Trump aims to make US drug prices like Europe’s

President Trump has long highlighted Europe’s drug market, arguing that Americans in comparison pay far too much for prescription drugs.

“I’ve seen it for years, and I never understood,” Trump said in October. “Same company, same box, same pill, made in the exact same location. And you’ll go to some countries, and it would be 20 percent the cost of what we pay, and in some cases much less than that.”

{mosads}The president is pushing an ambitious proposal that would tie certain Medicare drug prices to lower prices in other countries.

It’s a plan that has found support from across the aisle. Sen. Bernie Sanders (I-Vt.), a 2020 presidential candidate, has also compared the U.S. drug market unfavorably with Europe and has an even broader bill to lower U.S. prices in line with those in other countries. 

But health industry experts caution there are critical differences between the two markets that complicate comparisons.

The United States spent $1,011 per person on drugs in 2015, according to the Commonwealth Fund, far higher than other countries. By comparison, Switzerland spent $783, the United Kingdom spent $497, and Sweden spent just $351. 

“Prices are higher in the United States than in these other countries,” said Rachel Sachs, a drug pricing expert at Washington University in St. Louis. “The general reason is that other countries negotiate for these prices and we really don’t.”

Examples abound of individual drugs costing more in the U.S. The cholesterol drug Crestor costs $86 in the United States and $20 in Norway, according to the Commonwealth Fund. The insulin drug Lantus costs $186 in the United States and $60 in Germany. 

Other countries have a range of centralized government systems that negotiate in some way on drug prices and drive the prices down. They also often use systems that evaluate how effective a drug is compared to what is already on the market to determine what price is justified. 

The United States largely does not have these controls. 

The pharmaceutical industry argues that allows for more innovation in the U.S. and gives patients here access to more drugs.

The Pharmaceutical Research and Manufacturers of America (PhRMA) made that argument in pushing back on Trump’s proposal to tie Medicare drug prices to those in other countries, saying data shows just half of the new drugs launched since 2011 that are available in Medicare Part B are available in the 14 other countries featured in the proposal. 

PhRMA also points to a survey of its members that found that more than three-quarters of the companies said cutting Medicare Part B prices to match those in other countries would hurt their ability to invest in research on new drugs. 

Others, though, are pushing back on PhRMA’s reasoning.

Robin Osborn, vice president at the Commonwealth Fund, said that taking into account the value of a drug in the price, as Germany does, ensures that high prices are actually justified by a breakthrough medical development. 

“If it doesn’t add value to what’s already there, it’s covered but it’s priced at a reference level at other drugs in the same class,” Osborn said. “Just because it’s new, it doesn’t get to have this whopping price. It’s got to prove that it’s worth it.”

Osborn pointed out that in the U.S. one of the only entities that negotiates for drugs is the Veterans Administration.

“We know how to do it, but we just don’t do it across the board,” she said. 

Trump, though, eager for a victory on drug pricing, is pushing to do just that.

One of the president’s Medicare proposals, called the International Price Index, aims to bring U.S. drug prices more in line with other countries.

Health and Human Services Secretary Alex Azar has touted the measure, saying it would close the gap between what the US. pays for drugs and what other countries do.

The administration put forward the proposal in October, but it still has several regulatory steps to complete before it actually goes into effect.

There have been questions as to whether the Trump administration will actually follow through on it, given intense opposition from the pharmaceutical industry and from GOP lawmakers, who worry it is a departure from free-market principles. 

But Trump officials are also under pressure to follow through as other pricing initiatives have fallen through.

“This is the only significant one still standing,” Sachs said.