Former President Donald Trump recently made the startling assertion that his government has slashed the cost of prescription drug price by up to 1,500%. Days before, he had written to leading pharmaceutical companies, encouraging them to switch to a “most favoured nation” pricing arrangement.
However, despite being eye-catching, the assertion is just unsupportable.
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The Math Doesn’t Work
Trump’s claim is seriously flawed because, in any realistic economic scenario, it is impossible to reduce a price by more than 100%.
Let’s dissect it:
- A 100% reduction indicates that something is totally free.
- A 1,500% decrease would indicate that someone is purchasing the product.
Therefore, a medicine that costs $100 is now only worth $0 after being slashed by 100%. The medicine business would be paying the consumer $1,500 for each transaction, however, if the cut was 1,500%. Obviously, that hasn’t taken place.
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Health Policy Experts Respond
Experts in health policy were quick to point out that Trump’s claim was inaccurate.
The remark was called “total fiction” by Geoffrey Joyce, director of health policy at the Schaeffer Center at the University of Southern California. He clarified that such a significant decline would result in a total reversal of the business model, where pharmaceutical companies would effectively compensate patients for using their products.
The figures, according to Mariana Socal, an associate professor at Johns Hopkins University, were “really hard to follow” and didn’t correspond with actual prices.
“Converting those figures into some real estimates that patients would see at the pharmacy counter is really tough for me,” Socal stated.
No Data to Back Up the Numbers
The White House did not offer any precise pricing information when pressed to back President Trump’s assertion.
Instead, the discussion was redirected by spokesperson Kush Desai. It is commonly acknowledged, he underlined, that Americans spend a lot more on drugs than those in other nations. But he didn’t vouch for any real cuts that would back up Trump’s assertion.
“It is a fact that Americans are paying significantly more for the same medications than people in other developed nations,” Desai stated. “And it is a fact that no other administration has taken more action to address this unfair burden.”
A chart that contrasted the cost of drug price in the United States with those in other wealthy nations was the only information the administration offered. It revealed differences in prices rather than decreases.
Trump Later Said Price Cuts Were “Coming Soon”
It’s interesting to note that Trump then changed the tone of his remarks to imply that the drug price cuts were anticipated shortly rather than having occurred yet.
“Therefore, we will be lowering the cost of drugs,” he stated. “It will increase by 1,200, 1,300, and even 1,400% over the course of the next two to three months.”
This inconsistency prompted additional inquiries: Were the price reductions hypothetical or had they already occurred?
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The Reality of Drug Pricing in America
The United States has the highest prescription drug price among developed countries, which is no secret. This is mostly because of how the American healthcare system manages the cost of medications.
Governments in the majority of developed nations control pricing or engage in direct price negotiations with producers. However, in the United States, a complicated system that includes wholesalers, pharmacy benefit managers, private insurers, and medication manufacturers affects prices. For both name-brand and specialty drugs, this frequently results in exorbitant costs.
Trump is right to be concerned about the cost of drugs, but the figures he used are just not accurate.
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What Is the “Most Favoured Nation” Model?
The administration’s drive for a “most favoured nation” model—a pricing plan that seeks to lower U.S. drug price by bringing them into line with the lowest rates found in other developed nations—followed Trump’s comments.
Accordingly, Trump wrote to 17 pharmaceutical companies asking them to voluntarily lower the price of their drugs in the United States to match those in other countries. This came after a May executive order that threatened to limit what the government would pay under Medicare unless pharmaceutical companies complied within 30 days.
Without using direct regulation, the strategy aims to put pressure on pharmaceutical corporations to reduce their prices. However, it’s yet unclear how many businesses have accepted the adjustments or whether they will actually result in savings.
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If Huge Cuts Happened, Wouldn’t Drugmakers Announce Them?
The pharmaceutical industry’s silence in response to Trump’s claim is one of the main warning signs.
Experts claim that, given years of criticism for price gouging, pharmaceutical companies would have made public statements if they had truly lowered costs by such enormous margins.
“I anticipate that they will make public announcements, and that they will do so well in advance of any date of implementation,” Socal stated.
However, no big pharmaceutical companies have announced anything like this. Furthermore, there is no proof at the pharmacy counter that prices have decreased by even a small portion of the amount Trump claimed.
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What About Privately Insured Americans?
Many Americans would not be affected right away even if pricing adjustments under Medicare or Medicaid did occur.
The majority of Americans have access to private health insurance, where rates are negotiated differently. Although the federal government has minimal control over the private sector, it can have considerable impact on public services. In the absence of more extensive reform or regulation, the majority of Americans might not notice significant changes in their costs.
As Geoffrey Joyce stated quite plainly: “No sign of a 1,500% decrease has been found. Absolutely none.
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Conclusion
The Trump administration may have advocated for measures to lower prescription prices and sparked a heated discussion over pricing disparity, but the assertion that drug price have been lowered by 1,200% to 1,500% is completely baseless.
The claim’s math just doesn’t work, and there is no proof that such reductions have happened. Even those ambitions seem inflated, and at best Trump was talking about future objectives rather than accomplishments.
Distinguishing actual impact from political hyperbole is crucial, as is the case with many policy issues. Furthermore, in this instance, the headline-grabbing figures are not supported by the facts.