Competition is the Real Cure for High Drug Prices

Originally published at Washington Examiner.

President Donald Trump is correct that prescription drugs cost too much. Families are struggling, and no one should have to choose between paying for their child’s inhaler or rent. But a new partnership between Trump and Pfizer to sell drugs directly to consumers won’t cure the disease, but rather embrace the government favoritism that made healthcare unaffordable in the first place.

Washington, D.C., keeps trying to fix healthcare by controlling it, and that’s the real problem. Each new regulation, tariff, or political deal promises to make medicine more affordable, yet costs keep rising while innovation slows. The cure for high drug prices isn’t more government control. It’s competition, the one thing Washington, D.C., can’t seem to stop meddling with.

​TrumpRX, created by this Pfizer deal, will provide a government-directed new direct-to-consumer plan touted as a bold step toward transparency and savings. In reality, it’s another government-blessed arrangement that rewards one company while punishing competitors. Because Pfizer is already building U.S. plants, it’s exempt from the administration’s 100% tariff on branded drug imports. Smaller biotech firms and future innovators, many of whom rely on global supply chains to survive, won’t get that pass. They’ll face higher costs and fewer opportunities, meaning fewer drugs, higher prices, and worse outcomes for patients.

This is regulatory capture in action. Instead of breaking down barriers to entry and unleashing the creative energy of thousands of smaller innovators, Washington, D.C., keeps picking winners and losers — favoring those with the biggest lobbying budgets. Meanwhile, patients lose the benefits of competition, efficiency, and choice.

It’s not just about politics; it’s about incentives. 

America now spends about $5 trillion a year on healthcare. As much as half of that spending goes to overhead and bureaucracy: compliance systems, licensing, mandates, and red tape that do nothing to help people get well. That burden filters down to every consumer through higher premiums, co-pays, and deductibles. For low- and middle-income families, it’s what doctors call financial toxicity — the economic pain of a healthcare system that costs more every year but delivers less value.

Instead of cutting this red tape, Washington, D.C., keeps layering on more. Whether it’s direct-to-consumer mandates, Medicare “negotiations,” or the “most favored nation” pricing model, the pattern is the same: bureaucrats try to dictate prices rather than letting markets find them. That might sound compassionate, but it’s economically destructive.

When politicians cap prices or impose tariffs, they don’t make products cheaper; they just make them less available.

Drug development is already a high-risk venture. It takes more than $2 billion, on average, to bring one new drug to market, and 90% of those efforts fail. Companies take those risks because successful medicines can generate the returns needed to fund the next breakthroughs.

America now spends about $5 trillion a year on healthcare. As much as half of that spending goes to overhead and bureaucracy: compliance systems, licensing, mandates, and red tape that do nothing to help people get well. That burden filters down to every consumer through higher premiums, co-pays, and deductibles. For low- and middle-income families, it’s what doctors call financial toxicity — the economic pain of a healthcare system that costs more every year but delivers less value.

Instead of cutting this red tape, Washington, D.C., keeps layering on more. Whether it’s direct-to-consumer mandates, Medicare “negotiations,” or the “most favored nation” pricing model, the pattern is the same: bureaucrats try to dictate prices rather than letting markets find them. That might sound compassionate, but it’s economically destructive.

When politicians cap prices or impose tariffs, they don’t make products cheaper; they just make them less available.

Drug development is already a high-risk venture. It takes more than $2 billion, on average, to bring one new drug to market, and 90% of those efforts fail. Companies take those risks because successful medicines can generate the returns needed to fund the next breakthroughs.

But when Washington, D.C., caps returns or raises trade barriers, it tells innovators that risk is no longer worth taking. Authors of a study at the National Bureau of Economic Research found that a 40–50% reduction in expected prices could cut early-stage research and development by up to 60% — roughly 100 fewer new medicines over a decade.

That’s not a victimless mistake. It means fewer cancer treatments, fewer Alzheimer’s therapies, and fewer chances for hope. When innovation dies, patients suffer — today and tomorrow.

A better approach is to remove obstacles to competition. Let new entrants challenge incumbents. Simplify FDA approvals for generics and biosimilars to speed lower-cost alternatives to market. Repeal anti-competitive rules that shield large corporations and block small ones. And yes, allow more trade in medicines. Instead of raising tariffs, we should be expanding access to safe, lower-cost drugs from abroad, giving patients — especially those most vulnerable — more options and flexibility.

This isn’t about “outsourcing healthcare.” It’s about empowering people. Free trade and open competition force companies to innovate, improve quality, and cut costs, all without the heavy hand of the government dictating prices or supply chains. It’s how every other successful market works.

​Meanwhile, countries such as China are racing to capitalize on America’s regulatory paralysis. Through its “Made in China 2025” plan, Beijing has spent billions on biotech manufacturing and research, increasing its share of global clinical trials from 1% in 2009 to 30% in 2024. China’s system isn’t better — it’s state-directed and inefficient — but if the United States continues to strangle innovation with red tape and tariffs, we could end up handing China the future of medicine.

​Trump deserves credit for calling out the problem: Drug prices are too high, and families are hurting. But the solution isn’t more government control; it’s less. We should deregulate, detariff, and decentralize. Let Americans buy, sell, and innovate freely, because the real cure for high drug costs, and the key to remaining the world’s leader in medical innovation, is not to control prices, but to unleash competition.