Waiting To See The Impact Of This

For years Americans have subsidized research by pharmaceutical companies by paying higher prices for drugs than other countries. Yesterday The Epoch Times reported that President Trump has signed an Executive Order that requires drug companies to charge Americans the same price for druges that the companies charge other countries.

The article reports:

The latest step would replace a July 24 Trump executive order.

It extends the mandate to prescription drugs available at a pharmacy, which are covered under Medicare Part D. The July version focused on drugs typically administered in doctors’ offices and health clinics, covered by Medicare Part B.

Specifically, it would pay a price for a drug that matches the lowest price paid among wealthy foreign governments. Medicare, the government healthcare program for seniors, is currently prohibited from negotiating prices it pays to drugmakers.

…Trump took executive action in late July on drug prices, which included discounts on insulin and EpiPens for hospitals, which would be passed down to patients, allowing the United States to allow the legal importation of prescription drugs from Canada and other countries where prices are lower, and a Medicare program will be required to purchase drugs at the same price that other countries pay.

The article notes:

The orders received swift pushback from the pharmaceutical industry. Pharmaceutical Research and Manufacturers of America said in a statement that the move was “a reckless distraction that impedes our ability to respond to the current pandemic—and those we could face in the future.”

The pushback is not a surprise. The pharmaceutical industry pays very well.

For example according to Fierce Pharma:

Len Schleifer, Regeneron has a salary package of $41.97 million

Jeffrey Leiden, Vertex Pharmaceuticals has a salary package of $36.64 million

Brent Saunders, Allergan (formerly Actavis) has a salary package of $36.61 million

You get the picture. While I believe in the Free Market and don’t want to see the government interfere in anyone’s salary, I also believe that there is something askew here. It seems to me that as the President moves to bring drug prices into the rhelm of reality, the pharmaceutical companies might want to re-evaluate what they are paying their CEO’s. I am sure the President’s Executive Orders will impact the bottom line of the pharmaceutical companies. The question will be how they choose to handle the revenue cuts.$

7 illion $41.million

 

 

Changes Needed

Yesterday The Washington Free Beacon posted an article about legislation sponsored by Sen. Tom Cotton (R., Ark.) and Rep. Mike Gallagher (R., Wis.). The legislation would bring back pharmaceutical manufacturing from China to America, aiming to reduce a dependency that could seriously limit the U.S. coronavirus response.

The article reports:

Cotton’s is just the latest proposal to onshore pharmaceutical supply chains, including a similar one from Sen. Marco Rubio (R., Fla.) and rumblings from the White House about a “buy American” executive order. Prompted by the coronavirus pandemic, many are beginning to see the cost-savings from Chinese-made pharmaceuticals as not worth the risk of undersupply during another pandemic, or during a potential conflict with America’s main geostrategic rival.

“China unleashed this plague on the world, and China has to be held accountable,” said Cotton during a Fox News interview Wednesday evening. “It’s too grave a threat to let our health rest on Chinese drugs.”

The Cotton bill would directly target Chinese API producers, requiring the FDA to track the point of origin for APIs and drugs made outside of the United States, as well as requiring drug companies to list the country of origin for APIs on their products. It would also prohibit all federal entities—including the Departments of Health and Human Services, Veterans Affairs, and Defense—from purchasing drugs that use APIs made in China.

The bill also aims to bolster domestic pharmaceutical production capacity. It would allow domestic manufacturers to immediately expense the costs of expanding production capacity, giving such businesses a major write-off on their taxes. If successful, that provision could help U.S.-based manufacturers compete with lower-cost Chinese ones, keeping drug prices low even as production moves back to the United States.

The really positive aspect of this is the tax break–unless drugs manufactured in America have a lower price than those manufactured in China, Americans won’t buy them. Any bill that aims to bring manufacturing back to America needs to consider the cost of making whatever is manufactured. We have cheap energy right now, and our corporate tax policies generally make America a good place to do business. Both of these factors are the result of having a businessman in the White House.

The article concludes:

Perhaps, in part, because of these profits, discussion of repatriating pharmaceutical production appears to have spooked Chinese authorities. In a Tuesday tweet, the country’s ministry of foreign affairs claimed that “trying to move medical supply chains back to the U.S. from China is unrealistic and unhelpful,” adding that it would be “a wrong remedy for #COVID19 pandemic.”

Playing Politics With Drug Prices

On Wednesday, The Epoch Times reported on a bill in the Senate that was designed to lower drug prices.

The article reports:

Senate Minority Leader Chuck Schumer (D-N.Y.) blocked a bill that would lower prescription drug costs, arguing that a measure that addresses other health care issues would be better.

Sen. John Cornyn (R-Texas) wanted a bill he co-sponsored with Sen. Richard Blumenthal (D-Conn.) to be passed unanimously on Nov. 13, but Schumer blocked the measure by objecting to Cornyn’s request for a unanimous vote.

Schumer said he didn’t oppose the bill’s substance, but accused Cornyn of playing a “little game” to try to get his bill passed when action on additional issues in health care was being blocked by Republicans, according to The Hill.

“We have a whole lot of legislative ideas, not just his,” Schumer said on the floor. “His party blocks everything that would have far larger consequence.”

Schumer said there were better legislative options than Cornyn’s bill, including one introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.).

Cornyn responded by saying Schumer’s blocking of the measure was “what people hate about Washington.”

“My bill is not going to sink the prospects of that larger package of legislation,” Cornyn said.

“I’m not going to agree to price-fixing by the U.S. government,” he added about another measure Schumer cited, which would let Medicare negotiate drug prices.

The bill is noncontroversial and bipartisan. There is no reason to block it other than politics.