ECONOMYNEXT – US President Donald Trump said he will halt American pharmaceutical companies from selling drugs at high prices at home and low prices in foreign countries, ending the practice of making American ‘suckers’ solely bear the development costs of new drugs.
Western companies have for decades sold drugs in developing countries, based on affordability, a practice called ‘price discrimination’ in economics, passing on the benefits of marginal costs to the last customer, after recovering development costs and overhead at home.
Protectionist businessmen and nationalists in Sri Lanka refer to the practice as ‘dumping’ and use anti-dumping laws against price discrimination.
They also slap hefty taxes under anti-dumping laws to keep out foreign competition and gouge domestic customers.
Strangely, anti-dumping laws are not applied against pharmaceuticals by developing countries.
Instead, these countries try to promote generics which are even cheaper and no clinical trials have been performed to check their efficacy.
“For many years the World has wondered why Prescription Drugs and Pharmaceuticals in the United States States of America were SO MUCH HIGHER IN PRICE THAN THEY WERE IN ANY OTHER NATION, SOMETIMES BEING FIVE TO TEN TIMES MORE EXPENSIVE THAN THE SAME DRUG, MANUFACTURED IN THE EXACT SAME LABORATORY OR PLANT, BY THE SAME COMPANY???,” Donald Trump said in post on his Truthsocial.com platform.
“It was always difficult to explain and very embarrassing because, in fact, there was no correct or rightful answer.
“Therefore, I am pleased to announce that Tomorrow morning, in the White House, at 9:00 A.M., I will be signing one of the most consequential Executive Orders in our Country’s history. Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%.
“They will rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!
“I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World.
“Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before.”
Trump however did not impose the most favoured nation policy when slamming wildcat tariffs on the rest of the world.
Trump’s plan may lose more foreign customers to US companies as they rely more on generics. That will be the opposite reaction to his trying to promote exports in the case of other products where he has called for a reduction of tariff and non tariff barriers which is making US products more expensive to foreign customers.
Health care costs in the US is high and controversial, though a large number of new drugs are discovered in the country with billions spent on research.
Analysts say Trump is correct in saying that customers in US and advanced countries have for decades borne the cost of developing new drugs and also of gaining long drawn out approvals from agencies like the Food and Drug Administration.
Trump said “all of these costs were, and would be, for no reason whatsoever, borne by the “suckers” of America, ALONE.”
Capitalist companies however usually practice price discrimination targeting different brands at different customer segments based on affordability. But in the case of drugs brand names largely remain the same. (Colombo/May12/2024)
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