For the same pharmaceutical products, US prices can be anywhere between two and ten times higher in US markets compared to prices across the border. Nor is importation allowed, even though this would drive prices toward equilibrium by facilitating market competition.

This problem has persisted for decades. US taxpayers and health insurance subscribers subsidize pharmaceutical products for the rest of the world. While many politicians have denounced this problem, and sworn to fix it with a genuine competitive market, the barriers have traced to the same source: entrenched industrial interests that like the rigged monopolistic system of price gouging as it is.

This has long been the status quo. This has now been shattered by a new executive order from the Trump administration. The order requires government agencies to be better stewards of tax dollars by only paying the lowest prices for drugs on international markets. …

Drug reimportation is currently banned, which makes no sense from a free-market perspective. If we truly do favor trade between nations, there should be no issue in allowing American importers to bring meds from Canada and sell them in the US at lower prices. With the ban in place, pharmaceutical companies are permitted unlimited opportunities to exploit both consumers and taxpayers.

All of this should be very straightforward and obvious. The real market solution is to allow most-favored-nation drug pricing plus reimportation–precisely what the new EO gives us. What makes it genuinely confusing is how market advocates – the Wall Street Journal is publishing on this nearly daily – so reliably defend the US’s heavy interventionist, monopolistic, and tax-funded system of pharmaceutical distribution.

These pharmaceutical prices in the US are not market prices because the current arrangement prevents a functional free market. Prices in the US are massively inflated by a range of government policies, while taxpayers are paying the bill. The new policy is the right way forward. At the very minimum, the government needs to stop paying monopoly prices for drugs available just across the border at 50 cents to 10 cents on the dollar.

Trump’s executive order achieves what many voices on the left and right have advocated for decades. It is a dramatic step and one that could put in motion a range of policy changes that will put consumers back in charge of the medical marketplace and begin to whittle away at the awesome power of the medical cartels.