The Wall Street Journal editorial board is not happy with President Donald Trump's latest plan to try to squeeze down the price of prescription drugs — an issue that has become popular in both parties in recent years, but that businesses are leery of.
Indeed, argued the board, Trump's new policy represents a betrayal of companies that made a deal with him to avoid this very situation.
"Days before Christmas, the Centers for Medicare and Medicaid Services (CMS) proposed a 560-page regulation to implement the President’s 'most-favored nation' (MFN) plan in Medicare," wrote the board, which has extensively criticized many of Trump's policies in recent months. "The point is to force drug makers to sell drugs to Medicare at the lowest price available in other developed countries. This is bad policy for many reasons, but it’s also a government double-cross."
"More than a dozen firms struck agreements with the Administration this year to boost investment in the U.S. and to sell medicines directly to consumers at lower prices — supposedly in return for a reprieve from Mr. Trump’s threatened tariffs and most-favored nation regime," the board noted. "Now Mr. Trump looks to be playing them for suckers."
The board argued that the risk with Trump's plan, which requires drug companies to rebate the difference to Medicare on drugs based on the lowest price paid in a number of other countries, would prevent those other countries from getting as many drugs for fear the price controls there could be used against them in the huge Medicare market.
Worse, they argued, "Chinese biotech firms fast would be poised to take global market share from U.S. drug makers. Mr. Trump’s plan would also reduce the incentive to develop innovative medicines in the U.S. if firms don’t think they can make a profit to recoup their investment. The companies may also increase prices for commercial payers to offset the Medicare rebates."
"As for government savings, CMS projects that the MFN pilot would reduce Medicare spending by some $26 billion over five years — out of the roughly $7.5 trillion that Medicare is expected to spend in total over those five years," the board warned. "The cost in lost U.S. innovation will be far greater than the government savings."
