Republicans and Democrats both love to campaign against high prescription drug prices. They just use different words to describe how they'll subvert markets and fix prices at a level their voters will appreciate. President Donald Trump's version of this is the Most Favored Nation (MFN) policy, which benchmarks drug prices against the lowest net prices paid in other countries, while Senator Bernie Sanders has proposed pegging prices against the median price across five countries.
That instinct isn't crazy, at least for brand-name drugs. Americans pay more than 4.22 times as much as people in other countries for branded medications before rebates. But that statistic hides a bigger one: for the generics that make up roughly 90 percent of prescriptions filled in the U.S., America is the world's leading bargain hunter, paying just 67 percent of what patients elsewhere pay for the same pills.
But the major policy question at hand for America is: what can be done to help draw down the prices paid for those brand-name drugs, and are price-setting schemes really the solution? America has run this experiment before.
In 1971, Richard Nixon froze wages and prices across the entire economy, pharmaceuticals included, to fight inflation. It produced the textbook case against price controls: ranchers stopped shipping cattle, farmers drowned chickens rather than sell at a loss, and shelves emptied as the controls dragged on. Still, Nixon's move polled at 75 percent support with voters, which isn't surprising. People get frustrated with the economy and look to politicians to channel that frustration.