by Robert Reich
CA.) – Trump promised to rein in drug prices. It was his only
sensible campaign promise.
the plan he announced Friday does little but add another battering
ram to his ongoing economic war against America’s allies.
calls it “American patients first,” and takes aim at what
he calls “foreign freeloading.” The plan will pressure
foreign countries to relax their drug price controls.
trading partners “need to pay more because they’re using
socialist price controls, market access controls, to get unfair
pricing,” said Alex Azar, Trump’s Secretary of Health and
Human Services, who, perhaps not incidentally, was a former top
executive at the drug maker Eli Lilly and Company.
this tortured logic, if other nations allow drug companies to charge
whatever they want, U.S. drug companies will then lower prices in the
is nonsensical. It would just mean more profits for U.S. drug
Pharma. Corporate welfare, massive ad spending, millions spent on
it’s true that Americans spend far
more on medications per person than do citizens in any other
country – even though Americans are no healthier – that’s
not because other nations freeload on American drug companies’
Pharma in America spends more on advertising and marketing than it
does on research – often tens of millions to promote a single
U.S. government supplies much of the research Big Pharma relies on
through the National Institutes of Health. This is a form of
corporate welfare. No other industry gets this sort of help.
flogging their drugs, American drug companies also spend hundreds of
millions lobbying the government. Last year alone, their lobbying tab
came to $171.5 million, according to the Center for Responsive
more than oil and gas, insurance, or any other American industry.
It’s more than the formidable lobbying expenditures of
America’s military contractors. Big Pharma spends tens of
millions more on campaign expenditures.
spend so much on politics in order to avoid price controls, as exist
in most other nations, and other government attempts to constrain
their formidable profits.
the government exactly where Big Pharma wants it
example, in 2003, Big Pharma got a U.S. law prohibiting the
government from using its considerable bargaining clout under
Medicare and Medicaid to negotiate lower drug prices. Other nations
with big healthcare plans routinely negotiate lower drug prices.
his campaign Trump promised to reverse this law. But the plan he
revealed Friday seeks only to make it easier for private health
insurers to negotiate better deals for Medicare beneficiaries.
reality, private health insurers don’t have anywhere near the
clout of Medicare and Medicaid – which was the whole point of
Big Pharma’s getting Congress to ban such negotiations in the
the last few years, U.S. drug companies have also blocked Americans
from getting low-cost prescription drug from Canada, using the absurd
argument that Americans can’t rely on the safety of drugs
coming from our northern neighbor – whose standards are at
least as high as ours.
new plan doesn’t change this.
Americans really buy when they purchase expensive drugs
put all this another way, when Americans buy drugs in the United
States, they really buy a package of advertising, marketing, and
political influence-peddling. Consumers in other nations don’t
pay these costs. Which explains a big part of why drug prices are
so-called plan to lower drug prices disregards this reality.
plan nibbles at the monopoly power of U.S. pharmaceutical companies,
but doesn’t deal with the central fact that their patents are
supposed to run only twenty years but they’ve developed a host
of strategies to keep patents going beyond then.
is to make often insignificant changes in their patented drugs that
are enough to trigger new patents and thereby prevent pharmacists
from substituting cheaper generic versions.
its patent expired on Namenda, its widely used drug to treat
Alzheimer’s, Forest Labs announced
it would stop selling the existing tablet form of in favor of new
extended-release capsules called Namenda XR. Even though Namenda XR
was just a reformulated version of the tablet, the introduction
prevented generic versions from being introduced.
nations don’t allow drug patents to be extended on such flimsy
grounds. Trump’s plan doesn’t touch this ploy.
Pharma uses lawsuits to help it keep prices high
tactic used by U.S. drug companies has been to sue generics to
prevent them from selling their cheaper versions, then settle the
cases by paying the generics to delay introducing those cheaper
“pay-for-delay” agreements are illegal in other nations,
but antitrust enforcement hasn’t laid a finger on them in
America – and Trump doesn’t mention them although they
cost Americans an estimated $3.5
billion a year.
after their patents have expired, U.S. drug companies continue to
aggressively advertise their brands so patients will ask their
doctors for them instead of the generic versions. Many doctors
nations don’t allow direct advertising of prescription drugs –
another reason why prices are lower there and higher here. Trump’s
plan is silent on this, too.
Trump were serious about lowering drug prices he’d have to take
on the U.S. drug manufacturers.
Trump doesn’t want to take on Big Pharma. As has been typical
for him, rather than confronting the moneyed interests in America he
chooses mainly to blame foreigners.
B. REICH is the Chancellor’s Professor of Public Policy at the
University of California, Berkeley, and a senior fellow at the Blum
Center for Developing Economies.
served as secretary of labor in the Clinton administration and Time
magazine named him one of the 10 most effective cabinet secretaries
of the 20th century.
Reich has written 14 books, including the best-sellers Aftershock,
The Work of Nations, Beyond Outrage and most recently Saving
is also a founding editor of The American Prospect
chairman of Common Cause, a member of the American Academy of Arts
and Sciences and co-creator of the award-winning documentary
INEQUALITY FOR ALL.