Mick Jagger, Drug Prices, and the Art of the Deal

Both the president and Speaker Pelosi have announced their support for negotiating drug prices. Even better, their thinking about the mechanism is similar. So, they agree, but can they reach an agreement? Let’s speculate.

First, a little wisdom from Mick Jagger that most of us grew up with: “You can’t always get what you want, but if you try sometimes ... you get what you need.” Trite, perhaps, but nonetheless true. Unless, of course, you are talking about the Congress.

When it comes to issues with large differences, like gun control, healthcare, and immigration, it is no longer surprising that the extreme factions on both sides prefer no deal to an imperfect one. We have become accustomed to this attitude preventing even a modicum of rational discussion and compromise as our problems grow and become more imminent.

What we haven’t seen quite so much of is the failure to make progress on the few issues that both sides do seem to agree on. The current question of drug price negotiation is a potential real-time example. First, what is at stake?

As discussed in Healthcare Research, countries with universal healthcare negotiate drug prices. The first-order result is that they pay less than we do—about two-thirds less. The second-order result is that in America we arguably pay even more because they pay less. The simple reason for this is that pharmaceutical companies charge Americans more to make up for what they can’t charge abroad. In essence, we subsidize the rest of the world. (It is worth noting here that proponents of this system argue that because we pay more, we get access to new drugs first. While this is true, the question for another Commentary is if it matters.) Both President Trump and Speaker Pelosi have reached this conclusion and have proposed negotiating drug prices down closer to the world average. Pelosi would set a maximum price on negotiated drugs of 1.2 times the average price in six developed countries, including Canada and the United Kingdom. President Trump has endorsed a “favored nation” clause ensuring that Americans pay no more than other major developed countries. His secretary of health and human services, Alex Azar, recently said, “The American senior and the American patient have been asked too long to overpay for drugs to subsidize the socialist systems of Europe.” If there are differences in these two points of view, they are relatively immaterial, and surely the two could meet in the middle. That is, if they wanted to make a deal.

So, will they? What do you all think? If you believe the policy is right, surely you hope they will reach an agreement. Even if you think the policy is wrong, you would nonetheless welcome some fact-based discussion of the issue. Given the current state of affairs, however, it doesn’t seem likely that either will happen—for the very simple reason that neither side believes they can afford to let the other side have any credit.

Surely Americans are smart enough and generous enough to identify a true compromise, share the credit, and get a bit of what we need, even if it isn’t everything that we want.