The Wall Street Journal's conservative editorial board trashed President Donald Trump's new idea to give Americans pricing relief as his "worst idea since tariffs," and potentially disastrous for prescription drug markets.
The conservative board has posted several times about the dangers of Trump's economic policy in recent months.
"President Trump and Republicans appear to be shrinking from reforming Medicaid, but that’s not the worst of it," wrote the board. "To replace the spending slowdown they won’t get in Medicaid, they may expand drug price controls. For that trade we could have elected Democrats."
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Specifically, the board wrote, Trump's idea would be to cap prices for prescription drugs covered under Medicaid at the cheapest rate they go for in other developed countries. This, they warned, would have severe unintended consequences — and wouldn't even make a dent in replacing the spending cuts the GOP is struggling to get the votes for in their budget reconciliation bill.
"Medicaid already receives hefty discounts for drugs under statutory formulas that require manufacturers to kick back a share of a medicine’s price to states in a rebate. Medicaid rebates in 2023 amounted to 52% of the program’s drug spending. Because Democrats in 2021 removed a cap on these rebates, state Medicaid programs may pay nothing for some drugs," said the report. "Drugs accounted for less than 4% of Medicaid spending ($21.2 billion) in 2023. The feds spent 10 times more on hospital payments. Even if Republicans required drug makers to give away medicines to Medicaid, savings wouldn’t come close to $880 billion."
Meanwhile, they wrote, this would actually cost more money in the long run.
"Drugs actually reduce Medicaid spending by preventing complications that require expensive hospital care. Take hepatitis C antiviral drugs, which have a 95% cure rate. A treatment course can cost upward of $24,000. But the Congressional Budget Office estimates that expanding Medicaid patient access to these drugs would save $7 billion over a decade."
The real risk, the board wrote, is that drug manufacturers would withdraw from Medicaid altogether rather than pay these rates, leaving more people to get sick and putting Medicaid on the hook for more expensive, drug-preventable illnesses.
"Drug price controls are a Democratic perennial," the board concluded. "If Republicans go along with Mr. Trump’s most-favored-nation plan, Democrats will invariably extend it to Medicare and the commercial market next time they control Congress. If Republicans lack the courage to reform Medicaid, they should at least do no harm."