The “most preferred country” policy aims to incentivize drugmakers and equalize drug prices between the US and other countries.
President Donald Trump aims to reduce the cost of prescription drugs for all Americans with the help of two carrots and a stick.
Positive and negative induction aims to acquire pharmaceutical manufacturers to equalize prices in developed countries. This means dramatically lowering prices offered to U.S. consumers while increasing prices in other countries, particularly developed countries.
High prices in the US
According to a 2024 report from the Department of Health and Human Services, in the United States, it is higher than anywhere else in the world, and on average is more than twice as high.
For the most expensive drugs, the gap is even greater.
According to the administration, it is unfair to our consumers and difficult for our patients.
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In particular, in Europe, where many countries have single payer health systems, Trump said he announced his plan, in some countries, on behalf of purchasing power, unfairly low prices from drug manufacturers.
This will cause drugmakers to seek higher profits in the US and artificially inflate prices.
“As the biggest buyers of medicines, Americans should get the best deal,” Trump said.
Dr. Martin McCurry, Director of the Food and Drug Administration, commented on the patient impact at a White House press conference on May 12th.
“We didn’t take vows to heal our patients and then see their lives ruined financially,” McCurry said.
He added that some will get back to asking their families and support networks to pay for their necessary medication up to 15 times more expensive than in other countries.
Merith Basey, executive director of affordable drug patients, believes that political moments are suitable for further action against drug prices.
“This administration gives us the opportunity to continue fighting to build up the existing advances we saw and lower drug prices so that Americans don’t pay anymore than other high-income countries,” Basey told The Epoch Times.
Hundreds of patient voices about patients on affordable drug websites have spoken about the difficulty of providing some prescription medications.
Even insurance was not uncommon for out-of-pocket expenses exceeding $10,000 a year.
Incentives
The administration’s plan offers two incentives for pharmaceutical companies to offer the best prices in the United States.
The first is Trump’s promise to help them negotiate with other countries, and they may negotiate with other countries.
“They set the price and said, ‘Here we’re going to pay, and there’s something else that charges America,'” Trump said.
The purpose of the executive order aims to use negotiations between the US trade with other countries to encourage compliance with the plan.
“Like countries represented by the European Union (if they don’t pay more for prescription drugs), they’re going to tell the US that they don’t need to sell their cars anymore,” Trump said.
The executive order ensures the Secretary of Commerce and US trade representatives that other countries do not use irrational or discriminatory practices to lower their own drug prices, thereby enforcing the United States to pay a higher price.
The second incentive for drug makers is the plan to create a direct consumer purchase program that allows manufacturers to sell prescription drugs directly to consumers.
These companies often hold the drug discounts offered to manufacturers themselves, encouraging consumers to pay higher prices.
These two provisions of the plan also brought positive responses from representatives of the pharmaceutical industry.
“The United States is the only country in the world (pharmacy benefits managers), insurance companies and hospitals can make up 50% of all dollars spent on drugs.”
Requirements
The president has expressed optimism that pharmaceutical companies will voluntarily adhere to the most favorable national price plans.
Otherwise, the Department of Health and Human Services will begin production of rules to force drugmakers to offer the lowest prices in the United States.
Rule creation is the process of creating federal regulations, which once adopted, have the power of law.
The order also threatens “all available measures” by government agencies without further specifying what they are to address “global freeloading and price discrimination against American patients.”
Criticism
While agreeing that help is needed to break the unfair pricing model overseas, UBL criticised the pricing ideas of the most favorable country as harmful to American patients and preventing them from creating new medicines.
“Importing foreign prices from socialist countries is a bad thing for American patients and workers,” UBL wrote.
“It means fewer treatments and treatments and putting hundreds of millions of billions of people that our member companies plan to invest in America. They threaten jobs, hurt the economy, and rely on China for innovative medicines.”
Some economists say that this idea simply doesn’t work.
“The US government may try to force pharmaceutical companies to disclose rebates, but that would violate foreign laws that require confidentiality,” wrote Darius Rakdawala and Dana Goldman in the USC Schaeffer Institute for Public Policy and Government Services, a research group focusing on health issues.
Jeremy Nigohosian, a senior fellow at the Competitive Enterprise Institute, a libertarian think tank, said in the Epoch era, the idea of the most favorable country creates more problems than it solves.
“Three countries that tend to have the lowest prices that new policies are trying to emulate are plagued by the issue of providing drugs within the country,” Nighohossian said on May 9.
“In addition, (policies) are subject to government methods and evaluations and effectively import bureaucratic value judgments in foreign countries, driven not by our country but by the individual circumstances of that country.”
Trump dismissed such concerns, saying the plan would put an end to price adjustments by some foreign countries and that levelling pricing would leave pharmaceutical companies with the same profits they had before.
The specific drugs included in the plan were not listed in the order.
White House officials told reporters on May 12 that the administration will focus on leveling drug prices, with the highest pricing gap between the United States and other countries.
Management staff will announce the most preferred national pricing targets for the pharmaceutical industry within 30 days.
