..Schiff's take below may be right but I'd somewhat agree with Trump's attempt to introduce price control on prescription drugs for Americans who have been paying more than other countries even when the drugs are discovered and made in USA.
..it is just like we pay more for Aussie oranges than someone else in the Asian market (who cannot afford to pay).
..But I don't agree that US pharma must price match in US what they sell lowest in foreign countries. Americans should not be 'subsidising' other countries for their own drugs to that large degree. The Federal could provide US pharma with some special tax deductions for drug R&D e.g double deduction on R&D expenses to reduce forgone profits after lowering domestic drug prices.
..this Trump policy is still in its infancy stage on how it is to be implemented. But on this, I agree with the Prez.
..Guess he does not something 'big' to offset concerns over price hike from incoming tariffs.
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When Kamala Harris talked about price-fixing groceries, Republicans were correct to call her policy socialism. The same applies to Trump's desire to do something similar with prescription drugs. But as always, when government interferes with the free market, the plan will backfire, resulting in higher, not lower, prices for prescription drugs in the U.S.
Thanks to overly burdensome FDA regulations, it costs a lot of money to bring a prescription drug to market. As a result, pharmaceutical companies have a finite period of time to recover their costs and turn a profit before their patent expires, and other companies that spent no money developing the drug can knock it off. Also, for every drug that gets approved, five don't.
So not only do drug prices need to be high enough for companies to recover the costs of developing the drugs they sell, but to recover what they spent developing drugs they never sell.
The U.S. is the main market for prescription drug sales, so that is where pharmaceutical companies look to recover their costs first. They supplement that recovery with overseas sales. But since the marginal cost of those sales is very low, they maximize their profits by selling in foreign countries at lower prices. This is especially true in poor countries that could never afford to pay what Americans can. Pharmaceutical companies still make money on those sales, even if the price is much lower than what Americans pay. But if they charged people living in poor countries the same prices as they charge Americans, the collapse in sales volume would result in lower profits. Now some of the foreign sales are not to poor countries, but other rich countries.
But there, U.S. companies compete with foreign pharmaceutical companies, that sell drugs that might not even be approved in the U.S., and that spent much less to develop their alternatives. To stay competitive and win contracts, U.S. companies often sell their drugs for lower prices than what the same drugs sell for in America.
Trump doesn't think this is fair. So his solution is to force U.S. pharmaceutical companies to charge Americans no more for prescription drugs than what they charge to their poorest customers in the world. According to Trump, this will result in pharmaceutical companies slashing prices in America to match prices in Bangladesh. The opposite will occur. Prices in Bangladesh and all other countries will be raised to match prices in the U.S.
The result will be a decline in earnings for U.S. pharmaceutical companies due to collapsing overseas sales. Since those companies will now have lower foreign profits to offset the cost of developing drugs, the price they charge for all drugs will go up, including here in the U.S. So the net result of the president's plan will be to lower U.S. pharmaceutical company profits and raise the prices Americans pay for prescription drugs.
