Why Do Americans Pay So Much for Drugs?

Plain English with Derek Thompson

The Ringer

News Commentary, News

4.8 • 1.8K Ratings

🗓️ 13 May 2025

⏱️ 65 minutes

🔗️ Recording | iTunes | RSS

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Summary

On Monday, President Donald Trump signed an executive order telling drugmakers to slash the prices of their medicines. Once again, the president showed an amazing nose for interesting questions. Statistically, the U.S. accounts for 4 percent of the world’s population but nearly 50 percent of global pharmaceutical spending. Americans spend three to five times more on new branded drugs than people in Europe. Why? And what's the matter with fixing this problem by just telling pharmaceutical companies that their prices are too damn high? Today’s guest is Jason Abaluck, a health economist at Yale University. We talk about why Americans pay so much for new drugs but, ironically, pay so little for old drugs. We unpack trade-offs between low prices and innovation. And finally, we consider several ways we can have our cake and eat it too: more miracle drugs and more affordability. Because, after all, what is this whole conversation about besides the obvious: How do we design a world in which imperfect people working at imperfect companies nonetheless collaborate to build therapies that save and extend our lives with products we can actually afford? If you have questions, observations, or ideas for future episodes, email us at [email protected]. Host: Derek Thompson Guest: Jason Abaluck Producer: Devon Baroldi Learn more about your ad choices. Visit podcastchoices.com/adchoices

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1:14.5	Today, drugs.
1:17.1	On Monday, President Donald Trump signed an executive order telling drug makers to slash the price of their medicines.
1:24.2	In a post on truth social, Trump announced that he would seek a so-called most favored nation agreement
1:30.2	that would make it impossible for any country to buy drugs at a price below the U.S., even if it were the poorest country in the world.
1:39.3	My immediate reaction to this EO was threefold.
1:43.1	Number one, I'm not sure he can actually do this.
1:46.3	The ability to set prices is not an enumerated power of the executive branch in the U.S.
	...

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