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The Hidden Cruelty of Capping Drug Prices
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The Hidden Cruelty of Capping Drug Prices
“Many drugs are far cheaper abroad, which induces many people to wonder why Americans must pay more,” writes Tyler Cowen. (Illustration by The Free Press)
Let me explain why pharmaceutical prices are higher in America—and why forcing them down is a fool’s errand.
By Tyler Cowen
05.14.25 — U.S. Politics
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The Hidden Cruelty of Capping Drug Prices
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Is the Trump administration an attempt to copy what a Bernie Sanders administration would have done? Sometimes it seems that way.

Earlier this week Trump announced an executive order to lower the prices of pharmaceuticals in the United States. As you may recall, this has been one of Bernie’s main policy proposals for years. As Trump barked it out on Truth Social, he will (supposedly) force down pharma prices by 30 to 80 percent.

The rationale for this policy is not difficult to understand, as many drugs are expensive. For instance, Medicare spends more than $160 billion a year on pharmaceuticals for elderly Americans. In an era where we need to look for savings in the federal budget, that is one obvious target.

More outrageous, and indeed baffling to most people, is that many drugs are far cheaper abroad, which induces many people to wonder why Americans must pay more.

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Tyler Cowen
Tyler Cowen is Holbert L. Harris Professor of Economics at George Mason University and also Faculty Director of the Mercatus Center. He received his PhD in economics from Harvard University in 1987. His book The Great Stagnation: How America Ate the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better was a New York Times best-seller. He was named in an Economist poll as one of the most influential economists of the last decade and Bloomberg Businessweek dubbed him "America's Hottest Economist." Foreign Policy magazine named him as one of its "Top 100 Global Thinkers" of 2011. He co-writes a blog at www.MarginalRevolution.com, hosts a podcast Conversations with Tyler, and is co-founder of an online economics education project, MRU.org. He is also director of the philanthropic project Emergent Ventures.
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Health
Donald Trump
Politics
Democrats
Republicans
Science
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