Trump must challenge foreign freel weighing, not copy

This morning the America First Policy Institute has one Power shortly Emphasizing a real problem of the rest of the world free rides about American pharmaceutical innovation. American consumers have the most global costs related to research and development of medicines and therefore subsidize lower prices abroad.

President Trump is already working on tackling similar foreign freel weighing – in particular by calling on our European NATO bondmen to contribute their fair share to collective defense. He can and must apply the same fixed approach to pharmaceutical prices.

Much of the analysis of AFPI is correct. It accurately identifies foreign freel that as harmful to US patients and global research efforts.

The proposed solution of AFPi ‘most beneficiary nation’ or MFN, the pricing policy that would determine the prices of medicines in Medicare on the basis of the lowest prices paid in countries such as Canada, the United Kingdom and France is fundamentally misled.

To begin with, the MFN approach looks on the complex dynamics of pharmaceutical prices abroad. European countries use aggressive, government -supported negotiations to secure deep discounts from drug manufacturers.

These “negotiations” often come with implicit and explicit threats. If only one example, if a manufacturer refuses to sell his products at dictated prices, a European government can take revenge by withdrawing its patents under Article 5 From the Paris Treaty for the protection of industrial real estate, which makes mandatory licenses possible when a patent holder refuses to sell his product in a market.

Moreover, it is not as if American drug agencies can easily go together and leave Europe if the continent refuses to pay more for drugs. All coordinated efforts would be seen as cartel -like behavior and activating antitrust sentences in the context of the laws of the European Union.

In view of these limitations, pharmaceutical companies are effectively forced to accept artificially low prices abroad. Expect American companies to respond to MFN by raising prices abroad, is simply not realistic.

In other words, MFN would not repair Freeloading. But it would aggravate the impact of European price controls on American innovation and investments.

The adoption of an MFN policy would effectively import Europe’s price checks into our own health care system – and thereby endanger the worldwide leadership of America in pharmaceutical innovation. Developing a new medicine currently costs $ 2.6 billion, takes 10 to 15 years, And only about 12% of drugs Entering clinical studies eventually reach patients.

Despite these challenging opportunities, More than 60% Of the innovative medicines in the world have been developed in the United States.

If the MFN proposal becomes a policy, critical investments in the research and development of medicines can greatly decrease. A National Bureau of Economic Research Study Estimate that reducing American pharmaceutical prices by 40% to 50% could lead to a reduction in research initiatives of 30% to 60%.

Likewise, research From the University of Connecticut economist Joseph Golec discovered that America would have lost more than 100 new drugs from 1986 to 2004 under Price Controls in European style.

In addition to limiting future discoveries, MFN prices would already be delayed access to new medicines. The Majority of new drugs First debut in the United States. Pharmaceutical companies give priority to the American market, precisely because it compensates them reasonably for their substantial research and regulatory costs before they are confronted with markets with covered prices abroad.

Lowering the American prices to match the artificially low prices of Europe would intensify the global freela weighing instead of reducing it. Foreign governments would continue to pay little, while American research budgets would shrink.

Competitors such as China are rapidly expanding their biotechnological possibilities. MFN prices risks to shift worldwide leadership for medical innovation from America to China.

The United States has numerous commercial instruments and diplomatic levers to force abroad to pay prices that reflect the actual value of medicines developed by America. We have to use them.

Price checks do not work whether they have been conceived or imported in the interior abroad. The Trump government must confront foreign governments directly to put an end to the pharmaceutical freela weighing. This will protect the American innovation, retain the access of the patient to pioneering treatments and retain the unparalleled global leadership of America in medical research.