In deciding today not to change certain rules related to pharmaceutical pricing, the Trump administration deserves great credit for its willingness to reexamine its own assumptions.
Through the Department of Health and Human Services, the administration had been poised to issue a new rule upending a system of drug-price “rebates” (in effect, discounts) that are negotiated by middlemen companies known as “pharmacy benefit managers.” The administration wanted to make the change to this complicated system, at least within Medicare and Medicaid, because the current system leaves list prices high at the pharmacy counter for consumers buying the medicines without the benefit of insurance.
Nonetheless, the proposed change was ill-considered. Most Americans do enjoy insurance help for most prescription drugs, and the current system works well to keep monthly insurance premiums significantly lower than they otherwise would be. As one analyst explained it, the administration’s proposed change would have been the rough equivalent of a baseball franchise implementing a system that reduces the prices of beers sold at the ballpark, but at the expense of much higher ticket prices to enter the stadium in the first place.
The administration had good intentions in proposing the rules change. The likely harm, though, would have outweighed the benefits. Rather than being bullheaded about their plan, administration officials were willing to examine counterarguments and counterevidence. They and the president deserve credit for abandoning their proposal.
Meanwhile, the White House is crowing, appropriately, over new evidence that a series of other administrative actions is succeeding in halting what had been a long-running hike in drug prices. The Bureau of Labor Statistics reported today that after many years of exorbitant inflation in medicine prices, the past 12 months have seen an actual decrease in prices of 2 percent from June 2018 to June 2019. This is the best result since 1968.
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07.13.2025