Trump: And now after studying the industry, it's a very complex industry but I figured it out and I said it's not going to happen. The Democrats fought very hard to keep the prices of drugs very high. They really are to blame for this pic.twitter.com/rikV9ug66l
— Acyn (@Acyn) May 14, 2025
The major pharmaceutical companies, which make obscene profits, aren't to blame for the prices they charge or the profits they make. It's the Democrats!
And not surprisingly, Trump's proposal isn't half of what it's hyped up to be. As reported by The New York Times on Monday
President Trump on Monday signed an executive order asking
drugmakers to voluntarily reduce the prices of key medicines in the United
States.
But the order cites no obvious legal authority to mandate lower prices. The order said the administration would consider taking regulatory actions or importing drugs from other countries in the future if drugmakers do not comply.
It was something of a win for the pharmaceutical industry, which had been bracing for a policy that would be much more damaging to its interests.
The President was expected to call for lower drug prices for American consumer, and the stock prices of major pharmaceutical companies dropped before the announcement. They then recovered when the corporations realized that Trump's primary proposal was toothless. However, the President's approach and reasoning reinforce a major operating principle of his. The Washington Post noted
Far from demonizing pharmaceutical companies for high prices, Trump focused his fire on countries, particularly in the European Union, for negotiating drug prices so low that they leave the United States to subsidize the global costs of innovation. He is directing his administration to investigate countries that “extort drug companies by blocking their products unless they accept bottom line and very low dollar amounts for their product, unfairly shifting the cost burden onto American patients”…
While other countries directly negotiate with drugmakers to
lower prices, the United States generally has left it up to the companies to
set their own price, with complex and opaque negotiations with industry
middlemen determining what Americans pay out of pocket. In targeting this
international price disparity, Trump has zeroed in on a potent, bipartisan
political issue.
“So they’re going to have to pay more for health care, and we’re going to have to pay less,” Trump said Monday.
This might be a wild idea but: how about the federal government force lower drug prices in the USA upon the companies? An analysis reported in late 2024 by The Campaign for Sustainable Rx Prices "found the pharmaceutical industry’s average annual net income margin was nearly 23 percent, while the average for other sectors of the U.S. prescription drug supply chain, including distributors, retail pharmacies, pharmacy benefit managers (PBMs) and health insurers, was just 2.3 percent." And
In 2023, 16 of the largest drug companies reported $684 billion in earnings, a figure that is higher than the gross domestic product (GDP) of 88 percent of the countries in the world...
While drug companies increased their innovation budgets, they also rewarded their shareholders handsomely. Each company spent at least approximately $1 billion on dividends and stock buybacks. Johnson & Johnson, AbbVie, Bristol Meyers Squibb, and Novo Nordisk spent more lining the pockets of shareholders than on their research and development budgets
But wholly in character, Donald Trump's answer to all this is to lecture Europeans with "So they're going to have to pay more for health care and we're going to have to pay less."
That's not necessarily the case, and it's a slimy tactic, sticking it to our European allies. who per capita and relative to GDP have been more generous to Ukraine defending itself against the invasion launched by Trump's pal in the Kremlin.
However, it demonstrates also Donald Trump's fealty to the zero-sum game: if others pay more and hurt as a result, we'll be paying less. Reinforcing that interpretation, the President did not say those other countries will "pay more for health care but we'll pay less." Instead, he said they'd pay more "and we're going to have to pay less." If we're to believe the President- always a dubious proposition, to be sure- he considers it a net loss for Americans to pay less: we're going to have to pay less."
O.K., maybe President Trump was speaking hurriedly or had something else on his mind or for some other reason didn't speak his mind. There must be a reasonable explanation, though, because as the media has been avidly suggesting recently, Joe Biden is the only recent American President with cognitive issues.
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