Trump Can Already Combat Drug Price Gouging, If He Chooses

April 21, 2017

 

Yesterday the New York Times published an op-ed on drug price gouging by Tim Wu, Professor at Columbia Law School. Rising drug prices are a huge problem and pressure is building for Congress and the administration to take action. Professor Wu suggested that the administration already has significant power to combat price gouging, located in the Medicare Modernization Act of 2003. The Food and Drug Administration can allow imports of drugs whenever it determines they are safe and that they will save Americans money.

 

This section of the law has never been used, largely because the pharmaceutical industry has lobbied against it, saying that imported drugs are dangerous and that the F.D.A. cannot reliably determine that the imports won’t harm public health and safety. Professor Wu politely but firmly points out these arguments don't hold water.

 

The Department of Health and Human Services (the department that supervises the F.D.A.) is part of the executive branch and follows the President’s orders. It also has the ability to determine the costs and safety of imported drugs. The industry provides little or no evidence for its assertions.

 

Additionally, fears of unsafe drugs are greatly overblown. Wu observes that 25% of drugs that are labeled American-made are really made in foreign countries, most of them in manufacturing plants that the F.D.A. inspects. And many of the imports that the pharmaceutical industry warns us against are exactly the same as American-made drugs. Often they are made at the same plant, just exported to different places. The F.D.A. is already regulating imported drugs, and has allowed additional imports to make up for shortages of certain prescriptions. The price gougers’ arguments are without foundation; the F.D.A. already does what they claim it cannot do.

 

Professor Wu concludes with a suggestion that the administration choose the most appalling cases of price gouging and make examples of certain companies. The companies that own the drugs Daraprim, Cosmegen, and Indocin have all increased the prices by 1,000 to 5,000 percent, and they would be perfect targets. While these companies would squawk and claim that medical research is being endangered, the general public sees through these assertions and would applaud such a measure.

 

So Trump already has a way to reduce drug prices, if he chooses. But will he fulfill his campaign promise and use it? In the first hundred days of his administration he has shown little evidence of economic populism or standing up for the little guy. This is the perfect chance. 

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