Let's Fix Our Own Prescription Drug Policies

President Trump's push to import drug pricing models from European health systems -- particularly his Most Favored Nation (MFN) approach -- is like trying to fix a Harley-Davidson at a Vespa dealership.

One is built for café runs on cobblestone alleys. The other is made for muscle, speed, and long-range power.

While American health care certainly has problems, we don't need lessons from Europe on how to fix them. Our problems stem from Washington policies that prioritize government programs over private insurance, and allow hospitals, insurers, and other middlemen to pocket drug savings that should go to patients at the pharmacy counter. Despite these shortcomings, America remains the world's undisputed superpower for biotech innovation and cures.

Europe shows why government price controls backfire. Their governments hold drug prices down so tightly that pharmaceutical companies often cannot afford to launch new treatments. Europeans may pay less for older drugs, but they wait years longer for access to breakthrough therapies. It is no surprise that many European-based drugmakers now conduct their cutting-edge research in the United States.

To their credit, Europeans have a clear goal that somehow eludes our government: Reducing costs at the pharmacy for all patients. In Washington, however, the priority too often seems to be ensuring government programs like Medicaid get the deepest discounts -- even if it means patients in private coverage pay more.

That disparity creates perverse incentives. Copying European-style price controls for Medicare would push Americans out of private coverage and into government plans that only appear cheaper because taxpayers foot the bill. That would increase federal spending without addressing the underlying problems.

We need solutions that help all Americans -- not just those in public programs. Yet Washington continues to ignore billions in potential savings by allowing insurers and middlemen to keep drug company discounts and rebates instead of passing them to patients. Meanwhile, some group purchasing organizations have shifted operations to Europe to escape U.S. oversight. That alone should raise alarm.

Washington should address these market distortions and revisit policies that artificially favor government programs over private patients. Take the 1991 law requiring drugmakers to give Medicaid their "best price." This created the backwards idea that government programs deserve steeper discounts than struggling small businesses buying coverage for their employees.

The problems run deeper. The federal 340B program was supposed to help a few dozen safety-net hospitals serve poor patients, but it now lets hospitals pocket massive discounts on $60 billion in drugs annually -- turning a program meant to help the vulnerable into a corporate money grab. Meanwhile, states pocket billions annually in drug company payments that are supposed to help lower costs for Medicaid patients, then spend that money on completely unrelated government expenses.

Attacking drug prices makes no sense without addressing the middlemen who add costs throughout the system. Government price controls will achieve little if hospitals, insurers, and other players keep gobbling up savings before they reach patients. It's like trying to fill a bucket with giant holes in the bottom -- no matter how much water you pour in, it never gets full.

Instead of copying Europe's government-controlled approach, Washington must stop protecting middlemen and favoring those in government programs over those with private health insurance. It's time to focus on what actually matters: reducing pharmacy costs for all Americans, not just expanding government control over healthcare decisions.

In short, the solution isn't importing Europe's problems -- it's fixing our own.

Mark Merritt is a health care specialist who has held senior executive roles in several national health policy organizations.