President Trump has directed Health and Human Services Secretary Robert F. Kennedy Jr to work with Congress on addressing government manipulation within the prescription drug market. More specifically, the White House highlighted a specific regulation, dubbed the “pill penalty,” which distorts investment in new small molecule drugs—typically taken in pill form—versus biologic products administered in a clinical setting.
The move is more than welcome given Uncle Sam should have no place picking winners and losers in the free market. Congress should follow the White House’s lead and pass legislation that eliminates bureaucratic meddling. But the Trump team—together with its allies on Capitol Hill—can go further to put Biden’s socialist healthcare agenda out to pasture.
Notably, this should include cutting the broader government strings tied to Medicare Part D drugs, which were part of the so-called Inflation Reduction Act that passed without a single Republican vote in 2022. The misguided government price control program requires more than simple transparency, as the latest executive order suggests. It’s a classic example of big government action yielding unintended consequences.
More specifically, the law empowers the Department of Health and Human Services to force drugmakers into providing certain products at a fraction of the market price to the government for Medicare Part D. If a manufacturer doesn’t comply, it would be subject to a 95 percent excise tax in addition to missing out on a big chunk of the patient market.
Putting a price ceiling on the cost of prescription drugs has massive unintended consequences. Europe is an informative case study on what not to do.
Across the Atlantic, drug price control policies have triggered shortages of prescription drugs, while simultaneously undermining the continent's pharmaceutical manufacturing sector and innovation. European drugmakers, burdened by artificially low prices, are losing ground to competitors worldwide. The result has been a slow erosion of jobs, expertise, and capacity, leaving patients scrambling.
Why? Because price controls have a chilling effect on research and development projects. The U.S. should avoid making the same mistakes.
Pharmaceutical innovation isn’t cheap. New drugs can take over a decade and billions of dollars to bring to the market. When governments cap prices, they reduce the revenue that companies rely on to fund these risky, long-term investments. Fewer new drugs mean fewer breakthroughs for diseases like cancer, Alzheimer’s, or rare conditions that desperate families pray for cures to every day. It’s a trade-off that sacrifices the future health of millions.
That is why President Trump must continue to pursue a policy agenda rooted in free market competition, transparency, and elevated patient choice to lower healthcare costs. The White House should work to scale back the Biden Administration’s heavy-handed, big-government approach, while also being careful not to fall prey to Frankensteinian reanimations of Biden-era harmful policies.
Foreign reference pricing—as some in the Trump Administration’s orbit have floated—is a prime example of a policy idea to stay away from. Pricing the cost of medicine in America at the government-mandated, artificially low level paid in countries like the U.K. or France is no better than what would be proposed by the likes of Sen. Bernie Sanders or Rep. Alexandria Ocasio-Cortez.
The Trump Administration has the big-picture thinking to ‘Make America Healthy Again.’ That should start by eliminating current—and rejecting future—government price control schemes. The White House has an opportunity to bury Biden’s healthcare manipulation folly for good.