Is Trump giving the EU higher drug prices too? | Business| Economy and finance news from a German perspective | DW | 01.06.2018
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Is Trump giving the EU higher drug prices too?

Soaring drug prices keep Americans sick. Donald Trump's new plan aims to bring down domestic costs at the expense of Europeans, but is the EU really to blame? Lindsey Rae Gjording reports from New York.

Many Americans simply cannot afford the treatments they need. A longtime complaint of the American health care system — overpriced drugs — keeps pharmaceutical investors rich while the sick stay sick.

"We're going to end global freeloading," promised Donald Trump while unveiling his American Patients First plan to tackle the market. It is still not clear just how he plans to do this.

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On Wednesday, Trump again made big promises while signing the newly passed "Right to Try" law which allows patients with life-threatening illness to bypass the country's Food and Drug Administration for access to experimental medication. Trump predicted big pharma companies are "going to announce voluntary massive drops in prices" but the Department of Health and Human Services declined to comment or clarify the statement.

American patients first

The debate continues as to who exactly should be shouldering the arbitrarily high costs of pharmaceuticals. The US spends over $3 trillion (€2.56 trillion) a year on health care, over 17 percent of its GDP. That is double the amount of other industrialized countries. Germany for instance leads the EU with the highest health care spending, at 11 percent of its GDP.

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Among OECD countries the US brings in 70 percent of total profit for branded drugs, with Americans paying on average three times more for the same prescription drugs.

"We've heard from thousands of patients who tell us devastating stories of skipping doses, cutting pills in half, going without food and even declaring bankruptcy" because of drug prices, says executive director Ben Wakana of advocacy group Patients for Affordable Drugs.

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See your doctor

Studies have shown Americans use essentially the same level of health services as their counterparts. It simply costs more in America. One reason is that much of the major research and development that goes into breakthrough treatments and medication is conducted in the US and often funded by taxpayer money. In this sense, American taxpayers pay for their drugs before — and after — they reach the pharmacy.

As president of the Commonwealth Fund, David Blumenthal remarks on these findings as typical: "Time and again we see evidence that the amount of money we spend on health care in this country is not gaining us comparable health benefits."

Mind your own market

Speculation as to why US health care costs are so high has been a riddle of the ages. Trump hopes to solve this through his American Patients First plan. It outlines ideas to increase competition and transparency in pricing along with requiring other countries to pay more for US-made drugs.

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If other countries can regulate drug pricing through government negotiation, why can't America? Many believe the main culprit is America itself. Nearly every drug hitting the market is based on a breakthrough or technology stemming from research conducted in the US. Perhaps Trump should take a page out of Europe's playbook. 

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Europe responded to the 2008 financial crisis with, among other things, new rules on drug prices that raised taxes but decreased actual drug prices for users.

Through single-payer health care systems the EU is able to regulate consumer costs at reasonable levels. It also makes decisions about what new drugs are worth spending taxpayer money on and how to fairly value them.

Without looking at the actual issue — that pharmaceutical companies are allowed to charge whatever amount they want on the US market — the problem will not be solved. As Rachel Sachs, associate law professor at Washington University in St. Louis argues: "The administration is proposing to take very few actions that would impact pharmaceutical companies' bottom lines. Many of the actions they have proposed are repeats of those they've presented on other occasions, and even those actions still appear to be far in the future."

For many it is not clear yet how Trump plans to solve the problem. Until concrete plans are proposed it will be hard to determine if the EU will shoulder the burden and to what extent. Yet despite the elusive rhetoric, pharma stocks have remained steady and the market appears unfazed.

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