OPINION:
The price disparity between the United States and other wealthy nations on prescription medicines is outrageous. President Trump is right to demand that European and other wealthy nations pay more for prescription drugs. Americans feel ripped off.
On Monday, Mr. Trump signed an executive order to “equalize” drug prices. He will urge foreign countries to pay higher prices for prescription medicines through trade policy and regulatory measures. The core of Mr. Trump’s policy is a price control known as “most favored nation,” which effectively imports the price controls of socialist health care into the American market. This model would peg the cost of drugs in the U.S. to the prices paid by countries such as Britain, Spain, Finland and Sweden.
At first glance, that may sound fair. We pay more for prescription drugs than anyone else in the world.
Here’s the catch: Europe’s system isn’t built to foster medical breakthroughs. It’s designed to ration care.
Government-run health care systems worldwide do not value science, medicine and human health the way America does. If we import that model to the U.S., it won’t be just drug prices that fall. Price controls, whether they are from President Biden’s Medicare drug price negotiations or a “most favored nation” policy, always lead to getting less of a good thing. Medical innovation will slow, patient access will be delayed, and cures may never be developed.
Mr. Trump is correct in saying the status quo is not acceptable. We should build on what is working well for Americans.
America leads the world in the speed and availability of new medicines. From 2018 to 2022, about 85% of newly launched medicines were available to American patients, and nearly all were introduced in the U.S. either first or simultaneously as in other countries.
In contrast, only 56% of new medicines approved in Europe were accessible to patients in Britain, 62% in Spain, 50% in Finland and 60% in Sweden. Most European countries face longer delays. Twenty-five out of 27 nations in the European Union trail the U.S. in median time to patient access. In a life-or-death diagnosis, waiting isn’t an option.
That’s why this debate matters. American patients don’t want just access; they want access now. For the premium we pay, we should expect access to these medicines before they are available in any other country. Foreign countries should be willing to pay a premium if they expect access.
So, let’s help American patients have affordable access to prescription medicines now. However, we must also expect more value and better health outcomes. America’s model for health care is stuck in the 20th century. Rather than embracing Europe’s approach to pricing, we need a serious upgrade in how we finance health care to support the 21st century.
The foundation is an incentive structure that aims to improve Americans’ long-term health and well-being. That means rethinking insurance design so patients aren’t paying the highest out-of-pocket costs. Health insurers must innovate and break out of the cost-management-over-the-calendar-year mindset.
The current command-and-control model seems to work only for bureaucrats, administrators and middlemen. American policy should embrace the democratization of health care and place more trust in patients, caregivers, doctors and health professionals.
Corporate and government health care would better serve Americans by embracing contracts that reward real improvements in patients’ health and innovative financing that aligns incentives with outcomes. This would mean investing in long-term health, not just chasing short-term budget wins.
One idea proposed by Darius Lakdawalla and Dana Goldman at the University of Southern California’s Schaefer Center for Health Policy and Economics suggests drug manufacturers adopt performance agreements. Similarly to Mr. Trump, they suggest leveraging the purchasing power of Medicare to reshape foreign markets among wealthy countries.
Instead of paying a high price up front, patients and insurers would pay extra “success fees” only when an innovative medicine meets or exceeds the expected value of the treatment. If a drug doesn’t work, the patient and insurer would get a full refund. Manufacturers would also need to commit to not selling the drug for less in other countries than in the U.S. In exchange, Americans would receive benefits such as low to no out-of-pocket costs, and the U.S. government would help establish fair prices abroad, possibly through trade incentives. Wealthy nations must stop freeloading off the U.S. and value innovative medicines fairly.
If America embraces European-style price controls from socialist health care systems, the message will be clear: American patients are no longer worth the investment. That is not a future we can afford.
At Patients Rising, we believe patients deserve better. That means a health care model that values human life, supports scientific discovery and ensures no one is denied a breakthrough treatment because of a budget line.
Mr. Trump has the right goal. We need to equalize drug pricing between America and other wealthy nations, but let’s lead the world, not copy its mistakes. We can make medicine more affordable and invest in tomorrow’s cures. Let’s reimagine how we finance health care to support the needs of Americans in the 21st century and urge the world to follow.
• MacKay Jimeson is the executive director of Patients Rising, a national advocacy organization dedicated to patient empowerment.
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