90 Miles From Tyranny : Trump Was Right Again: The U.S. Subsidizes Europeans’ Healthcare and Defense

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Saturday, March 5, 2022

Trump Was Right Again: The U.S. Subsidizes Europeans’ Healthcare and Defense


And Joe Biden’s State of the Union pitch to lower drug prices won’t change that.

It took Russia’s naked aggression against Ukraine for Germany to admit that Donald Trump was right all along: Europe needs to stop relying on U.S. subsidies and spend more on its own defense.

In a stunning policy reversal, Chancellor Olaf Scholz announced that Germany would do what Trump was long urging and commit at least two percent of GDP to defense spending.

That the United States has been subsidizing Europe’s defense is well known, thanks mainly to Trump’s harping on it. Another thing Trump thundered about, correctly, is that the United States also subsidizes Europe’s socialized healthcare. Pharmaceutical companies rely upon sky-high U.S. drug prices to render economically viable their ability to sell drugs in other countries. The United States thereby subsidizes socialized healthcare in the rest of the world, especially in the wealthiest European countries.

Here’s how and why—and why Joe Biden’s State of the Union pledge to lower drug prices is dead on arrival.

Drug development is expensive. To defray costs and turn a profit, most pharma companies rely upon the holy trinity of drug approval: The United States, Western Europe, and Japan—usually in that order, for compelling economic reasons.

Why that order? The United States is nearly always first because the highest prices can be obtained there. Through their “market access” functions, pharma companies negotiate prices with the “payers”: large healthcare organizations, hospital systems and insurers. These discussions often involve byzantine structures of rebates and third parties known as pharmacy benefit managers (PBMs). But the main goal is always the same: to convince the payers to accept the highest price possible for U.S. sales.

The Trump Administration briefly tried to enact “most-favored nation” status for the United States, under which American prices could be no higher than the lowest approved prices elsewhere. That proposal went nowhere fast. The same will happen with Biden’s State of the Union pledge to “let Medicare negotiate lower prices for prescription drugs.” Pharma companies donate a lot to politicians of both parties. Therefore, neither “most-favored nation” nor negotiated Medicare prices will happen.

The pharma companies have no interest in changing the status quo, as their business models explicitly depend on high U.S. prices. Without being propped up by American consumers and taxpayers, the economic viability of selling drugs in Europe and beyond nosedives. The European health authorities, on behalf of their largely single-payer systems, know they have the upper hand with the drug companies, as everyone acknowledges that high U.S. prices are intended to subsidize lower prices in Europe. This, of course, props up their socialized medicine schemes by...




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1 comment:

Bobo the Hobo said...

President Trump had already convinced the manufacturers to lower insulin and epi pen costs and had been negotiating for other lowered meds. Grandpa Puddingcup IMMEDIATELY rolled back Trump’s progress with big pharma. Of course he promptly took credit for chiding big pharma, leading the ignorant to assume he was “getting tough” with the big guys in order to “protect” average Americans.