The Trump administration's new stance on drug prices goes as follows: "Socialist countries are ripping off American companies, so it's time for the U.S. to join them."
It's the complete opposite of Trump's admirable defense of American interests in other areas.
The Chinese government is ripping off American companies' intellectual property, so Trump is going to bat for them, using a variety of tough, aggressive approaches to force Chinese President Xi Jinping to the negotiating table.
Lopsided tariffs are protecting foreign industries against U.S. competition, so Trump is working to make the playing field more even. Germany and other eurozone countries have been fleecing the U.S. on North Atlantic Treaty Organization (NATO) contributions, so Trump is making sure they pay up.
But now, Merkel and company are bullying some of our most innovative companies, and it's time to fight back.
First of all, one of the chief reasons that other governments turn to price controls for drugs is their single-payer systems are financially sagging under their own weight, which leaves rationing as the only viable alternative.
Health and Human Services (HHS) recently released a package touting its new approach entitled, "What You Need to Know about President TrumpDonald TrumpCheney says a lot of GOP lawmakers have privately encouraged her fight against Trump Republicans criticizing Afghan refugees face risks DeVos says 'principles have been overtaken by personalities' in GOP MORE Cutting Down on Foreign Freeloading."
"The current system lets other countries reap the benefits of American pharmaceutical investment and innovation, while the costs fall on American patients and taxpayers," the document states.
American companies invent roughly 10 times the number of new medicines that European nations do. This is not some huge coincidence, and it's not because Americans were born with a God-given talent for inventing new medicines. Indeed it is because the world's largest, mostly free market for drugs exists in the U.S.
With American companies having invented these wonderful, life-saving medicines, other countries step-in and require they sell them at prices that would never sustain the research and development required to produce them in the first place. In other words, the fixed price is below the whole cost.
But how is this an onus on our companies, again? Isn't the president supposed to lead our international affairs? American pharmaceutical companies cannot be faulted when other countries impose price controls on their products. This has been difficult for past U.S. presidents to fix; but not President Trump.
One of the reasons that Americans voted for Trump is the belief that he would refuse to accept the status quo if there's a better deal for Americans to be had. But this policy is, unfortunately, a departure from that record.
The new American price controls won't be bad for American firms if "foreign prices were more in line with U.S. prices," HHS stated in its press release. But other nations are freeloading from us; from our companies, and our workers. It's not something for the U.S. to emulate. Rather, it is something the U.S. should stop foreign nations from doing.
Furthermore, this fails to mention that we are implementing this disastrous policy via an office created by ObamaCare that Republicans have rightly criticized for its unconstitutional, breathtaking powers.
The office, the Center for Medicare and Medicaid Innovation (CMMI), is the executive branch rewriting federal law under the guise of a "pilot study." The office is supposed to evaluate new policy ideas with small experiments, but many of their tests involve the mandatory participation of the whole country.
Using an ObamaCare agency to import socialist, single-payer price controls, killing American jobs in the process, is not a good idea. President Trump is fighting for the steel industry and the automobile industry. Why is he surrendering instead of fighting for the drug industry?
Michael Busler, Ph.D., is a public policy analyst and a professor of finance at Stockton University.