Trump Admin Pushes More On Prescription Drugs (Plus Friday Essays)

Trump Admin Pushes More On Prescription Drugs (Plus Friday Essays)

Trump Admin Pushes More On Prescription Drugs (Plus Friday Essays)

Trump Admin Pushes More On Prescription Drugs (Plus Friday Essays)

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Aug 1, 2025

Aug 1, 2025

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Trump Admin Pushes More On Prescription Drugs

The Trump Administration has launched a new initiative to lower prices on prescription drugs.

The centerpiece of the order, whose legality is not clearly enforceable, is the idea of Most-Favored Nation status: drug companies in the US are not allowed to charge more in the US than they do in any other major American trading partner, such as Canada or Europe. As you know, the drug prices are much, much lower there.

But there are other, more interesting aspect of the plans, and in particular the one that tries to get around middlemen such as PBMs.

As you probably know, Pharmacy Benefit Managers (PBMs) operate as middlemen between drug manufacturers, insurance companies, and pharmacies. Originally created to negotiate lower drug prices on behalf of insurers, PBMs have evolved into what critics describe as an inefficient cartel that actually drives prices higher. According to Goldman Sachs analysis, PBMs now account for approximately one-fifth of drug production costs in the United States.

These intermediaries make money through complex rebate systems and spread pricing—charging insurers more than they reimburse pharmacies and pocketing the difference. Rather than passing savings to consumers, PBMs often favor higher-priced drugs that offer larger rebates, creating a system where everyone profits except patients. The opacity of their operations and concentration of market power among just three major PBMs has created what many economists view as a classic rent-seeking arrangement that adds cost without corresponding value.

The new policy enjoins American drug manufacturers to create direct-to-patient sales channels that bypass PBMs, so long as the drugs are sold at MFN prices. This is very clever, because it promises to reduce the impact on the bottomline for drug manufacturers. And it removes the entire rebate system that PBMs depend upon. This seems like a very interesting compromise that creates new revenue and a new consumer channel for drug companies, sweetening the bargain.

Now, at the same time, the companies will probably still balk at applying MFN prices to drugs, and will probably, at least at first, choose noncompliance and challenge the administration in court if they have to. But President Trump offered them a way out of this conflict, one which delivers significant benefits to the American consumer.

Policy News You Need To Know

#ItsTheEconomyStupid — We have been reporting on how many economic indicators have been coming out looking much stronger than most economists and analysts expect, seeming to vindicate President Trump's economic strategy. So it's only fair when we report when the numbers go into the other direction. Today's Nonfarm Payrolls report is not good. It's not a disaster, but it's a slight miss: the economy only added 73,000 new jobs, versus an expected 104,000, causing the unemployment rate to rise slightly to 4.2%. What is even more worrying, as Bloomberg's Joe Weisenthal pointed out, is that the only sectors in the US economy that are adding jobs are healthcare and social assistance; if you exclude these two categories, the US economy has been losing jobs for three straight months. Although, as Washington Examiner Editor Conn Carroll points out, jobs for the native born are up while jobs for the foreign born are down. In other news, the Federal government has cut 84,000 jobs since January.

#Wonkery — Very useful: AEI's Will Rinehart has produced a guide to AI tools for economists and policy analysts.

#Judiciary — We need to talk about the judiciary. Again. The spate of frankly ridiculous injunctions by (often Biden-appointed, but sometimes Obama-appointed) district court judges keeps happening. In what may be the most embarrassing example yet, District Judge Trina L. Thompson produced an injunction preventing DHS from removing Temporary Protected Status to illegal aliens that reads like the ravings of the drunken host of a 1am MSNBC show. The opening sentences give the flavor: "The freedom to live fearlessly, the opportunity of liberty, and the American dream. That is all Plaintiffs seek. Instead, they are told to atone for their race, leave because of their names, and purify their blood." A very long footnote equates basic border enforcement with the Atlantic slave trade. This is, on its face, not law. The Executive Branch is not bound to respect this.

#Judicary — Speaking of, we'll remind you of Adrian Vermeule's argument that the Executive should simply ignore district courts that go against Supreme Court precedent.

#Trade — Jacob Jensen, Trade Policy Analyst, has produced a very interesting chart on the US-EU trade deal. You see, the way the EU and the way the US government describe the deal they both say they struck is not the same. There are notable differences.

#Immigration — Incredible catch from Will Chamberlain of Article III Project: Temporary Protected Status has been in place for Honduras and Nicaragua for 26 years, because of…bad weather.

#Immigration — Once more: Tom Cotton is introducing a bill to end the loophole that exempts universities from H-1B visa caps. There's another bill doing this in the House. It's obviously a good idea.

#MAHA — President Donald Trump has signed an executive order reinstating the Presidential Fitness Test for schoolchildren and reestablishing the President’s Council on Sports, Fitness, and Nutrition, reviving programs that were discontinued or restructured during previous administrations. The Presidential Fitness Test will return to US public schools. The order also signals an intent to collaborate broadly, engaging professional athletes and sports organizations in promoting youth fitness and addressing what the administration calls, very rightly, a "widespread epidemic of declining health and physical fitness."

#Life — Interesting: the Missouri Attorney General is suing Planned Parenthood for disinformation after the EPPC study showing a very high adverse event rate from the abortion pill.

Friday Essays

At Deseret, Brad Wilcox and Maria Baer have a lamenting, well-taken essay lamenting the departure of the pro-family senators. The OBBBA was not very pro-family, in fact it was arguably anti-family: the Senate reduced the CTC expansion to $2,200, not even keeping up with inflation from Trump's first term. They also provided subsidies for child care outside the home, which only benefits higher income families who tend to vote Democrat, and not the majority of American families with children who don't use paid child care. In one of the most perverse features of the tax code, which the OBBBA left unchanged, the Child and Dependent Care Tax Credit (CDCTC) explicitly excludes married couples where one spouse is a stay-at-home parent.

You may have heard that the UK recently passed a dystopian new so-called online safety bill, the Online Safety Act, whichn it turns out, seems to be an omnidirectional tool of speech control. At the excellent British magazine The Critic, the writer Melissa Tourt who, as a think tanker, witnessed the birth of this law, writes an outstanding, darkly hilarious memoir of the birth of this bad law, which starts with a very memorable opening paragraph: "What if a rogue AI impersonated a child and had sex with another child — a real one this time — while both were dressed as animals in a virtual reality chat room? Would it be rape? Child sexual exploitation? Is there a bestiality element to consider? Who gets sued — the VR platform? The AI company? This was not a scenario I had given any thought to until I was sitting on a roundtable with some of the finest legal minds in the House of Lords, going over the umpteenth round of changes to the Online Safety Act (OSA)."

At The New Atlantis, Charles T. Rubin writes about sci-fi novelist William Gibson's vision of great urban structures, and how it may be a "more likely scenario" of what the city of the future will look like.

At Evie magazine, the very good magazine for the based, glamorous woman, Lisa Britton writes about the latest feminist insanity, the term "mankeeping." Yes, it's every bit as stupid and socially destructive as you think.

Chart of the Day

Demographic traits most likely to make someone a Democratic voter, via @StatisticUrban.

Meme of the Day

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