In the U.S., drug prices are shaped by complex negotiations involving pharmacy benefit managers that act as middlemen between drugmakers and employer clients and health insurers and have been criticised for inflating costs. In Europe, countries generally have public health systems that negotiate directly with manufacturers and keep costs down.
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Trump said if drugmakers do not cut prices they could be hit with tariffs.
Diagnosis:
The US system for financing medicine has middlemen who increase prices. The consumer / patient has poor representation and low bargaining power. In European countries, there typically exists a central health insurance authority that’s not interested in making a profit, but is interested in everyone’s health and access to medicines (at low cost if possible).
Subsequently, a president arrives who doesn’t understand a thing. He’s been told that his ratings are dropping and he should “do something the people like”. He tries to solve drug prices with customs tariffs instead of implementing single payer health care in the US.
Prognosis:
The result will be a free market clusterf*ck and some people will die as a result.
Pharmaceutical companies will demand higher prices from countries with socialized healthcare. Those higher costs will be passed on to the citizens of those countries. Those citizens will get angry(ier) at the US. US citizens will see little to no cost reduction in drug prices, but any, no matter how minor, will be touted as a victory by Team Trump. And none of them will ever recognize why countries with socialized healthcare can negotiate lower drug costs.
The end result is the US becomes even more isolated and hated by the world.
Pharmaceutical companies will demand higher prices from countries with socialized healthcare. Those higher costs will be passed on to the citizens of those countries.
I’ve tried to analyze whether this can happen.
Maybe. Countries with socialized health care typically have disproportionately great bargaining power relative to their size. A pharamaceutical company may not be inclined to demand higher prices from a customer who buys great quantities.
Countries may also enter international alliances to obtain cheaper access to some product, like the EU did in case of COVID vaccines. Currently, companies have contracts they cannot back out from. Countries with single payer systems also have laws which regulate the purchase of pharamaceuticals, and those won’t be changing soon.
Basically, it seems that the only thing Trump can do to immediately alter prices, is to start a trade war. Which would raise prices for US consumers and lead to unreliable access to certain drugs, putting people’s lives in direct danger.
Finally, even if we suppose that one category of customers agree to pay higher prices (likely not for long, foreign competitors would quickly step in and offer alternatives) - there’s no guarantee that savings obtained in such a way will be passed down to another category of customers (who have lower bargaining power) without legislation to ensure that. But legislation comes from the Congress…
European government is bringing down Trump government?
