Today, the Council of Economic Advisers (CEA) released a report outlining how the Trump Administration’s policies at the Department of Health and Human Services and the Food and Drug Administration have helped decrease the prices of prescription drugs for American patients. Read the full report here.

Many Americans face excessively high prices for pharmaceutical drugs, making them either unaffordable or taking up a large share of household budgets. The Trump Administration has responded to this problem with several actions undertaken by the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA). In most industries, free market entry and robust competition provide a pathway to lower prices. However, FDA regulations intended to guarantee safety and efficacy can constitute barriers to price competition for drugs. In few other industries do firms spend a decade and over $2 billion to enter the market—which is the current state of affairs for new, innovative drugs going through the FDA’s safety and efficacy review process.

As part of the Trump Administration’s overall deregulatory agenda, HHS and the FDA have launched a series of reforms to better facilitate price competition by streamlining the drug application and review process in a way that effectively lowers barriers to entry while ensuring a supply of safe and effective drugs. This deregulatory effort will enhance competition and may already be contributing to the faster flow of newly approved generic drugs seen since January 2017. We find that relative annual price growth for prescription drugs has slowed since January 2017, and estimate that lower prices from new generic drug products saved consumers $26 billion through July 2018. We also argue that the influx of new brand name drugs should be viewed as implicitly lowering the price of improved health, even though the methods currently being used to estimate changes in drug prices do not reflect this. Implicit price reductions from new, brand name drugs since January 2017 are providing an estimated $43 billion in annual benefits to consumers.

In May 2018, the Administration introduced the American Patients First Blueprint to bring down pharmaceutical drug prices. The Blueprint offers several strategies to help patients address rising drug costs, including enhancing price competition. The Blueprint’s many actions will further enhance this goal.