President Donald Trump: Drug Prices Have Been Astronomical | CNBC


A lot happened in the 2016 campaign, but one of the things Donald Trump did to win the election was shift to the left on a number of key issues — promising to avoid cuts in Social Security and Medicare benefits and adopting a longstanding Democratic pledge to let Medicare negotiate bulk discounts in the price it pays for prescription drugs.
Today, after a meeting with pharmaceutical industry lobbyists and executives, he abandoned that pledge, referring to an idea he supported as recently as three weeks ago as a form of “price fixing” that would hurt “smaller, younger companies.” Instead of getting tough, Trump’s new plan is that he’s “going to be lowering taxes” and “getting rid of regulations.”
New drugs are generally covered by patent monopolies, so drug companies have a lot of pricing power; other companies can’t produce the same drug without paying royalties, so there’s little competition. But most countries use their nationalized health care systems to negotiate a good deal on drug prices. Manufacturing pills is cheap, so it’s usually still profitable for a company to sell medicine at a pretty steep discount.
The United States doesn’t have a nationalized health care system, but we do have Medicare for senior citizens, and since the USA is a very large country, that’s still a huge potential bulk purchaser. But a 2003 law written by congressional Republicans and signed by George W. Bush prohibits the federal government from using that negotiating power.
As recently as January 11, President-elect Trump was promising to revisit this policy.
“Pharma has a lot of lobbies, a lot of lobbyists and a lot of power. And there’s very little bidding on drugs,” he said at a press conference at Trump Tower in Manhattan. “We’re the largest buyer of drugs in the world, and yet we don’t bid properly.”

I'll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing their product to a vibrantly competitive market. That includes price-fixing by the biggest dog in the market, Medicare, which is what's happening. But we can increase competition and bidding wars, big time.
So what I want, we have to get lower prices, we have to get even better innovation and I want you to move your companies back into the United States. And I want you to manufacture in the United States. We're going to be lowering taxes, we're going to be getting rid of regulations that are unnecessary.
President Donald Trump met with leading drugmakers at the White House on Tuesday, jawboning them to produce their medications in the United States and to cut "astronomical" drug prices.
Trump also blasted foreign countries, which he said have been "freeloading" on the United States with price controls that limit what their own citizens can be charged for medications. And he vowed to use the purchasing power of the U.S. government, the world's largest drug purchaser, to push the price of medications down.
President Donald Trump meets with leaders of the pharmaceutical industry in the Oval Office at the White House in Washington, DC, on January 31, 2017.
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President Donald Trump meets with leaders of the pharmaceutical industry in the Oval Office at the White House in Washington, DC, on January 31, 2017.
"We have to get the prices way down," Trump said.
"We have to get lower prices, we have to get even better innovation, and I want you to move your companies back to the United States. I want you to manufacture in the United States."
"You have to get your companies back here, we have to make products back" here, Trump said.
Participants in the meeting included the CEOs of Merck, Amgen, Eli Lilly, Novartis and Johnson & Johnson, as well as the head of the trade group PhRMA.
Trump told them he wants to make it easier for pharmaceutical companies to win regulatory approval for their products.
"You're going to get your prices either approved, or not approved," the president said. "But it's going to be a quick process. It's not going to take 15 years."
In remarks to reporters while flanked by the CEOs, Trump said, "The U.S. drug companies have produced extraordinary results for our country, but the prices have been astronomical for our country."
"We're going to be changing a lot of the rules," Trump said. "We're going to be ending global freeloading. Foreign price controls reduce the resources of American drug companies to finance drug and R&D innovation. I think you people know very well, it's very unfair to this country."
"Our trade policy will prioritize that foreign countries pay their fair share for U.S.-manufactured drug, so our drug companies have greater financial resources to accelerate development of new cures, and I think that's so important," Trump said. "Right now it's very unfair what other countries are doing to us."
The president said that "competition is the key to lower drug prices," and he promised to "oppose anything that makes it harder for smaller, younger drug companies to take the risk" of bringing a medication to market.
Trump also decried what he said was the situation where "I go to a drug store to buy aspirin [and] the aspirin costs me less than what the United States pays for aspirin."
The president was referring to regulations that Medicare, the federally run health coverage program for primarily the elderly, is barred by law from negotiating drug prices.
Correction: This story was revised to note that Medicare is primarily for the elderly