5 Trump quotes on drug prices explained

As a vocal critic of high drug prices, President Trump has shared many remarks about the pharmaceutical industry, along with solutions to decrease costs.

STAT recently assessed the validity of five quotes from President Trump on the drug industry, framing them with additional background information and context.

1. The quote: "They come with a new drug for a patient who's terminal, and the FDA says, 'We can't have this drug used on the patient.'"

The "right-to-try" movement, which STAT believes President Trump is endorsing in this quote, would allow terminally ill patients to use experimental treatments not yet approved by the Food and Drug Administration. However, drug companies are often hesitant to supply experimental treatments to patients. Some have a limited supply of the medication and need it for clinical trials, while others fear the potential for negative publicity — or even lawsuits — associated with adverse side effects, according to the report.

2. The quote: "We're going to be ending global freeloading … [and] foreign price controls [that] reduce the resources of American drug companies to finance drug and R&D innovation. … It's very unfair to this country."

Many foreign governments successfully limit drug prices. It is unknown how President Trump plans to convince these governments — many in wealthy nations like the U.K. or France — to pay more for medications so drug companies can collect higher profits from overseas sales, reports STAT. It's also unlikely that poorer countries like Egypt, which pays some of the lowest prices for drugs, could afford more expensive medications.

3. The quote: "I read where it costs sometimes $2.5 billion — on average, actually — to come up with a new product. Fifteen years, $2.5 billion to come up with a product where there's not even a safety problem. So it's crazy."

This figure, often cited by drug companies, stems from a study done by the Tufts Center for the Study of Drug Development in Boston. STAT notes that the $2.5 billion includes opportunity cost, or how much the company would have made by investing research and development funds elsewhere. The actual out-of-pocket cost is closer to $1.4 billion, according to the Tufts report.

4. The quote: "A lot of the companies have moved out; they don't make the drugs in our country anymore. A lot of that has to do with regulation, a lot of it has to do with the fact that other [countries] take advantage of us with their money and their money supply and deregulation."

Drug companies shift manufacturing overseas for various reasons, including tax incentives and labor costs, reports STAT. Smaller companies usually find it more efficient to hire a manufacturer abroad than locate a U.S. factory able to take on a contract job. Plus, many companies still have manufacturing facilities in the country — GlaxoSmithKline has nine U.S. plants that employ about 15,000 people, according to the report.

5. The quote: "We can increase competition and bidding wars, big time."

President Trump believes letting government programs negotiate drug prices will lower costs. Officials at the Congressional Budget Office are not sure this method would yield savings, as drugmakers are already required to give discounts to Medicaid and the private plans that administer Medicare prescription-drug benefits already negotiate discounts, reports STAT.


More articles on supply chain:

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A new framework for measuring the true value of drugs: 5 takeaways
Bloomberg: Medtronic arranging sale of medical supplies business

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