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The U.S. is making huge strides in the medical and biopharmaceutical fields, but price controls threaten this progress, a recent Wall Street Journal editorial asserts (subscription).

What’s going on: “President Trump … last week threatened drug companies with price controls or worse if they don’t cut prices as he wants,” the editorial board wrote. “Mr. Trump’s excuse is that other countries are ‘free riding’ on American innovation. His solution: Demand manufacturers give Americans their “most-favored nation” (MFN) price—i.e., the lowest in other developed countries like Canada and the U.K. If drug makers refuse, he may yank their drug approvals, harass them with lawsuits and more.”

Why it’s a problem: While nations with single-payer health care systems, such as Canada and the U.K., pay less for prescription pharmaceuticals than American private insurers and Medicaid, “[d]rugs aren’t the main driver of health care premiums, patient costs or government spending.”

• “Manufacturers benefit for a few years from patent protection after medicines launch, but then they face stiff competition from follow-on medicines and generics.”
• Unbranded generic medications account for 90% of all prescriptions in the U.S. and cost just one-third less here than they do in other countries.

What really works: Market competition, not price controls, is what will bring costs down for consumers, the editorial continues.

Discouraging innovation: It isn’t true that pharmaceutical manufacturers get “generous research subsidies,” as the president recently claimed.

• In fact, “the pharmaceutical industry spent $141 billion on research and development in 2022, nearly 40 times as much as the National Institutes of Health did on research directly related to drug development.”
• Harassing companies the way Trump is doing, according to the piece, could make them move more of their intellectual property to China—and that’s a move that would “likely result in fewer new drugs developed and sold in the U.S., especially in riskier research fields like neurologic and rare genetic diseases.”

NAM says: “European-style price controls will stifle innovation—undermining R&D and limiting future access to breakthrough treatments,” NAM President and CEO Jay Timmons said in a statement last week.

• “Manufacturers and manufacturing workers are facing rising health care costs because of underregulated middlemen like [pharmacy benefit managers] and the 340B program, both of which have increased prices for patients without producing a single treatment. Rather than punishing the innovators who develop lifesaving and life-changing medicines, policymakers should focus on the real inefficiencies and distortions in the system.”