One reason the Rio Grande Valley is so popular among Winter Texans is the access to lower-priced drugs across the border. The same drugs can be found at a fraction of the U.S. cost, sometimes without a prescription.
So we welcome President Trump’s efforts to address the disparity.
Drug prices have far outpaced the rate of inflation and helped drive overall health care prices, and in turn insurance rates, skyward. The issue gained prominence in 2015 when a young investor, Martin Shkreli, bought control of an AIDS drug maker and raised its price by 5,000. Similar but less extreme increases have been made to the makers of the EpiPen, used to counteract extreme allergic reactions, insulin and other drugs. The companies have endured class-action lawsuits and investigations for possible collusion by the Obama administration.
And still the prices rise.
Trump made drug prices a campaign issue and addressed it early in his presidency. He met with CEOs of major drug companies shortly after his inauguration in January 2017, and by May of last year he’d drafted an executive order that called for more transparancy, and would allow patients with high deductible insurance plans to receive drugs without first having to reach the deductible limit. Critics said the provision merely got money to the drug makers sooner and did nothing to lower prices, and Trump never signed the order into effect.
The president also has suggested allowing government programs such as Medicare to negotiate drug prices directly with drug companies rather than going through intermediaries. The idea has been popular for some time but resisted by the drug makers. Most recently Trump has proposed an “international price index” under which Medicare would pay the global average for drug prices, which should lower the prices in this country.
It’s a complex issue. Prices are lower in some countries because they are regulated by law. The companies make up for lost revenues in those countries by adding them to the prices in other countries.
Drug makers say much of their revenue funds research and development that improves medicines or creates new ones. Studies have shown, however, that they spend more on marketing than on research, and drops in revenues usually lead to cuts in research but not on marketing.
A contentious issue is the matter of drug patents, which rewards drug makers for the development cost of new medications but locks out any competition that would impose market pressures to keep prices down.
Imposing artificial price controls isn’t a serious option. It’s abhorrent to most people in Trump’s political base and many liberals probably are averse to such intrusions in the free market. More importantly, Richard Nixon imposed price controls four decades ago, with disastrous results.
The new year will give Trump a Democratic House and Republican Senate. If the three parties are willing to work together to seriously address it, perhaps they can make progress toward reducing one of the largest factors in the high cost of medical care in the United States.