Last night, Fox News gave one hour of free air time (again) to Donald Trump again right before the Nevada Caucuses. As usual, Sean Hannity offered multiple softball questions and did not follow up on Trump when Trump was spouting Democrat party health policy. The latest example was Trump advocating that the government control all prescription drug prices by negotiating with pharmaceutical companies for prices. This is one of the oldest Democrat Talking points around. Trump said this: “If we bid out the purchase of drugs this country would save hundreds of billions of dollars per year.”
There are several big problems with this approach. First of all, Trump stated that the country would save “hundreds of billions of dollars per year” if the federal government “bid out” the purchase of drugs. One problem is that the total amount spent by programs that can negotiate is $115 billion per year according to the latest “National Health Expenditure data”. Medicare, Medicaid and CHIP (Children’s Health insurance program) are spending far less than “hundreds of billions” per year (those are the programs controlled by the Centers for Medicare and Medicaid Services that could “bid” out the drugs). In fact, the total amount spent on prescription drugs in America in 2014 was $297.68 billion, well under the “hundreds of billions per year” Trump thinks he can save with his Democrat policy proposal. This demonstrates Trumps ignorance on policy. It also demonstrates that Trump will say anything to get elected – pandering to the populace to earn votes while spreading misinformation.
Another problem with the Trump proposal is that if Trump has the government “bid out the purchase” of drugs on, then several unintended consequences will occur. The cost of drugs outside of Medicare, Medicare and CHIP will go up. The companies will have to raise prices among private insurers so that average consumers that must buy the mandated insurance (also supported by Trump) will pay even higher prices. Of course, this will then lead to Trump to impose price controls on the private insurers to set a ceiling on drug prices. Price controls are what lead to shortages, as happened with Nixon when he caused gas lines after imposing price controls on gas. Further, price controls (and regulation) are already leading to massive shortages of injectable (IV) drugs as Obama has imposed and continued them through his FDA.
Finally, once the government “bids” out the price of drugs, then the government will have even tighter restrictions on what drugs will be available to patients. That is exactly what is happening now at the VA where they have bid out drugs for many years – limited drug “formularies”. Another problem will be the impact on drug research and innovation as pharmaceutical companies get the message that spending tens and hundreds of millions on drug development will result only in a loss, not a reasonable profit.
Donald Trump has demonstrated yet again that he 1) wants big government control over healthcare, 2) Doesn’t understand health economics and conditions of the market, 3) will cause far more harm to our health system with his policies. Those who want real health care reform will not find it with Trump.