October 27, 2021

President Trump Must Step Away from the Socialist Price Index, It’s a Disaster!

The following article is sponsored by Americans for Limited Government and authored by Richard Manning.

One thing about President Trump is, his instincts are almost always right.

Take, for example, his recent executive orders to bring down pharmaceutical drug prices — the man wants a good deal for his people. As he put it: “No more will we have to suffer by saying, ‘Gee, why is it so much cheaper for the exact same drug in some other country?’”

Trump, a businessman with an almost uncanny ability to get the better terms of a deal, must marvel at the licentiousness all around him in “the swamp.” After all, he now leads an organization, the federal government, with wastefulness so gargantuan it long ago moved from appalling into incomprehensible, even numbing.

And when Trump refuses to bow to the howling shrieks of the political correctness brigade and actually speaks openly and boldly about getting a good deal for Americans, it’s still refreshing, even as his first term nears a close.

But another thing about President Trump is, the details of how those instincts are put into action aren’t always right.

Frankly, it’d be astonishing if implementation did match aspiration, since practically the entire city of Washington, D.C., including and especially the tens of thousands of federal employees up and down the ranks, consider “the resistance” their mission.

But even still, not even Sean Hannity would argue that Trump is a “details guy” when it comes to the ins and outs of the policy details.

All of which is why I’m still optimistic that Trump will step back from a disastrous, socialist policy dubbed the “International Pricing Index” that somehow ended up lumped into the group of well-meaning and, other than the “IPI,” well-designed proposals included in the group of executive orders to address drug prices.

For context, the idea of an international price “index” first gained prominence in the mainstream political debate last year as Nancy Pelosi was drafting an Alexandria Ocasio-Cortez fever dream of a bill purportedly intended to address drug prices.

I say “purportedly” because Trump has repeatedly signaled his willingness to negotiate on the issue much further than most Republicans ever have. You might expect Democrats to be delighted. But the lizard brains of the denizens of our nation’s capital have their own “Washington logic,” which saw the matter completely differently.

A deal to lower drug prices could help Trump politically — he might get credit! No, no, this could not stand. So Pelosi and the other Democrats set about to move their bill so far to the left that Trump wouldn’t dream of going near it. It was during this period that the “international pricing index” gained prominence in the discussion.

“Index,” however, is a deeply misleading misnomer for how these proposals (proposals, plural — both Pelosi and Chuck Schumer, the top Senate Democrat, have theirs) would work. On its face, the index would consist of some number of other nations, from which the average price of each drug in each country would be tallied. That average price would then form a legally-enforced price ceiling in the United States, the highest a company could charge for it, in some fashion or another.

Which nations would be picked for such an index? In the proposals so far, the lists are almost entirely composed of countries that have their own government-set price controls. This means that the “index,” a term normally reserved for a collection of prices — which are, by definition, set by a market, not European socialist bureaucrats — would just be other countries’ price controls aggregated.

Saddling the world’s most important drug market with price controls, in a country that also hosts a large majority of the most innovative drug companies, would be nothing short of devastating to medical innovation in the years and decades to come — causing potentially irreversible damage.

In contrast, a much more ambitious, but far more rewarding deal, could it be secured, would be to stop European free riders from ripping off our country’s drug companies at prices that would never in a million years sustain the R&D it takes to bring a new medicine to market. Now that sounds like a fight that’s right up Trump’s alley!

But there are other good, important steps to take short of that. The president’s instincts to help Americans save money on prescriptions are better applied to another one of the Executive Orders in the batch, one designed to ensure drug rebates reach consumers directly, rather than serving as kickbacks to pharmacy benefit managers (PBMs), middleman entities who are helping insurance companies and pharmacies pocket savings intended for patients.

Trump’s work to rein in PBMs could be huge — saving Americans’ costs without hurting medical innovation. The PBMs’ business practices are driving up healthcare costs and distorting the health insurance market. Americans should receive drug rebates right at the pharmacy counter instead of losing them in the PBM industry scam.

So: President Trump, if you’re reading, step away from the disaster of IPIs! Mr. President, your instincts are almost always right. Whatever inside baseball political drama brought us to this point, it’s not too late. Throw the socialist plan in the garbage and go forth in haste on the remaining prudent and admirable planks to your policy. The American people have long needed a fierce advocate like you. What a shame it’d be if that effort were marred by the mistaken inclusion of a Pelosi special as part of the fight.

Rick Manning is the President of Americans for Limited Government.

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