The United States spends far more on healthcare, on a per capita basis, than any other country in the world. There are many reasons why, including health insurance companies. But one reason has been largely overlooked: foreign governments maintain pricing systems that limit what they pay for drugs. The difference has been absorbed in the United States, with the result that Americans cover a disproportionate share of the world’s drug costs.
These pharmaceutical pricing systems need to be called out for what they are: trade distortions. And the Trump administration should treat these distortions just as it would treat any other trade distortion: with the remedies that are available under U.S. trade law, starting with an investigation of discriminatory measures.