Push Prescription Drug Prices Down
The United States can decrease healthcare costs by setting prescription drug prices equal to the lowest price in other developed nations. Right now, pharmaceutical companies are using their patents to hurt Americans who rely on prescription drugs. We can push prices down without risking our health.
Rising prescription drug costs have plagued us for decades. In 2000, I worked for Brian Schweitzer in his campaign for the U.S. Senate. We took senior citizens on buses to Canada for cheaper prescription drugs—drugs made in America. Since then, costs have continued to rise. Some Montanans have told me that they intended to retire, but needed to work to pay for prescription drugs. We can do better.
Indeed, healthcare costs are increasing twice as fast as wages or Social Security incomes. Prescription drug costs are increasing twice as fast as that, while pharmaceutical companies reap higher profits than any other industry. If we fix the market failure that gives the pharmaceutical drug companies a captive market, we can push prescription drug costs down.
Pharmaceutical drug companies have a captive market in the United States.
Right now, most developed nations set prescription drug prices in those nations, but in the United States, the pharmaceutical drug companies set them. Patents give pharmaceutical drug companies the right to charge whatever prices they want. They charge whatever Americans can pay.
The United States Constitution gives Congress authority to cure this market failure. It authorizes Congress “[t]o promote the Progress of . . . useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.” In other words, the Constitution seeks to use patents to encourage inventors to create new devices—not to hold United States citizens captive to private companies.
Giving the United States agency, Centers for Medicare and Medicaid Services, authority to negotiate with pharmaceutical drug companies would help, but not as much as leveraging the market. Health insurance companies already negotiate with pharmaceutical drug companies as prices continue to rise. These companies, too, lack leverage. At best, negotiations could push patients to cheaper alternatives that may not work as well.
No one wants pharmaceutical drug companies to stop researching and developing new life-saving drugs, but they do not need price gouging to do that. In the past, Americans could buy prescription drugs on the international market. But Congress concluded that importing prescription drugs risks importing dangerous, counterfeit ones. The market does not work like this for other inventions because, if a company sold devices cheaper in another nation, the United States would import them at those cheaper prices.Prohibiting drug imports creates this captive market.
Set prescription drug prices to the lowest price in developed countries.
Nonetheless, we can lower prices without physically moving prescription drugs. We have the Internet. The United States can prohibit pharmaceutical companies from selling prescription drugs at higher prices here than in developed nations. Then, pharmaceutical drug companies could either accept lower prices from their U.S. customers, or renegotiate with other countries. This solution would encourage other nations to help pay the research and development costs.
International Drug Spending
For example, assume France prohibits a pharmaceutical drug company from selling Drug X for $1 per pill. This new law would prohibit that corporation from selling it for more than $1 in here. If the pharmaceutical drug company concludes that $1per pill would not cover its research and development costs, it could either stop selling that drug in France or here, or it could renegotiate with France for a higher price. No one need transport any prescription drug anywhere.
Making the market work would reduce prescription drug prices. It would preserve incentives to develop new medicines. It would help families make ends meet, and it would decrease healthcare costs.