Trump’s drug deal

OPINION:

Prices of prescription medications might drop under an ambitious White House plan announced Monday. Washington’s special interests won’t be happy if President Trump can pull this off. Cue the federal judges standing by to dutifully step in and preserve the status quo on their behalf.

“I’m doing this against the most powerful lobby in the world, probably, the drug and pharmaceutical lobby,” the president said Monday. “It’s one of the most important orders, I think, that’s ever been signed, certainly with regard to health care or health in the history of our country, and it’s an honor to be a part of it.”

Mr. Trump intends nothing less than a rebalancing of the global health care system. Right now, America picks up the tab for the intensive research and development required to develop revolutionary treatments. Nations with socialized health care rely on price-fixing to force those cures to be sold in their markets for a third of what we pay, typically.

Pharmaceutical companies make up for income lost overseas by charging more here. Details on how Mr. Trump aims to upend the current arrangement are a bit fuzzy. The president’s newly signed executive order simply instructs the administration’s trade and health officials to apply leverage to end the “global freeloading.”

The White House argues that the United States, as the world’s largest market for these remedies, needs to flex its tremendous buying power to secure a better deal. Democrats seek the same outcome, but the only tool in their toolbox is price caps restricting drugmakers’ profit margins.

This approach has a nasty side effect. Price caps compel producers to reduce R&D, resulting in fewer discoveries. The National Bureau of Economic Research documented this phenomenon in the context of medical devices. When Medicare imposed a 61% price reduction, the number of medical device patent filings plunged 75%.

Recognizing this, the president says he won’t mess with the industry’s revenue. “It could be the same top line, but it’s going to be distributed differently,” Mr. Trump explained. “Europe’s going to have to pay a little bit more, the rest of the world’s going to pay a bit more, and America’s going to pay a lot less.”

Legislation to implement his initiative will be included in the “one big, beautiful bill” that also codifies budget priorities and tax cuts. Expect it to be an uphill battle. Big Pharma fields an army of 1,800 lobbyists with a $386 million war chest, according to OpenSecrets.

Pliable politicians will object, as will codependent media sources. Promotional spots for new pills pop up on Sunday talk shows and throughout the day on cable news channels, addressing chronic conditions such as arthritis, depression and diabetes.

Drug manufacturers spent just under $18 billion to influence consumers from 2016 through 2018, according to the Government Accountability Office’s calculation. It works. Patients hear the tag line, “Ask your doctor if it’s right for you,” and drugmakers quickly see higher returns.

A 2000 study in the BMJ found that Schering-Plough’s $137 million television advertising buy for Claritin boosted sales by 21%. Doctors wrote more prescriptions for it than for potions that weren’t advertised.

That gives this industry more sway in Washington than almost any other, raising questions about how much the president will be able to change. Any move away from having American taxpayers subsidize drug prices in socialist countries should be considered a success.