On Donald Trump’s way out the White House door, he did something revealing how he lied and cheated his way into office and about where his allegiances genuinely are. On January 4, 2021, two days before the insurrection and 16 days before Trump’s term ended, his administration proposed a new rule on drug prices, a major issue in both the 2016 and 2020 campaigns.
In 2003 President George W. Bush proposed the first significant expansion of Medicare benefits since the program began in 1965 by adding Part D to provide some relief from rising drug prices. But that law barred our government from negotiating for lower wholesale drug prices, which continued rising. Novo Nordisk, for example, raised the price of its widely used Novolog insulin 353 percent from its introduction in 2001 to 2016. Some other insulin makers raised prices even higher.
Trump campaigned on a claim that he was the only person who could lower drug prices. Unlike politicians who he said had no idea how to wrest lower prices from the drug companies, on Day One as president Trump promised that drug prices would drop dramatically. Such were the virtually magical superpowers he claimed to possess. A few days before the 2016 New Hampshire primary Trump told a rally, “We pay about $300 billion more than we are supposed to, than if we negotiated the price, so there’s $300 billion on Day One we solve.” “If we negotiated the price of drugs,” he told MSNBC’s Joe Scarborough the next morning, “we’d save $300 billion a year.” It was a bizarre and fact-free claim, typical of Trumpian hyperbole.
According to the federal Centers for Medicaid and Medicare Services, our federal government spent $298 billion on prescription drugs at that time. To believe Trump was to believe the big drug companies would hand over all the medications for free along with a check to Uncle Sam for a couple of billion dollars.
The spending reduction Trump promised meant prices would plummet by more than 70 percent, bringing them well below what was paid by the governments of Britain, Canada, France, Germany, Japan, and South Korea, all of which negotiated the wholesale prices they paid for drugs. No one but Trump and those who saw him as a demigod believed that. When reporters asked Trump and his campaign staff about the fantastical $300 billion number they refused to respond. Besides, it was one of those big incomprehensible numbers. Trump wanted to own the image of price cutter extraordinaire. He didn’t care about the number. When Day One came and Trump was president, drug prices kept rising. All he did was talk about lowering them.
Over the next four years, the most he did was suggest that, maybe, perhaps, he might invoke existing law to require pharmaceutical companies to sell our government drugs at the average price of other large countries. But it was all talk, no action.
“Drug prices are coming down—first time in 51 years—because of my administration, but we can get them down way lower working with the Democrats,” Trump declared during some May 2019 comments in the Rose Garden. But prices had not come down. It was just another lie.
Trump had plenty of legal authority to force drug prices down without Congressional cooperation. At least two federal laws gave Trump the power to declare that our government wouldn’t pay exorbitant prices for drugs. He could have invoked a law known as Section 1498, which is most often used in military procurement. That law gives the president the power to override a patent if prices, including drug prices, are excessive or supply is inadequate.
Eventually, Trump took decisive action on drug prices. It was the first Monday of 2021, just 16 days before he would leave the White House. In the Federal Register, where rules changes are published and people can comment before any changes occur, he proposed a new policy in implementing the 40-year-old Bayh-Dole law. That law, like Section 1498, gives our government power to “march in” and seize control of a drug patent developed with taxpayer funding when the owner charges excessively high prices or holds back supply. Of course, the patent owner would be compensated, but any seizure would be immediate with payment after negotiations or litigation.
An early hint of Trump’s last-minute action could be found in his administration’s contracts with drug companies in 2020 to develop Covid-19 vaccines. Except for Pfizer, which used its own funds for research and development, the vaccines were all paid for with government money. That made them liable to the Bayh-Dole march-in rights over high prices or inadequate supply. March-in rights under Bayh-Dole have never been invoked, no doubt because the Pharmaceutical Research and Manufacturers of America, or PhRMA, has made clear that it would litigate.
Instead, the law’s power is the negotiating leverage it gives a president to challenge greedy and recalcitrant drug companies during national emergencies by jawboning, as George W. Bush did. Trump’s proposed new rule would have removed that leverage. It would make marching-in on any patented drug under the Bayh-Dole law impossible. In political terms, the goal of the new proposed rule seemed clear—to make it harder for the incoming Biden administration to do what Trump failed to do, negotiate lower drug prices.