President Trump's recently released Great Healthcare Plan offers several welcome reforms. It endeavors to put patients first by fostering greater price transparency and taking steps to lower health insurance premiums.
Its approach to prescription drug policy is a bit more mixed.
First, the good. Trump's proposal would make more drugs available for purchase over the counter. That change would save patients both time and money. No longer would they need a doctor's visit just to obtain routine medications.
Expanded over-the-counter access would also make the drug market more efficient. When patients buy medicines with their own money, they demand transparent prices.
That leaves far less room for insurers and pharmacy benefit managers to obscure the true cost of a medicine — and take a cut.
Price transparency, in turn, encourages competition.
Pharmaceutical manufacturers will compete on price and value.
The end result will be lower costs, better-value care, or some combination of the two.
It's especially heartening that Trump's over-the-counter drug proposal seeks to lower prices through market forces rather than government fiat.
The same cannot be said for the Great Healthcare Plan's proposal to codify a "most favored nation" approach to drug pricing into law.
Since September, the administration has struck agreements with 16 drug makers to offer certain U.S. buyers prices no higher than those paid in other developed nations. The drug makers have agreed to the deals in exchange for concessions like relief from tariffs.
Turning those voluntary arrangements into binding law would be something else entirely.
New medicines generally cost less abroad — when they're available.
Research from RAND finds that drug prices are nearly 2.8 times higher in the United States than in 33 other wealthy nations.
That gap exists for a reason. Countries like Canada, the United Kingdom, and France maintain strict price controls on medicines. Lower prices come at the cost of reduced access.
Consider that fewer than six in ten drugs launched between 2012 and 2021 were available in the United Kingdom as of October 2022.
Only 52% were available in France, and just 45% in Canada. In the United States, by contrast, 85% of these medicines were available to patients.
It stands to reason that importing foreign price controls would reduce Americans' ability to access novel drugs to levels in other nations.
Capping prices by codifying most-favored-nation mandates would also undermine investment in the next generation of medicines.
Drug research is already extraordinarily risky. It takes an average of $2.6 billion and more than a decade to bring a new therapy to market. About 90% of drugs that enter clinical trials ultimately fail.
Price controls make that gamble even less attractive.
Investors will be far less willing to fund the development of new medicines if government policy caps potential returns. The result will be fewer medical breakthroughs — and more people waiting for effective treatments.
An open, competitive market is the best way to keep drug prices in check while preserving innovation and quality. Expanding over-the-counter access moves us in that direction.
Codifying foreign price controls moves us backward. Such mandates have no place in a healthcare reform package claiming to put American patients first.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It." Follow her on X @sallypipes. Read more of Sally Pipes Insider articles — Click Here Now.
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