President Trump on Friday said his administration would soon issue an executive order mandating a “favored nations” policy in which U.S. payments for drugs are capped at the lowest price paid by either a manufacturer or a developed country.
“Why should other nations — like Canada — but why should other nations pay much less than us?” Trump asked. “We’re working on a favored nations law where we pay whatever the lowest nation’s price is.”
The phrase “favored nations” is sometimes used in contracts to ensure that a purchaser of a good or service receives terms at least as favorable as any other purchaser. In other words, the clauses ensure no one else gets a better deal than the “favored nation.”
It was not immediately clear to what extent Trump’s announcement differs from one of the White House’s signature drug pricing proposals: an international price index that would similarly cap U.S. drug payments based on an average of prices paid in an index of developed nations.
Oh wait. That was from 2019, when Trump first proposed to do it and never did. Never mind.
The “plan” is preposterous and will end up creating shortages in the US and, if it were actually implemented, would kill a bunch of people in poor countries. But that’s probably a feature.
There is certainly something that should be done about the ridiculous price of pharmaceuticals in America. This isn’t it. If any of it comes to pass it will, as everything Trump touches does, make it worse.