One by one, the world’s drug makers are signing up to Washington’s terms. In fifteen months twenty-six manufacturers, on the White House’s count some 89 per cent of the branded market, have agreed to sell at the lowest price any wealthy country pays: to the state Medicaid programmes, and on every new medicine they bring to market. President Trump has cast them as national champions. Their factories and laboratories are moving onto American soil. Washington has the industry behind it, and it means to lead in life sciences again.
What brought the companies in was the tariff, up to 100 per cent on medicines made abroad, that the president was holding over them and would lift only for those who signed. In return they agreed to two things: to sell at most-favoured-nation prices to the state Medicaid programmes and on all new launches, and to move manufacturing and research onto American soil. For that a company escapes the tariff for three years and takes a place on TrumpRx, the president’s direct-to-consumer storefront. For medicines already on the market the deals reach only Medicaid and the cash market, leaving commercial insurance and Medicare, between them some 70 per cent of American drug spending, largely untouched. For every new medicine the commitment applies across all of them. On the administration’s own arithmetic that prospective half of the bargain accounts for $529bn of the savings claimed, against $64bn from the existing portfolio.
The industry is playing along, wagering that what it gives up in America it will win back in Europe, because the very rule that cuts American prices is designed to push European ones up.