Just saying yes to big pharma

Last week we learned that Novartis, the Swiss drug company, had paid Michael Cohen — Donald Trump’s personal lawyer — $1.2 million for what ended up being a single meeting. Then, on May 11, Mr. Trump announced a “plan” to reduce drug prices.

Why the scare quotes? Because the “plan” was mostly free of substance, controlled or otherwise. (OK, there were a few ideas that experts found interesting, but they were fairly marginal.) During the 2016 campaign Mr. Trump promised to use the government’s power, including Medicare’s role in paying for prescription drugs, to bring prices down. But none of that was in his speech.

And if someone tries to convince you that Trump really is getting tough on drug companies, there’s a simple response: If he were, his speech wouldn’t have sent drug stocks soaring.

None of this should come as a surprise. But there are two substantive questions here. First, should the U.S. government actually do what Mr. Trump said he would do, but didn’t? And if so, why haven’t we taken action on drug prices?

The answer to the first question is yes. America pays far more for drugs than any other major nation, and there’s no good reason we should. When it comes to drugs, we’re Big Pharma’s sucker of last resort.

What we have is a patent system in which the company that develops a drug is granted a temporary legal monopoly over sales of that drug. That system is OK, or at least defensible, as a way to reward innovation; but nothing about the logic of the patent system says that patent owners should be free to exploit their monopolies to the max.

There is, in fact, a very strong case for government action to limit the prices drug companies can charge, just as there is a strong case for limiting monopoly power in general. And the fact that taxpayers pay a large share of drug costs both reinforces the case for limiting drug prices and gives the government a lot of leverage it could use to achieve that goal.

Of course, draconian controls on drug prices could discourage innovation. But that’s not what anyone is talking about, and the benefits of moderate action would almost surely exceed the costs, for a variety of reasons: Drug companies would make less per unit but sell more, they would spend less developing drugs that largely duplicate existing medication, and more. Oh, and America, with its unique unwillingness to bargain over drug prices, is basically subsidizing the rest of the world.

So why aren’t we doing something about drug prices?

Granting Medicare the right to negotiate prices wouldn’t do much by itself. We’d also have to give Medicare bargaining power, probably including the right to refuse to cover drugs whose prices are exorbitant. Before you denounce this as “rationing,” remember that before 2003, Medicare didn’t pay for drugs at all.

Still, saying no might anger some Medicare recipients; polls show overwhelming public support (92 percent!) for allowing Medicare to negotiate lower prices, but that support might erode once people realized what negotiation requires.

But questions about the details aren’t what’s stopping action on drug prices, since we haven’t even gotten to the point of letting Medicare try to bring prices down. Pharma has bought itself enough politicians to block policies that might reduce its profits.

After all, who put together the 2003 Medicare Modernization Act, which put taxpayers on the hook for seniors’ prescription drug costs but specifically prohibited Medicare from negotiating prices? The answer is that it was largely devised by then-Rep. Billy Tauzin, Republican of Louisiana — who shortly thereafter left Congress to become the highly paid president of the Pharmaceutical Research and Manufacturers Association, the industry’s main lobbying group. If that sounds remarkably raw, that’s because it is.

And Mr. Trump, far from draining this swamp, invited it in to the executive branch. Tom Price, his first secretary of health and human services, was forced out because of his lavish travel spending — but his pharma-related conflicts of interest were actually a much bigger deal. And his successor, Alex Azar, is … a former drug company executive whose stated views on drug pricing are at odds with everything Mr. Trump said in the campaign.