This weekly column offers opinions on the latest pharmaceutical industry news.

Dear President Trump,

When you met with several pharma executives last week, you complained about “astronomical” drug prices and promised to cut regulations so medicines could be approved faster.

That’s standard campaign fare. But one remark was particularly curious — you accused foreign governments of “freeloading” by imposing price controls on medicines, which cut drug makers’ profits and, as a result, make it more difficult to finance research and development. You promised, without specifics, to use trade policies so that foreign countries would pay their “fair share.”


Let’s be blunt: Your idea is half-baked. Why? Because it is much more complicated than you think.

Unlike the United States, most other countries provide some form of insurance coverage for their populations and take responsibility for negotiating drug prices. Government agencies around the world have been pushing back against drug makers over the rising cost of medicines, a development that has proven not only popular with voters, but increasingly necessary given strained budgets.

Some Americans, however, grumble that they are, in effect, subsidizing other countries. That may be true, but the US has failed to take any significant steps to lower prices. And while you profess a desire to tackle this issue — and play to your populist base — you have sent mixed messages about allowing Medicare to negotiate. And you have only paid lip service to the idea of allowing drugs to be imported.

Perhaps this is because you have realized that the Republicans controlling Congress are unlikely to back proposals that would upset brand-name drug makers, who are big campaign contributors. Of course, you’re full of surprises and may yet take action. But using strong-arm tactics — in the form of trade deals that force other countries to pay more for medicines — must seem like an easier fix.

Well, good luck. Other governments are unlikely to acquiesce so easily.

“Expecting other countries to pay their fair share is patently absurd,” said Kurt Kessler of the ZS Associates pharmaceutical consulting firm. “It could quickly turn into a backlash against the US. Imagine the reaction from other governments: ‘You’re going to beat us with a stick and make us pay more for something, when our system already works well, so that it’s easier for Americans to pay less?’” said Kessler, who is based in Switzerland and specializes in global marketing strategies.

Just spin a globe and you can find any number of battles currently underway over pricing — in countries that are well off, and some that are less so.

In Ireland, health authorities are fighting Vertex Pharmaceuticals over the price of a cystic fibrosis drug. The Canadian government is in court hoping to win the right to seek restitution from Alexion Pharmaceuticals, which it accused of overcharging for a rare disease treatment. The Colombian health minister unilaterally cut the price of a Novartis drug after bitter negotiations failed. And the Chilean congress asked the president to establish procedures for sidestepping patents on medicines so that lower-cost versions could be produced.

The US is unlikely to be able to use trade agreements as leverage to raise prices abroad. Such pacts often require countries to protect drug makers’ patent rights. But they are not obligated to buy those drugs or to guarantee certain pricing in public hospitals, for instance. And under a World Trade Organization agreement, countries have the right to take the approach being pursued by Chile to create low-cost alternatives to pricey brand-name drugs.

There may be some routes open to you, however. Perhaps your team could pursue trade deals that eliminate reference pricing, which is when a government evaluates the effectiveness of different drugs used for treating the same disease and sets reimbursement based on the least expensive choice. Or you could restrict the use of formularies, which are lists of drugs that receive certain coverage.

“Any smart country would fight back, though, because they’re at the mercy of [pharmaceutical] monopolies,” said Brook Baker, a professor at Northeastern University School of Law and a senior policy analyst for Health GAP, a group that advocates for wider access to medicines. “It’s not that these countries are getting a free ride. What you see is a willingness to tame the excesses of a free market.”

There is another point worth noting.

Even if other countries began paying more for medicines, there is nothing to say this would result in greater research or more jobs in the US. Maybe drug makers would use the extra revenue for more research. That would be nice. But they could just as easily raise shareholder dividends or divert some of the money to more heavily promote their medicines. Most likely, it would be all of the above.

Meanwhile, though, you risk souring relations with some countries over a pocketbook issue that resonates widely no matter where you look. And it will do nothing to solve the affordability problem confronting many Americans.

So before you complain too much about others not paying their fair share, perhaps you should sort out how Americans can pay a reasonable share for medicines, too.

UPDATE: This column was corrected to reflect that the Canadian government is seeking restitution from Alexion Pharmaceuticals..

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  • Half baked is more than generous. If we look at the landscape there are Mount Everestian challenges.

    Most of actives used in the US are imported. They have to be produced in the US with the hope that their cost would be the same as the landed cost of imports. Questions we have to ask are:

    1. Do we have entrepreneurs who are willing to invest to produce the actives?
    2. Do we have the technologies and processes to off the imported cost of actives?
    3. Do we have or have invested in technologies that will lower the formulated drug costs?
    4. Do we have sufficient number of chemists and chemical engineers to create, man and manage active ingredient plants and are they ready to work in the next two to three years?
    5. Do we have the systems and competition in place for compete when it comes to drugs and do the patients have the choice and benefits of competition?

    Answer to the above five and additional questions are NO. Focus of the pharma companies generally has been to increase their revenue and profits. In the recent years these have come through price increases and orphan drugs that per disease has less than 100,000 patients. Companies have created new treatments that are marginally better but way more expensive than the existing drugs and that means unaffordable.

    With the above landscape how are you planning to make the drugs more affordable. Are you planning to eliminate the influence of the pharma companies on our legislatures to make things are more acceptable to the companies or to do things that are mutually beneficial to the patients and the pharma companies? So far things have been Pharma win and patient loss.

    Are you willing to isolate our country from 80% of the world? If you do not allow free trade then we do not have the right to tell companies in other countries not to respect our drug and for that matter any patents.

    Many things have to be thought through rather than saying things that are no achievable. Pharma companies have one motive win and win at all costs.

    Talk is cheap and free but walk is difficult. In addition, free things have no value. Cheers.

  • Well, so far Pres. Trump has ” shot from the hip ” on a lot of issues . Are we surprised ? We Stage IV Cancer Survivors and Caregivers applaud him for taking both the FDA and Big Pharma to task . Even if he’s doing it incoherently . His background is casinos, real estate and reality tv. We do not want a Big Govt. System like the UK and others around the world. They don’t ( can’t ) fund research and seem to depend on American ingenuity . They deny their citizens a chance at life that Americans get . My wife’s miracle cancer – clearing drug , Kadcyla ,( a product of US private sector research ingenuity ) is being denied to UK citizens by NICE as we speak . Thousands of UK citizens may die over the next year or so , if NICE ‘s control is allowed to stand.
    We Survivors got a taste of Big Govt. Control in Pres. Obama’s 1st term – an FDA that revoked, delayed, banned drugs that saved , prolonged lives – 2009 -2014, Avastin, Kadcyla, Iclisug, Lemtrada . Big Govt. seeking to regulate instead of saving lives . We also know that much of Big Pharma is focused more on making $$$ than saving lives . We want negotiation , adjustment – with our lives as the top priority .

    • Thanks, Ed Silverman, for the strenuous work of sorting through the complexities of both the problem and Trump’s “shoot from the hip” solution – or for at least trying to tease out his solution. Some of us do want a big government solution, of course, but in spite of our disgracefully low ranking in health indicators when compared to countries with some form of universal health care, this seems a distant goal. Survivors, and the rare disease community, certainly need to be heard, but they also need to be aware that they are at risk for exploitation and manipulation by the very people, the big pharmas of the world and their politicians, who are profiting from the public’s contribution to research even before profiting from grotesquely inflated prices. Huge sums of money in NIH funding go to support the basic research that lies behind specific drug development, the universities supporting this research crank in overheads of 50% – 65% on every research dollar, additional large sums underwrite the medical schools (infrastructure, grants, scholarships, student loans) – all of this is taxpayer, and Survivor, money and all of this before we even get to the cost of the specific drugs. Shooting from the hip may be emotionally satisfying, but it is not a solution to our problems.

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