for­bid­den to ap­ply any.

The up­shot, ac­cord­ing to the study by USC health-pol­icy re­searchers Dana Gold­man and Darius Lak­dawalla, is that the U.S. mar­ket ac­counts for 64 per­cent to 78 per­cent of global phar­ma­ceu­ti­cal prof­its.

If the United States were to adopt the play­book of its peer na­tions, and min­i­mize prices, it would sac­ri­fice some un­known, but prob­a­bly sig­nif­i­cant, quan­tum of in­no­va­tion: Today’s pa­tients might ben­e­fit, but at the ex­pense of fu­ture ones. If, on the other hand, the United States could per­suade its trad­ing part­ners to tilt their poli­cies mod­estly in fa­vor of higher prices, to stim­u­late in­no­va­tion, they could help their fu­ture pa­tients with­out un­duly harm­ing ex­ist­ing ones.

The op­ti­mum sit­u­a­tion would be one in which both the United States and its trad­ing part­ners moved some­what to­ward the middle. That can oc­cur only through ne­go­ti­a­tion, and Mr. Trump an­nounced that he will task U.S. Trade Rep­re­sen­ta­tive Robert E. Lighthizer to start deal­ing with the is­sue im­me­di­ately. Given that our trad­ing part­ners have lit­tle in­cen­tive to change — why would any­one vol­un­tar­ily quit “freeload­ing”? — the best way to make progress would be through broad ne­go­ti­a­tions in which the United States it­self made com­pen­sat­ing con­ces­sions in other ar­eas. Un­til Mr. Trump took of­fice, there were two frame­works for such a dis­cus­sion: the Trans-Pa­cific Part­ner­ship for Asia and Latin Amer­ica, and the Transat­lantic Trade and In­vest­ment Part­ner­ship for Europe. Mr. Trump re­jected both, though he has at times hinted at re­con­sid­er­ing them. Whether he re­al­izes it or not, his speech Fri­day was full of rea­sons to do so.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.