Last week, the Trump administration announced the launch of “TrumpRx,” a government-run website designed to give patients access to prescription drugs at a discounted price. The move is meant to be a first step toward offering medications at President Donald Trump’s “most-favored nation” price, based on the price controls set by other countries. Setting aside the gaudy branding and potential logistical nightmares TrumpRx may face, this is the latest in a series of swings and misses from policymakers seeking to lower prescription drug prices.
Selling medications on a government website at government-set prices hews dangerously close to practically any definition of socialism. Conservatives and libertarians rightly lambasted the Obama administration for setting up a government-run healthcare plan exchange. Having a taxpayer-funded site sell prescription drugs instead of health insurance and naming it after a Republican president does not make it any less antithetical to free market values.
Further, TrumpRx is not entering a landscape designed for the type of service it would offer. There might be some more price transparency and accessibility – welcome developments to be sure. Purchasing from such an exchange would make it much more difficult for patients to utilize their insurance plans, as marketplaces like these exist outside of the traditional system. Even if TrumpRx succeeds in making drug purchases simpler, consumers would have a hard time figuring out how the site fits in with their pricey health insurance policies.
Sadly, TrumpRx is not even addressing an unmet need. Billionaire businessman Mark Cuban already runs a similar site called Cost Plus Drugs. There, Cuban offers low-cost generics direct-to-consumer with transparent pricing. Instead of creating a government-run competitor, the Trump administration should roll back regulations to make it easier for companies like Cost Plus to grow and thrive. Making it easier for insurance to be able to cover purchases from these and expanding the scope of tax-preferred savings accounts are good first steps.
The success of Cost Plus and the demand for more transparency points to other reforms currently being overlooked by lawmakers. Currently, pharmacy benefit managers (PBMs) are a major unsung source of high prescription drug costs. Their reimbursement structure incentivizes them to prioritize drugs with a higher list price on insurance formularies. Current law in many cases prevents transparency when it comes to the rebates and deals made behind the scenes. PBMs often obfuscate the actual acquisition price of a drug, which may be sold for a lot more to patients without their knowledge.
Instead of competing with the private sector and essentially creating a government-run PBM, lawmakers should look to allow basic transparency. Such an initiative would let employers and plans know what the actual cost of these prescription drugs are. Congress could also move to ban rebates and spread pricing practices that have a nexus to taxpayer-funded Medicare and Medicaid plans. The government can – and should – address the numerous ways PBMs move taxpayer dollars to their own coffers, at the expense of patients and families.
Another reason Cost Plus is so effective is because it makes use of low-cost generics. Put simply, generics are popular. Once they are able to come to market after the existing patents on brand-name medications expire, generics and biosimilar drugs account for roughly 90% of prescriptions in the U.S., but only 13.1% of the total cost. These medications are a safe, easy way for Americans to access the medications they need without breaking the bank.
However, the playing field is not exactly level for generic and biosimilar manufacturers. First, the aforementioned PBMs are able to stifle generic uptake by placing them on higher cost-sharing formulary tiers. This mitigates the cost savings patients would otherwise get when being prescribed a generic medicine. The potential to lower costs would be even higher without this asymmetric treatment of generic and biosimilars.
Additionally, overly restrictive Food and Drug Administration (FDA) regulations make it far more difficult for promising medications to make it to market. As the Taxpayers Protection Alliance (TPA) documented in a 2023 report, the FDA routinely denies access to medications approved elsewhere, ostensibly due to easily-fixed manufacturing issues. President Trump’s threatened 100 percent tariff on pharmaceutical imports makes it even more difficult for manufacturers to rely on low-cost global supply chains.
President Trump should reverse course on this destructive tariff, and policymakers should work towards reform. One promising bill, the Biosimilar Red Tape Elimination Act, would make it easier for biosimilar manufacturers to prove interchangeability with a brand-name counterpart, paving the way for market entry once the relevant patents expire. Opposition continues to increase costs for manufacturers and patients alike.
It is no secret that Americans are frustrated with the high costs of prescription drugs in the United States. Policymakers can lower costs by getting government out of the way. Government central planning is the wrong approach, and patients will be worse for it.
