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Trump wanted to lower drug prices. That effort has begun. In the past, politicians could just score political points by saying this would be done but never following up with action. He knows that middlemen, government bureaucracy and European price controls are the culprits for keeping American drug prices high. Pharmacy Benefit Managers or PBMs drive about 50% of the price.
Trump knows where and how to strike
PBMs and insurance companies do 25%. They join huge hospitals to abuse an obscure government program called 340B to take another $66 billion which equals 10%. Middlemen in government take the remainder through statutory rebates and fees.
Trump boldly declared in December, “We’re going to knock out the middleman. We’re going to get drug costs down at levels that nobody has ever seen before. The horrible middleman that makes more money, frankly, than the drug companies, and they don’t do anything except they’re a middleman.”
PBMs negotiate
They work with manufacturers for pricing and rebates but instead of passing those savings onto the consumer, they’re pocketed. This is why the President and the FTC are cracking down on PBMs.
Trump plans to outright eliminate PBMs or bring their influence way down. If the rebate rule in his first term would have been applied there would have many billions of cost savings passed to the patients. But Biden threw it out in the Inflation Reduction Act.
Another Trump executive order
He signed one that would make healthcare prices transparent. The White House put out a statement, “When healthcare prices are hidden, large corporate entities like hospitals and insurance companies benefit at the expense of American patients. Price transparency will lower healthcare prices and help patients and employers get the best deal on healthcare.” He’s exposing 340B abuse.
Europe will be required to pay their fair share. There’s been global free-riding going on and will correct the imbalance that’s been going on for a long time.
