America has been taken advantage of for far too long. The president knows it and has been telling the truth about it all along on social media. I’m not talking about America’s subsidization of NATO, or the exorbitant tariffs we are continually charged by countries benefiting from American consumption. I’m also not talking about our porous southern border facilitating the international illegal drug trade and human trafficking.
I’m talking about an abuse that will unfortunately affect every person reading this at some point in their life: price gouging of prescription drugs.
Earlier this week, President Trump called out pharmaceutical giant Pfizer for their mistreatment of America’s sick. His tweet, which stated, "Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!" was a shot across the bow against an industry disproportionately penalizing Americans with unreasonably higher prices for life-saving medicines.
Trump has maintained a laser-like focus on this issue, beginning on the campaign trail and continuing into the White House. Shortly after the election, Trump told Time magazine in his "Person of the Year" interview in December of 2016, "I’m going to bring down drug prices. I don’t like what has happened with drug prices."
The president’s messaging on this issue remained consistent through this year’s State of the Union address, where he reiterated his promise to lower drug prices stating, "One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States . . . That is why I have directed my administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down."
This is just another one of many problems inherited by Trump with regard to an issue going unaddressed during the eight years of the Obama presidency.
Although the president has maintained the desire to address this issue, the administration’s execution through their first 18 months in office has been somewhat lackluster. Their first major attempt to reform the industry came this past May, via the Department of Health and Human services’ "HHS Strategy to Lower Drug Prices and Reduce Out-of-Pocket Costs."
Some of the key elements of the plan were lowering drug prices for seniors, eliminating foreign governments' "free-riding" by attempting to make them to pay more for American drugs, and requiring drug advertisements to include the cost of the product.
Another element of the plan called for the review of the existing "rebate system" and the role of Pharmacy Benefit Managers (PBM) within the process.
PBMs work for health insurance companies to negotiate lower prices with the pharmaceutical companies. The price breaks they obtain typically come in the form of rebates paid to the companies, which ultimately makes prescription drugs cheaper for patients.
Lately, the pharmaceutical industry and their allies in the press have attempted to vilify PBMs for the high cost of prescription drugs. This attempt to lay responsibility on the rebate system is an unfair blame shift that misdirects the responsibility from the pharmaceutical companies who have engaged in unrestrained price gouging.
Unfortunately, these attacks on PBMs can gain traction because of ignorance of the importance of their role. Drug company executives are willing to pay millions in lobbying and campaign contributions to make sure that legislators and government regulators have someone else to blame.
However, without PBMs, who would constrain the price of prescription drugs? Patients would be forced to pay whatever big pharma wanted to charge for drugs still on patent, with insurance companies footing the bill and having to raise premiums every year to cover the skyrocketing costs.
Without PBMs, there would be no entity working to negotiate prices for on-patent drugs.
The outrageously high prices of new drugs, in concert with a pharmaceutical industry looking to make every possible penny, necessitate the existence of entities like PBMs that negotiate prices to help keep medications and insurance premiums lower.
The president was right to call out the true driver of increasing drug prices, the pharmaceutical companies themselves, which account for almost 90 percent of the cost of a drug. Without the existence of actors to keep drug prices in check, big pharma will continue their advantageous exploitation of the free market.