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President Trump Assails Foreign Medicine Prices and Practices in "American Patients First"

  • 14/05/2018
  • Articles

President Donald Trump and Secretary of Health and Human Services Alex Azar presented on 11 May 2018 a medicine pricing plan entitled “American Patients First - The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs” ("APF"). APF obviously focuses on the complexity and idiosyncrasies of the US medicine markets and regulations and is designed to make its impact felt there. Still, some of the measures that will be implemented or studied sound familiar from an international perspective. Examples are measures to promote the uptake of biosimilars and indication-based pricing.
Of immediate relevance for third countries is the APF’s assault against “foreign governments’ free-riding off American investment in innovation”.  According to APF, which seems to focus first and foremost on Europe, budget controls have created excessive constraints on government spending on prescription medicines. Additionally, external reference pricing “combined with the threat of market lockout or intellectual property infringement, prevents drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing these policies.”  As a result, APF maintains that European countries (or, more generally, OECD countries) have not contributed an “appropriate share” to the research and development costs of medicines conceived in the US. They have rather been “free-riding off US consumers and taxpayers”.
Despite its muscular analysis, the heading “fixing global freeloading” of the APF does not so much cover a list of measures ready to be implemented against foreign governments or entities, but rather a few avenues of thought that invite further exploring. The APF raises the following questions: 

  • What can be done to reduce the pricing disparity and spread the burden for incentivising new drug development more equally between the U.S. and other developed countries?
  • What policies should the U.S. government pursue in order to protect intellectual property rights and address concerns around compulsory licensing in this area?

It would not be wise to dismiss the international part of the APF as a form of consequence-free pandering to a domestic audience. The United States, including previous administrations, has always been critical of budget-inspired European medicine reimbursement measures if they were judged to lack transparency, reflect arbitrariness, stifle innovation and/or erode intellectual property. For example, as recently as March 2018, the United States Trade Representative (“USTR”) expressed concern over European Union pharmaceutical policies in its 2018 National Trade Estimate Report on Foreign Trade Barriers. According to USTR, “U.S. pharmaceutical stakeholders have expressed concerns regarding several Member State policies affecting market access for pharmaceutical products, including non-transparent procedures and a lack of meaningful stakeholder input into policies related to pricing and reimbursement, such as therapeutic reference pricing and other price controls. Such policies reportedly create uncertainty and unpredictability for investment in these markets and can undermine incentives to market and innovate further”. USTR went on to criticise a range of individual Member States, including Austria, Belgium, Cyprus, the Czech Republic, France, Hungary, Italy, Lithuania, Poland, Portugal, Romania, and Slovakia. It is conceivable that, based on the analysis contained in APF, the US will no longer target European medicine pricing policies which it considers illegitimate through diplomacy only, but may also seek to deploy international trade measures.

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