Critically from its actions, Trump’s administration supports the lack of drugs. Clearly, this is not the president’s stated objective, but it is the inevitable result of his policies, including the proposed drug invoices and the policies of the more favored nation (MFN).
Let’s start with invoices. The specific medicinal products that will be treated by invoices and the exact rates to be imposed – the president has rejected rates up to 250% – are unknown. If these invoices are imposed, the impact on patients and the healthcare system will be terrible.
The complexity of world trade is a great confusion about the financial consequences of invoices, but invoices are just taxes. As a result, the proposed invoices impose an arbitrarily higher tax rate on a specific health care service. There could be very little confusion about policy damage, if, instead of a drug invoice, the proposed administration’s healthcare tax was 50% increased income tax on doctors.
Such a tax would seriously reduce income after doctors’ taxes in relation to other occupations. In response, many today’s doctors will leave the field for more lucrative opportunities elsewhere and fewer young people will choose medicine as a career. These doctors who continued the exercise will eventually increase their prices to offset the significantly higher tax burden they have to pay. The result would be a higher cost and a deterioration of the problem of a doctor’s lack.
The same financial processes will happen with Trump invoices. The imposition of duties on medicinal products will increase the marginal costs of drug production and reduce the availability of drugs in the US, thereby causing the problem of drug lacking, especially for generics and other low -margin drugs that are less capable of increasing.
Drugs deficiencies reduce health results and increase patients’ demand for other health services, including doctor visits, emergency visits, hospital stays and surgery. As these healthcare services can be even more expensive, the lack of drugs can ironically increase overall health care costs.
The president’s MFN policy composes these problems. MFN policy is causing US prices on targeted drugs to equal the lowest price offered for the same medicine to other rich nations.
The administration claims that the MFN policy only concerns justice, because American patients should not pay more for the same drugs. But this logic ignores the reality that the prices For generic medicines, which include 92% of all prescriptions written in the US, are cheaper here in the US, are only prices for 8% of US recipes – the most innovative, branded drugs – which are more expensive.
However, innovative drugs are cheaper abroad, because these other rich countries impose price controls on branded medicines. Since these government prices are based on strict budgets of foreign governments and incorrect value crises, they are anti -economic.
Non -financial price checks inevitably harm the nations that adopt them. For example, patients in these prices controlled have access to only 29% of new drugs compared to 85% here for American patients in Canada and the United Kingdom can expect years of access to the latest treatments in some cases and at any given time in Canada, there is a shortage of between 1,500 and 2,000.
The introduction of prices will introduce the same issues of lack of medicines and access that affect these other nations.
Adopting a MFN policy will also harm innovation. The development of an innovative drug takes over $ 2.9 billion (including spending after purchase). It is also a dangerous attempt as about 9 of the 10 drugs that reach the clinical test stage eventually fail.
Drug price checks make it difficult for innovative businesses to cover these extremely large funds, which reduces the amount of money spent on new innovations. Chicago University Issuing short He found that “revenue reduction by 1 % leads to a 1.5 % reduction in R&D activity”.
However, the above evaluations evaluate the effects of invoices and MFN policy individually. But it is possible (perhaps possible?) That both policies will be implemented. The adoption of both politicians further exacerbates the negative consequences.
By imposing drug tariffs and their ingredients, the effective cost of producing drugs in the US is now even higher than other countries. However, MFN policy will force US prices at arbitrary low levels that do not represent these additional “production” costs.
Since US prices will cover even less costs, US prices would be even more anti -financial than the price of the reference nation, although both prices are the same. This means that the problem of lack of drugs and disincentives for future innovation would be even more acute in the US compared to other industrial countries.
While these adverse consequences are quite bad, the combined MFN pricing policies will also endanger the US regime as a global leader in drug innovation. Although it never makes sense to reduce entrepreneurs based on us, doing this at a time when China is gaining significant attraction will only boost the Chinese industry to the detriment of domestic innovative.
Anti -economic pricing in other countries is a problem and the US drug pricing system is fundamentally wrong. The US must face anti -economic prices in other countries through trade negotiations. There are many possible reforms that will face defects that plague the US drug pricing system as I discuss here and here.
However, invoices and MFN policy are not effective answers to these problems. Applying either policy will harm patients and cause unpleasant shortages of drugs and access issues. If the administration is truly dedicated to the help of patients, it will launch these devastating policies.
