Under MFN, U.S. drug prices would be tied to the lowest amount paid by any OECD country with at least 60 percent of our GDP per capita. That includes many countries where government-run health systems routinely undervalue breakthrough medicines and decide which treatments patients can access — and when.
That’s not competition. That’s central planning. A market price originates from voluntary exchange, not foreign bureaucrats operating under fixed budgets and political incentives.
We know where that road leads. In countries using arbitrary price-setting benchmarks, patients are routinely denied or delayed access to new medicines. By late 2022, just 34 percent of new drugs launched globally were available in France, 37 percent in Italy, and 52 percent in Germany. Compare that to nearly 75 percent in the United States. Import their pricing models, and we’ll import their rationing — and avoidable suffering. //
Strong trade pressure best confronts these abuses. Other wealthy countries should be required to meet minimum spending targets on new medicines — benchmarked to what the United States invests relative to GDP. Those spending expectations should be written into binding agreements with clear enforcement mechanisms and consequences for noncompliance.
But overseas is not the only issue; we also need to fix what’s distorting prices at home.
Begin with the supply chain middlemen. The three largest pharmacy benefit managers (PBMs) now control more than 80 percent of the prescription drug market, acting as gatekeepers between manufacturers and patients. These entities, which play no role in innovation, dictate which drugs are covered, how much patients pay, and who profits. /
In 2023 alone, the “gross-to-net bubble” — the gap between the list prices of branded drugs and net prices after rebates and other discounts — was $334 billion. In an ideal market, those savings would dramatically lower out-of-pocket costs for patients.
Instead, the system is cloaked in secrecy. Most patients are unaware of the discounts that PBMs negotiate, and they don’t see a dime of those discounts when they pick up their prescriptions. Patient cost-sharing is still based on the inflated, publicly disclosed list price — not the much lower negotiated price. //
We also need to crack down on hospital conglomerates that abuse the federal 340B program. Initially created to support low-income and rural hospitals, 340B has ballooned into a multibillion-dollar loophole.
These hospitals purchase medicines at heavily discounted prices and resell them at a steep markup — up to five times their acquisition cost — with no obligation to deliver additional care or pass savings to patients. Most 340B hospitals provide less charity care than the national average.
