Make Room For Drug Price Relief

December 13, 2018 GMT

Americans continue to pay, by far, the highest prices for medicine in the industrialized world. A recent analysis conducted by the news agency Reuters, for example, found that Americans pay about three times as much as Britons for the world’s 20 most popular drugs. Globally, other analyses have found, Americans pay between two and six times as much for medicines as people in other countries. In an effort to reduce drug prices, the Trump administration announced a plan in October that would tie prices for certain drugs purchased through Medicare to prices in lower-cost countries. An array of Republican members of Congress oppose the Republican administration’s proposal, including Sen. Larry Bucshon of Indiana, chairman of the Doctors Caucus; Sen. Orrin Hatch of Utah, chairman of the Senate Finance Committee; and Sen. Charles Grassley of Iowa, who will succeed Hatch in January. Some lawmakers oppose the government price controls that many foreign governments use to regulate drug prices. Others contend that the Trump proposal would reduce investments in new drug development. The latter is not a trivial concern. Investments are based largely on long-term global profit projections, which rely largely on the U.S. market because it is the world’s largest. Meanwhile, only one in every 12.5 proposed drugs actually makes it to market, and the development costs for those that make it range between $1 billion and $2.6 billion. That does not mean that nothing can be done to give U.S. consumers a fairer shake on drug pricing, however. Rather than rejecting the Trump proposal out of hand, Congress should use it as a starting point to fully examine global drug development, marketing and pricing, recognizing that access to life-saving drugs should not be controlled solely by the market. That market is so vast that a diligent search surely could produce room for price relief.