Trump drug pricing proposal would doom future cures

President Trump wants to make a deal on drug prices. But his latest proposal could grind medical innovation to a halt.

Health and Human Services Secretary Alex Azar said last week that the president was looking for “most favored nation status,” whereby the United States got “the best deal among developed countries” for prescription drugs.

That may sound like the art of the deal. But it would result in the development of far fewer new drugs — and would thus snuff out hope for millions of Americans currently suffering from incurable diseases.

The drug development process is full of trial and error. Only 1 in 10 drugs that begins clinical trials ends up receiving approval. Consequently, developing a new medicine and bringing it to market requires a lot of money and time — $2.6 billion and 10 years, according to research from the Tufts Center for the Study of Drug Development.

Drug companies and their investors are willing to put up the capital necessary to develop these treatments because they believe they’ll recoup their investments after the product starts selling. Trump’s proposal would upset that calculus by decreeing that prices in the U.S. be less than those in other countries, which often impose price controls on drugs.

That would stifle innovation. One study from the University of Connecticut found that the U.S. would have produced nearly 120 fewer new medicines between 1986 and 2004 if it had adopted price controls similar to those in the European Union.

Trump’s new plan for drug pricing reform wouldn’t favor American patients — it would consign them to continued suffering.

Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is The False Promise of Single-Payer Health Care (Encounter). Follow her on Twitter @sallypipes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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