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Trump May Have a Prescription for High Drug Prices

In his State of the Union address, President Donald Trump said he would soon focus on bringing down the high cost of prescription drugs. 

Democrats have been singing that song for decades, but they only have one verse: government-imposed price controls. 

To be sure, some brand name drugs are very expensive—in excess of $100,000 a year. Still, it’s a little misleading to talk about “the high cost of prescription drugs” as if they are all equally expensive. 

According to the U.S. Food and Drug Administration, in the United States about nine out of 10 prescriptions are filled with less-expensive generic drugs. While some generics can be expensive, many of them will cost between $10 and $20. 

And the New York Times recently reported that generic drug prices are actually falling. “Blockbuster drugs that have recently taken this path include Lipitor and Plavix, the cholesterol-lowering and blood-thinning pills that now cost as little as $10 for a monthly prescription,” according to the Times. 

So what can Trump do? Well, he took a positive step in choosing Dr. Scott Gottlieb to run the FDA. Gottlieb has a number of innovative ideas for controlling drug costs, many by shrinking the role of government rather than expanding it. 

Another factor: Most developed countries have some version of a government-run health care system that demands significant discounts before they will allow consumers to access a new prescription drug. 

As a result, U.S. consumers pay the lion’s share of drug company profits, up to 78 percent, according to recent research published at The authors suggest that the U.S. should “press other countries to pay their fair share.”  

Getting other countries to do so has been difficult. Some countries, especially developing countries, have given branded drug companies an ultimatum: Sell us your brand name drug at an extremely low price or we will issue a “compulsory license”—in essence, the country will co-opt the drug and make it in their own factories.  

However, with Trump wanting to renegotiate bilateral, rather than multilateral, trade agreements, he may be able to address this problem.  

As the largest and richest economy in the world, other countries want access to U.S. markets and consumers. Trump has made it clear he wants more intellectual property protections. Pressing other countries to bear a greater share of pharmaceutical R&D costs—just as he wants allies to bear a greater share of defense costs—might help in reaching his goal of lowering prescription drug costs, at least for Americans.