Beneficial reforms to the U.S. drug pricing system are needed. However, importing foreign price controls via President Trump’s MFN scheme is not the answer.
The Trump Administration has announced its desire to impose price controls on drugs – officially called a most favored nation (MFN) policy. Essentially, the policy sets the price for the targeted drugs at the lowest price in other industrialized countries. The president’s justification for the MFN is simple: Americans are getting ripped off because drug prices are cheaper in other industrialized countries.
This justification misreads the problems plaguing the U.S. healthcare system. Three flaws drive up list prices for innovative medicines relative to other industrialized countries (OECD, or Organization for Economic Cooperation and Development). First, the U.S. drug market is plagued with inefficiencies. Second, other industrialized countries impose uneconomical price controls on innovative drugs. Third, the higher U.S. drug prices simply reflect the disfunction of the broader U.S. healthcare system.
Sustainably improving drug affordability in the U.S. requires policies that address each one of these flaws.
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.
Trump Should Support Effective Drug Policy Reforms Not The MFN Gimmick
Wayne H Winegarden
Beneficial reforms to the U.S. drug pricing system are needed. However, importing foreign price controls via President Trump’s MFN scheme is not the answer.
The Trump Administration has announced its desire to impose price controls on drugs – officially called a most favored nation (MFN) policy. Essentially, the policy sets the price for the targeted drugs at the lowest price in other industrialized countries. The president’s justification for the MFN is simple: Americans are getting ripped off because drug prices are cheaper in other industrialized countries.
This justification misreads the problems plaguing the U.S. healthcare system. Three flaws drive up list prices for innovative medicines relative to other industrialized countries (OECD, or Organization for Economic Cooperation and Development). First, the U.S. drug market is plagued with inefficiencies. Second, other industrialized countries impose uneconomical price controls on innovative drugs. Third, the higher U.S. drug prices simply reflect the disfunction of the broader U.S. healthcare system.
Sustainably improving drug affordability in the U.S. requires policies that address each one of these flaws.
Read the Forbes op-ed here:
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.