Columnist: Guthrie Must Oppose ‘Most Favored Nation’ Plan

The potential cost of Trump’s ‘most favored nation’ drug-pricing plan goes beyond finances. The lives of many Kentuckians could be at stake and Rep. Brett Guthrie, as chair of the House Energy & Commerce Committee debating this, should consider this.

This policy proposed by President Trump involves American patients paying for prescribed drugs at the lowest price available in any foreign nation. But this plan could be problematic.

Foreign governments, in many cases, impose strict price controls on prescription drugs. This results in slim profits, insufficient to fund the research and development of new medicines. Additionally, these governments often refrain from covering the basic costs of new medications, opting to wait for cheaper alternatives or ignoring new medications altogether.

Take Canada for instance, where new cancer drugs face an average delay of about a year and a half before they become available. In other countries, this delay is even longer. This shows the unwillingness of such countries to contribute to the costs of new drug research, sometimes at the expense of their citizens’ health.

Contrastingly, in the United States, there is an expectation for quick access to high-quality medications. Therefore, Trump’s push for Congress to apply the MFN policy to Medicaid prescription drugs should cause concern.

European price control measures indirectly handed over the world leadership position in biopharmaceutical innovation to the United States in the late 1990s. Now, Trump’s plan could potentially undermine our own leadership position as China is making strides in new drug approvals.

The drug-price control measures in the Inflation Reduction Act (IRA) have already negatively impacted the United States, reducing expected financial returns in the biomedical sector and causing a decrease in innovation investments. For instance:

• Research investment into small molecule medicine for diseases common among Medicare patients, like Alzheimer’s disease, heart failure, and several types of cancer, has reduced by a median of 74%.
• Since the IRA was enacted, the commencement of clinical trials for new, unapproved small molecule medicines has dropped by 25%, and clinical trials for new uses of existing small molecule medicines have fallen by 30% to 45%.

The real issue here is that the MFN drug pricing policy does not address the fundamental cause of high drug costs. Middlemen in the pharmaceutical industry and large health systems exploit federal drug discount programs without passing savings onto patients. Policymakers should aim their reform efforts here to truly benefit American patients.

The actual cost of the Trump administration’s bid to reduce drug prices could be the premature death of countless Kentuckians. Rep. Guthrie should strive to prevent us from finding out this harsh reality.

Kent Kaiser, Ph.D., is the executive director of the Trade Alliance to Promote Prosperity. He can be contacted at kent@promote-trade.org.