# Can Trump Cut Prescription Prices?

An episode of [Patrick Boyle On Finance](https://invisiblenetwork.ai/podcast/1547740313), 23 May 2025, 32 min.

Audio: https://traffic.megaphone.fm/APO3775577274.mp3

Donald Trump has promised to slash the US’s high prescription medication prices by as much as 80 per cent with an executive order that seeks to force other countries to pay more for their medicines.“Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories,” the order said. “As the largest purchaser of pharmaceuticals, Americans should get the best deal.” Patrick's Books: Statistics For The Trading Floor: https://amzn.to/3eerLA0 Derivatives For The Trading Floor: https://amzn.to/3cjsyPF Corporate Finance: https://amzn.to/3fn3rvC Ways To Support The Channel:Patreon: https://www.patreon.com/PatrickBoyleOnFinance Buy Me a Coffee: https://www.buymeacoffee.com/patrickboyleVisit our website: https://www.onfinance.org Follow Patrick on Twitter Here: https://bsky.app/profile/pboyle.bsky.socialBusiness Inquiries ➡️ sponsors@onfinance.org

## Transcript

[0:00] Donald Trump signed an executive order this week accusing the
[0:03] Pharmaceutical industry of overcharging Americans for
[0:07] prescription drugs. The fact sheet on the White
[0:10] House website describes the issue as another example of
[0:14] other countries freeloading off Americans who pay up, covering
[0:18] the cost of R&D and testing while everyone else benefits
[0:22] from lower drug prices. The order doesn't describe how
[0:26] the US government plans on forcing companies to lower their
[0:30] prices, other than to threaten additional aggressive action.
[0:34] The order calls on the health department, led by Robert F
[0:38] Kennedy Junior, to communicate price targets to pharmaceutical
[0:42] companies, which has worried a few analysts that Trump plans to
[0:46] impose price controls on medications, tying the price
[0:50] that Americans pay to the lowest prices paid in comparably
[0:54] developed countries. There is a 4000 year history of
[0:58] well meaning governments imposing price controls, but no
[1:02] successful examples as market prices are needed to solve the
[1:06] economic problem of how to most effectively allocate scarce
[1:10] resources in a world of unlimited wants and needs.
[1:15] The order directs RFK Junior to establish a mechanism through
[1:19] which Americans can buy medicines directly from
[1:23] pharmaceutical companies, bypassing middle men.
[1:26] This sent shares of Cigna, one of the largest health insurers
[1:30] in the United States, down almost 6% and the drugstore
[1:34] giant CVS Health down more than 3% as both own pharmacy benefit
[1:40] managers, known as PBMS, which are companies that work with
[1:44] health insurers, large employers and other payers to manage their
[1:48] prescription drug benefits. Most of the stock prices that
[1:52] declined bounced back later in the week as investors appear to
[1:55] have decided that Trump is all bark and no bite.
[1:59] But it's still worth digging into why drug prices are so high
[2:03] in America. PBMS have been hit with
[2:06] criticism from antitrust regulators, lawmakers,
[2:10] independent pharmacies and patient advocates in recent
[2:13] years for business practices that detractors say drive up
[2:18] drug costs for Americans. The Pharmaceutical industry is
[2:23] America's most hated industry, according to a Gallup poll.
[2:27] Only 20% of Americans view the industry positively, meaning
[2:31] that it's ranked below the federal government, lawyers,
[2:35] real estate agents, and even Mark Zuckerberg.
[2:39] OK, they didn't actually put Mark Zuckerberg on the list.
[2:42] I made that bit up. But then I wondered who the most
[2:45] hated man in America actually is.
[2:48] So I googled it and it's Martin Shkreli, the pharma guy who
[2:52] became famous a few years ago for hiking the price of an AIDS
[2:56] medicine. So I guess I was wrong.
[2:59] Americans actually love Mark Zuckerberg.
[3:01] Apparently, he's the person Americans would most like to go
[3:04] for a coffee with you. Drink coffee, man or no?
[3:08] Nah. Really.
[3:12] Yeah. I mean, you've, you've had it.
[3:15] I have sometimes on vacation I'll drink it recreationally.
[3:20] It's like every once in a while. Americans have long complained
[3:23] about high prescription drug prices, and people from other
[3:27] countries are often amazed by how expensive Healthcare is in
[3:31] the United States. Research from last year shows
[3:35] that prescription drugs cost almost three times as much in
[3:39] America as in the rest of the world.
[3:41] But of course, nothing's ever as simple as it first appears.
[3:45] The gap is largest for brand name drugs, which cost 4.22
[3:50] times as much in the United states as they cost in the rest
[3:53] of the world. But then unbranded generic
[3:56] drugs, which account for 90% of prescription drug volumes, are
[4:00] actually cheaper in the United States than than elsewhere.
[4:04] Let's look at why drug prices are so high in the United
[4:08] States, and whether we need drug prices to stay high to foster
[4:11] innovation. Let's look into why the prices
[4:14] seem to go up faster than inflation, whether the situation
[4:18] is actually better in the rest of the world, and how Trump
[4:22] could lower drug prices without price controls.
[4:25] When President Trump first suggested that Canada could
[4:28] become the 51st American state last December, he had a pricing
[4:33] supporter, the Democratic Senator Bernie Sanders, who
[4:37] tweeted. Does that mean that we can adopt
[4:40] the Canadian healthcare system and lower the cost of
[4:43] prescription drugs? I'm all for it.
[4:46] Sanders has been pushing for years for the US to adopt A
[4:50] Canadian style healthcare system, including its price
[4:53] controls on prescription drugs. He even introduced a bill in
[4:57] 2017 to allow Americans to import medicines from Canadian
[5:02] pharmacies as long as they meet certain safety standards.
[5:06] Sanders is not the only politician to have pitched this
[5:10] idea, either. Florida's Republican governor,
[5:13] Ron DeSantis, spent years petitioning the federal
[5:16] government to allow his state to import drugs directly from
[5:20] Canada, too. Last year, he succeeded and
[5:23] Florida became the first US state to launch a prescription
[5:27] drug importation program. Floridas program wouldn't
[5:31] directly help consumers at the pharmacy as it instead aimed to
[5:35] lower cost for the states Medicaid program and the
[5:39] medications provided by its corrections and health
[5:42] departments. The plan would only have a
[5:45] limited effect for Florida as generic drugs are already 15 to
[5:50] 20% cheaper in the United States than in Canada and these make up
[5:55] the majority of prescriptions. So it's just the brand name
[5:58] drugs that are cheaper in Canada.
[6:00] And this is because the Canadian government uses its buying power
[6:05] to negotiate lower prices with the pharmaceutical companies.
[6:09] One of the downsides of this approach is that if
[6:12] pharmaceutical companies don't agree to price cuts on their
[6:15] newest drugs, they're just unavailable in Canada.
[6:19] According to Forbes, Canadian patients only had access to 45%
[6:25] of the 460 new drugs introduced worldwide between 2012 and 2021,
[6:32] while American patients, if they could afford them, had access to
[6:36] 85% of them. Florida identified 14 drugs that
[6:41] it planned to import from Canada last year, but one year on, the
[6:45] results have been unspectacular. What do I mean by unspectacular?
[6:51] Well, what I mean is that it doesn't appear that Florida has
[6:54] imported a single Canadian drug so far.
[6:57] Importing medicines this way works out to be quite
[7:01] complicated because of the USFDA's requirements, which
[7:05] include finding companies to work with, like a Canadian
[7:09] exporter and AUS importer, and then following a process to
[7:14] ensure that the drugs are safe and authentic.
[7:17] According to a lawsuit where the state of Florida is now suing
[7:21] the FDA, Florida has so far spent $50,000,000 to set up a
[7:26] warehouse to store the medicines and paid an importer and
[7:30] distributor over $24 million, with this fee increasing at the
[7:35] rate of $1.2 million every month, even though not a single
[7:40] prescription pill has been imported, relabeled or
[7:43] distributed. And this is because of the FDA's
[7:47] idle. According to the lawsuit, one of
[7:50] the main reasons that prescription medicines are more
[7:53] expensive in America than elsewhere is that, like Canada,
[7:58] most other wealthy countries negotiate directly with
[8:01] pharmaceutical companies to get a good price on medications for
[8:06] the country as a whole. Because of the way that
[8:09] healthcare and health insurance works in the United States,
[8:13] thousands of smaller health plans negotiate their own
[8:16] prices. And because of their smaller
[8:19] sizes, these health plans can't buy the same volume as a country
[8:23] can, and thus they can't get the same kind of discounts.
[8:28] In the United States, the FDA decides if a new medicine is
[8:32] safe enough to be sold. And if it's safe, it can be sold
[8:36] in places like the UK. The NHS additionally decides if
[8:41] it's worthwhile making the new medicine available.
[8:44] National Health services in other countries often compare
[8:48] new medicines to existing ones to decide if the new one is
[8:53] actually better and if the improvements are worth the
[8:56] higher price. Pharmaceutical companies say
[8:59] that US patients get new medicines faster and with fewer
[9:03] insurance restrictions than patients in other countries.
[9:07] In 2016, there were protests in the United States over steep
[9:12] price hikes for EPI pens, which at $300.00 per dose, cost more
[9:18] than three times what they cost in other developed nations.
[9:22] Epipens are needed for people with extreme allergies who carry
[9:25] them around at all times in case of emergency.
[9:29] While these protests were going on in the United States, there
[9:33] were similar protests in the UK over the lack of access to a
[9:37] cystic fibrosis drug called Orcambi.
[9:40] In the US, OR Cambi was available and cost around
[9:44] $270,000 per patient per year, a very expensive drug.
[9:50] The best price the NHS could negotiate with the manufacturer
[9:54] was about a 50% discount, but this was still too expensive for
[9:59] the NHS. According to the Guardian, OR
[10:02] Cambi helps around 40% of patients with cystic fibrosis
[10:07] but only has limited efficacy. Canada's cost effectiveness body
[10:12] turned the drug down too. At the time that this was going
[10:15] on, President Trump accused the UK of freeloading by refusing to
[10:20] pay the high prices American drug companies charge for
[10:24] medications in the US. While new medicines do often
[10:28] become available in the United States earlier than in the rest
[10:32] of the world, research shows that Americans, and in
[10:35] particular uninsured Americans, skip taking their prescription
[10:40] medications due to cost more than citizens of any other
[10:44] developed country. There is a trade off between
[10:47] price and availability. President Trump used the story
[10:52] of a very wealthy and overweight friend buying weight loss
[10:55] medication abroad to illustrate the problem that Americans face.
[11:01] I mean, I'll tell you a story. A friend of mine who's a, a
[11:03] businessman, very, very, very top guy.
[11:07] Most of you would have heard of him, very successful, very rich,
[11:11] seriously overweight. And he takes the fat, the fat
[11:16] shot drug president, could I ask you a question?
[11:19] What? I'm in London and I just paid
[11:22] for this damn fat drug I take. I said it's not working.
[11:26] He said I just paid $88 and in New York I paid $1300.
[11:34] What the hell is going on? He said.
[11:37] So I checked and it's the same box made in the same plant by
[11:43] the same company. It's the identical pill that I
[11:46] buy in New York, and here I'm paying $88 in London.
[11:52] In New York I'm paying $1300. Now, this is a great
[11:55] businessman, so, but he's not familiar with this crazy
[11:59] situation that we have. But he was stunned.
[12:03] I brought it up with the drug companies, represented by
[12:05] somebody who's very, very smart, good person too.
[12:09] And we argued about it for about half hour.
[12:11] And then finally he just said, because they can't justify it.
[12:15] He just said, look, you got me, you got me.
[12:19] I can no longer just, they've been justifying this crap for
[12:23] years. They said, oh, it's research and
[12:25] development, where I said, well, research and development, other
[12:27] countries should pay research and development too.
[12:29] It's for their benefit. To understand drug testing, we
[12:33] need to go back to 1937, when an improperly prepared antibiotic
[12:39] caused a mass poisoning event in the United States, where over
[12:43] 100 people died. The public outcry LED Congress
[12:47] to pass the Federal Food, Drug and Cosmetic Act a year later,
[12:51] which exempted drugs that people had been using for several
[12:55] years, like aspirin and insulin, but required pharmaceutical
[12:59] companies to provide convincing passing evidence to the FDA that
[13:03] any new product being introduced was safe for patients to
[13:07] consume. As directed after the
[13:10] thalidomide tragedy, a 1962 amendment was added requiring
[13:16] drug makers to convince the agency that a new drug was
[13:19] effective as well as safe. The amount of time required to
[13:24] test new medications for safety and effectiveness has grown over
[13:29] time and once again there are trade-offs.
[13:32] No one wants unsafe medications being sold to the public, but
[13:36] equally, if testing takes too long, life saving medications
[13:40] could be being withheld from the public, causing lives to be
[13:44] lost. In the 1980s, under intense
[13:48] pressure from advocates for AIDS patients who protested the
[13:52] agency sluggishness, the FDA made changes in the way it tests
[13:57] and approves drugs for patients who are fatally ill.
[14:01] In 1983, the Orphan Drug Act was passed to encourage drug makers
[14:06] to develop rare disease treatments that otherwise might
[14:10] not be profitable to research. The FDA allowed approval for
[14:14] these drugs based on smaller trials with more flexible
[14:18] evidence standards. And it offered more time on the
[14:22] market for the medicines without generic competition so that
[14:26] pharmaceutical manufacturers could earn a reasonable profit
[14:30] from their research. The Prescription Drug User Fee
[14:34] Act of 1993 allowed the FDA to start charging pharmaceutical
[14:39] companies fees to fund the review process.
[14:43] This additional funding speed up the approval process but
[14:47] increased the cost of doing business for pharmaceutical
[14:50] companies. In 1993, the FDA collected $66
[14:55] million in fees from the Pharmaceutical industry.
[14:59] But we're collecting more than 12 times as much by 2018.
[15:04] FDA drug review times declined from more than three years in
[15:08] 1983 to less than one year in 2017.
[15:13] But total time from the authorization of clinical
[15:17] testing to approval has remained constant at approximately 8
[15:21] years over that period. While there are complaints about
[15:25] the speed of the drug approval process in the United States,
[15:29] research from the Yale School of Medicine found that the FDA
[15:33] moves faster than its counterparts in Europe, Canada,
[15:37] and Japan. One of the arguments that the
[15:40] pharmaceutical companies make for new drugs being so expensive
[15:44] in the United States is that R&D is both risky and expensive.
[15:49] Only about 12% of new molecules make it through the approval
[15:54] process to being commercialized, and a recent study found that
[15:59] R&D and D spending for the industry hit $276 billion in
[16:04] 2021. Last year, the FDA approved 50
[16:09] new drugs for use in the United States.
[16:12] If we divide the $276 billion of annual R&D spending by 50 new
[16:18] drugs a year, we end up with $5.52 billion per drug in
[16:24] research cost alone. Drug companies need to make that
[16:28] back and cover the cost of manufacturing and marketing
[16:32] before they even break even. And not all of those 50 new
[16:36] drugs will be blockbusters either.
[16:38] Many will be competing with existing treatments, and some of
[16:42] the existing drugs will be better than the new ones.
[16:45] Once a new medication is approved, it has about 12 years
[16:50] of market dominance before a competitor brings out a similar
[16:54] or better drug. Pharmaceutical companies have to
[16:58] make their money back plus a profit in this 12 year window.
[17:03] Unlike the 20 year patents that drug makers get, which are
[17:07] generally acquired early in the development process and are
[17:10] based on intellectual property rights rather than evidence of
[17:14] safety and effectiveness, marketing exclusivity is granted
[17:19] only after a drug has been approved by the FDA and only
[17:23] when statutory requirements are met.
[17:26] Exclusivity puts into place a period of time during which no
[17:31] other applications can be accepted and or approved for the
[17:35] same active ingredient. This means that other
[17:38] manufacturers who want to develop alternative formulations
[17:42] or generic versions of the drug will not be able to have their
[17:46] products approved during that exclusivity period.
[17:50] There are exceptions to some of these protections too, which
[17:54] might even benefit President Trump's fat friend.
[17:58] I'm not fat, I'm big bound. When drugs are in short supply,
[18:03] like GLP One, which is prescribed for diabetes as well
[18:07] as obesity, pharmacies in the United States are allowed to
[18:11] make compounded versions which are full blown copies so that
[18:15] people can still access important medications.
[18:19] The FDA declared a shortage of GLP One in 2022 due to high
[18:25] demand allowing telehealth providers to make generic
[18:29] versions, and only recently removed it from the shortage
[18:33] list after the agency determined that the current supply of the
[18:37] drug can meet present and future demand.
[18:41] The compounded versions were very popular as cheaper
[18:44] alternatives for people whose insurance didn't cover the drug
[18:48] for weight loss, but now they're going away.
[18:52] CNBC reported last month that Novo Nordisk, the drug's
[18:57] manufacturer, will make the drug available at a discount through
[19:01] telehealth providers in order to address a larger market.
[19:07] Reuters reported last December that drug makers planned to
[19:11] raise prices in the US on at least 250 branded medications by
[19:16] approximately 4 1/2% for 2025. Their research shows that larger
[19:23] drug price increases were once far more common in the United
[19:27] States, but in recent years drug makers have scaled them back
[19:31] after price hikes drew sharp criticism in 2015.
[19:35] The issue of drug price hikes came into sharp focus in 2015
[19:40] when pharma bro and rap enthusiast Martin Shkreli bought
[19:45] an old drug called Daraprim, which treats life threatening
[19:49] diseases in HIV patients. He raised the price overnight
[19:53] from $13.50 a pill to $750 a pill.
[19:59] The drug had been developed in the 1950s and had no patent
[20:03] protection, but there were no generic competitors available in
[20:08] the market that patients could turn to.
[20:11] He was the only supplier and he marked the price up as much as
[20:15] he could. In principle, the new high price
[20:19] should encourage generic drug makers to produce a cheaper bio
[20:23] equivalent product. But because of the small number
[20:26] of patients who needed it and the short treatment duration
[20:30] relative to other drugs, it wasn't worthwhile for another
[20:34] company to start producing a generic version.
[20:37] A Reuters analysis in 2023 found that pharmaceutical companies
[20:42] launched new US drugs in that year at prices 35% higher than
[20:48] the prior year. They say that more than half of
[20:52] the new medicines were for orphan diseases, meaning
[20:55] diseases which affect fewer than 200,000 Americans, and that most
[21:00] of these drugs were not expected to become big sellers, possibly
[21:04] justifying the price per dose. Despite the constant political
[21:09] pressure to reduce the price of prescription medicines, Novartis
[21:13] introduced the world's most expensive medication in 2019, a
[21:18] gene altering injection that cost $2.1 million for a one time
[21:24] treatment for a rare inherited disease that destroys certain
[21:28] cells involved in muscle movement.
[21:31] If left untreated, patients typically don't live past
[21:35] childhood. Novartis offered insurers the
[21:38] choice of paying for the treatment in $425,000
[21:43] installments over five years. The patent system was put in
[21:48] place to encourage innovation by giving inventors temporary
[21:52] monopolies on their new ideas so that they can recoup their R&D
[21:57] investment over time and hopefully yield a profit.
[22:01] If the business of coming up with new medicines is
[22:04] profitable, it should attract new market entrants and society
[22:08] should broadly benefit from innovative new products.
[22:12] To patent a new product, an inventor has to fully disclose
[22:16] the details of their invention, giving the public complete
[22:20] possession of it. They then get a 20 year monopoly
[22:24] to commercialize their new idea without competition.
[22:28] When the patent expires, the invention falls into the public
[22:32] domain and the inventor no longer has the exclusive right
[22:35] to commercialize their invention.
[22:38] In the United States, drug companies have been very
[22:41] successful at finding ways to extend that monopoly period
[22:45] through tactics like piling up patents to protect inventions
[22:50] that are only tangentially related to the drug in question.
[22:54] A 2023 paper from Cornell University found that the top 10
[22:59] best selling brand name pharmaceuticals have an average
[23:02] projected duration of 40 1/2 years of patent protection,
[23:07] which is more than double the 20 year statutory term.
[23:11] This practice of obtaining extended patent protection is
[23:15] known as evergreening. The authors of the paper say
[23:19] that the bulk of the patents contributing to Evergreening are
[23:23] improvement patent that cover improvements to methods of
[23:27] using, manufacturing or administering a drug.
[23:30] According to the New York Times, drug companies are not the only
[23:35] ones making money from high drug prices.
[23:38] Doctors, hospitals and other intermediaries make more money
[23:42] when drug prices are high too. Under Medicare policies for some
[23:47] drugs, doctors pay upfront for the drugs that they administer
[23:50] to patients in their offices. They can then bill Medicare for
[23:54] the cost of the drug and get to charge a percentage of the drug
[23:59] cost, which is fixed by Medicare to cover their overhead.
[24:03] If the doctor administers the cheapest available drug, they
[24:07] might only get to bill a few dollars for their work, so
[24:11] they're incentivized to administer the highest priced
[24:14] drug so that they can get paid a reasonable fee for their
[24:17] efforts. Experts also see misaligned
[24:21] incentive stemming from pharmacy benefit managers, or PBMS, which
[24:26] are big businesses that negotiate with pharmaceutical
[24:30] companies on behalf of the employers and health plans that
[24:33] pay most of the bills for prescription drugs.
[24:37] PBMS make more money when they negotiate a large discount with
[24:42] a pharmaceutical company. Because of this skewed
[24:45] incentive, the PBMS are accused of pushing pharmaceutical
[24:49] companies to increase the list prices of drugs, making
[24:53] pharmaceutical companies look bad.
[24:55] And PBMS look good for negotiating huge discounts.
[24:59] A friend of mine who's worked as a pharma analyst for almost 20
[25:03] years pointed out to me that if you look at the combined market
[25:07] caps of the PBMS and how they've grown over the last 15 years and
[25:12] compare that with the combined market caps of the big
[25:15] pharmaceutical companies, you'll quickly see where the taxpayer
[25:19] money is going. He explains that by law, PBMS
[25:23] are paid a cut of the difference between the list price and the
[25:27] negotiated price. If the list price is 100 and the
[25:31] negotiated price is 40, the PBM would get 10% of that $60.00
[25:37] discount. The reason that PBMS saw their
[25:40] stock prices fall more than pharmaceutical stocks last week
[25:44] is that if Trump manages to bring the list prices down, it
[25:48] would hit the profitability of the PBMS more than the
[25:52] pharmaceutical companies in the United States.
[25:55] My friend explained that Medicaid and Veteran Affairs are
[25:59] 100% centrally managed, whereas Medicare is partially managed by
[26:04] the US government and partially by PBMS.
[26:08] He explained that by law for Medicaid, drug companies must
[26:13] provide the greater of a fixed rebate of 23.1% versus the
[26:19] average manufacturing price, or the difference between the
[26:22] average manufacturing price and the lowest price the
[26:26] manufacturer offers to any private purchaser.
[26:29] This means that Medicaid prices are already extremely low, very
[26:34] close to European prices if not lower, especially because does
[26:39] there's also a CPI penalty, which means that if the list
[26:43] price has gone up by more than the rate of inflation, then the
[26:47] pharmaceutical company has to pay a penalty and pay back the
[26:51] difference, even if the pharmaceutical company was never
[26:55] paid the list price by Medicaid. My friend points out that this
[27:00] mechanism caused the price of insulin to go negative a decade
[27:04] ago and that Sanofi was selling Lantus to Medicaid but had to
[27:09] deliver the drug for free and pay Medicaid money because they
[27:13] were asked by PBMS to increase the list price dramatically over
[27:17] the years so that PBMS could earn higher profits year after
[27:21] year. He points out that in Europe,
[27:25] around 10% of GDP is spent on healthcare, versus 18% in the
[27:31] United States. But in both the US and Europe,
[27:34] drugs only account for 10 to 12% of overall healthcare costs, the
[27:40] biggest expense being physicians, hospitals and so on.
[27:44] So the prices of prescription medications in the US are
[27:48] roughly in line with the overall cost of treating patients in the
[27:52] US. The second part of Trump's
[27:55] order, which directed or FK Junior to establish a mechanism
[27:59] through which Americans can buy medicines directly from
[28:03] pharmaceutical companies, is worth discussing, too.
[28:07] The question we have to ask is whether drug companies would
[28:10] want to sell directly to the public or not, verifying their
[28:14] prescriptions and so on like pharmacies do.
[28:18] Anyone who's ever gone directly to a manufacturer's website
[28:21] hoping to get a better price than they can get on Amazon or
[28:24] Walmart probably knows how this might work out.
[28:28] The pharmaceutical companies may not want to compete with their
[28:32] distributors. Some of the big pharma companies
[28:36] already have direct customer sales channels like Lily Direct
[28:40] and Novacare, but we'll have to wait and see if they'll start
[28:44] undercutting the big chain drugstore prices.
[28:47] Analysts so far are saying that the lack of specific information
[28:52] in Trump's executive order makes it hard to predict its eventual
[28:56] impact. And they say that the order is
[28:59] more of a statement of intent, but that it has no legislative
[29:03] authority. The Democratic Representative Ro
[29:07] Khanna quickly introduced a bill to codify the executive order in
[29:11] Congress, which if passed, would give Trump's most favored nation
[29:16] pricing the force of law. Vermont Senator Bernie Sanders
[29:20] released a statement agreeing with Trump, saying if Trump is
[29:24] serious about making real change rather than just issuing a press
[29:28] release, he will support the legislation.
[29:30] I'll soon be introducing to make sure we pay no more for
[29:34] prescription drugs than people in other major countries.
[29:38] Researchers at the University of Southern California told the BBC
[29:43] that the executive order could possibly backfire if drug
[29:47] companies decided to pull out of selling new medications in poor
[29:51] countries to try to retain their profits in the US.
[29:56] It's also not clear how lower prescription drug prices fit
[30:00] into RFK Junior's Make America Healthy Again agenda, as he's
[30:05] been critical of the widespread use of pharmaceutical products,
[30:08] including vaccines, instead emphasizing diet, exercise and
[30:14] possibly testosterone replacement therapy as the key
[30:18] to improving Americans health. Connor O'Keefe at the Mises
[30:22] Institute argues that if the Trump administration wants to
[30:26] solve the issue of high drug prices without disastrous price
[30:30] controls causing drug shortages, there are several things they
[30:34] can do. The first is allowing Americans
[30:37] to buy drugs from foreign markets.
[30:39] The only reason that companies can charge two different prices
[30:43] for the same product in different countries is that the
[30:46] government prohibits Americans from buying and importing that
[30:49] product from abroad. Another approach would be to
[30:53] reduce the number of years of patent protection on new drugs,
[30:58] meaning that generics become available more quickly.
[31:01] Or Trump could reduce the cost of getting FDA approval for new
[31:05] drugs with expedited testing, reducing development costs.
[31:11] All of these solutions are trade-offs with pros and cons.
[31:15] There's no perfect solution and there are no easy answers.
[31:19] If it was as easy as demanding that prices should be lower, the
[31:23] problem would have been solved a long time ago.
[31:25] Thanks for tuning into this week's podcast.
[31:28] If you know anyone who you think would find it interesting, send
[31:31] them a link as word of mouth is really how podcasts grow.
[31:35] Have a great week and talk to you again soon.
[31:38] Bye.

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