George Hall: Foreign drug price controls aren’t right for Alaska

By GEORGE HALL

Alaska is, by far, the least densely populated state in the country. Roughly eight in 10 communities aren’t connected by the road system. So it’s no surprise that nearly all of Alaska’s census areas are considered pharmacy deserts, meaning residents must travel long distances just to fill a prescription.

Unfortunately, Congress could soon make it even harder for Alaskans to get the medicines they need.

Some lawmakers want to reduce U.S. drug prices by tying them to the lower prices paid in foreign countries. Those lawmakers are targeting a very real problem: foreign countries pay artificially low prices for medicines invented, and often manufactured, in America. The United States contributes more than 70% of the profits that fund global drug development, while other wealthy nations pay significantly less for treatments that spring forth from American labs.

That imbalance is deeply unfair, and it’s why President Donald Trump has made it a priority to end this foreign freeloading.

President Trump recently struck a deal with the United Kingdom that will force Britain to increase the prices it pays for new medicines in exchange for tariff exemptions. And the White House has signaled it’ll pressure other trading partners into similar deals.

By spreading the financial burden of drug development more evenly across all developed countries, these sorts of deals can incentivize continued research investments while giving companies more flexibility to lower prices here at home.

But Congress may unintentionally undermine the president’s efforts — and ironically let foreign freeloaders off the hook.

If lawmakers automatically cap U.S. drug prices at the lowest price offered abroad, other countries would be able to reject the White House’s demands. Those countries would know that, so long as they held firm, U.S. law would then mandate that drug companies cut their U.S. prices down to the artificially low level that foreign nations pay.

In other words, Congress would inadvertently deprive the White House of all its negotiating leverage to force foreign countries to accept the market prices that Americans pay.

Perhaps even worse, any such bill would clobber America’s biotech industry — hurting not just the millions of workers it employs, but the hundreds of millions of patients who benefit from the new medicines it produces. A recent University of Chicago study estimated that applying foreign pricing to existing drugs in the United States would prevent the development of over 200 drugs in the next decade.

That doesn’t mean that Congress should do nothing, of course. But there are other ways for our lawmakers to work with President Trump to lower prices without hurting Alaskans’ health.

For starters, Congress should expand and protect drug-price transparency efforts highlighted by the administration’s TrumpRX program.

Congress could also crack down on pharmacy benefit managers, the middlemen who decide which drugs insurers cover and ultimately determine what patients pay. They benefit when prices are high, since they take a huge cut — about 42 cents of every dollar spent on brand-name drugs.

Likewise, the federal 340B Drug Pricing Program, meant to help vulnerable communities, has become a tool for greedy hospitals to overcharge patients. Hospitals use the program to buy medicines at deep discounts. Yet instead of passing those discounts along to patients, many turn around and mark prices up by as much as 1,000% — then pocket much of the resulting spread.

Reforming the program to require hospitals to directly share the discounts with patients would immediately lower Alaskans’ drug bills — without putting their access to medicines at risk.

Congress and President Trump are right to demand a fairer drug pricing system.

But enshrining foreign prices into law would do more to break the system, rather than fix it. Policymakers in other countries don’t know what’s best for Alaska. They shouldn’t be allowed to dictate what medicines we can access or what they cost. Let’s hope our lawmakers and the Trump administration can work together to enact a drug pricing solution that truly puts Americans, not foreign bureaucrats, in the driver’s seat.

George Hall is a Homer resident and small business owner.