OPINION
For decades, Washington has promised to fix the problem of exorbitant drug prices for American individuals and families.
But doing so requires preserving innovation incentives that delivers the ultimate gains to our nation’s health. In early February, President Trump actually delivered both simultaneously by recognizing that the
medical supply chain can be made more efficient through PBM reforms and direct distribution mechanisms such as those under TrumpRx.
Most famous among those who overpromised and underdelivered was President Barack Obama and his misnamed Affordable Care Act (ACA) of 2010.
In contrast, Trump has promised and delivered in attempting to make the medical supply chain more efficient and not allowing foreign governments to free ride on Americans paying more for drugs than their
counterparts in other countries.
Recently, Mr. Trump delivered on yet another campaign promise.
The Federal Trade Commission and FTC Chair Andrew Ferguson announced a landmark settlement with Express Scripts, Inc. – one of the largest pharmacy benefit managers (PBMs) – that will result in fundamental changes to its practices and transparency and drive down out-of-pocket costs for drugs, including insulin, by as much as $7 billion over 10 years.
Members of both parties have clamored for PBM reform for years.
President Trump has now started to finally deliver it, with full reform of the nation’s largest PBM now already completed.
The president followed up the landmark Express Scripts settlement by unveiling Trump Rx, a direct-to-consumer government platform that gives Americans direct access to lower prices on dozens of common,
high-cost brand-name prescription drugs by bypassing costly parts of the medical supply chain.
Direct to consumer distribution is valuable because it simultaneously lowers prices for patients while preserving innovation incentives for manufacturers.
The astounding list of discounts that are immediately available directly to consumers can be found at TrumpRx.gov.
The president announced that 16 of the 17 largest pharmaceutical companies have signed on, and the remaining company is expected to do so soon.
Americans may be seeing full and complete transformation of drug pricing under this form of new distribution.
Disclosure: This writer is a board member of iRemedy, a direct medical distribution platform engineered by the architect of Amazon Marketplace.
I have seen firsthand the great potential this type of distribution may entail by bypassing costly parts of the medical supply chain just as Amazon bypassed retailers.
It can deliver both lower prices to patients while preserving innovation incentives for manufacturers.
But this program should be allowed to operate without price controls imported from foreign countries.
The role model to eliminate foreign free riding should instead the president's recent US and UK trade agreement in which UK was negotiated to increase its spending on innovative drugs.
Given that medical innovation is a public good shared by all nations, providing the global innovative returns should be addressed by GDP targeted spending like that of NATO.
This is a more promising route to reduce the free riding Trump has started to attack rather than importing foreign price controls.
"Americans have long been paying the highest drug prices anywhere in the world, while other countries often paid pennies on the dollar for the exact same drugs," Trump said at the launch of Trump Rx.
"We were essentially subsidizing the entire world by hundreds of billions of dollars every year." Trump added.
This is not a matter of tinkering around the edges or slightly modifying a program to give the appearance of reform.
Any critic who says otherwise is not being truthful.
Americans from all walks of life will benefit from this administration finally fulfilling a promise too often broken by previous presidents.
It's just one more promise kept by a president chalking up win after win for the American people. Given that health is the most valuable asset to most people, this may be his most impressive victory yet.
(Related articles may be found here.)
Tomas J. Philipson is an economist at the University of Chicago and served as a member and acting chairman of President Trump’s Council of Economic Advisers from 2017 to 2020.
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