After months of ads telling Republicans to call on President Trump to eliminate the “Biden Pill Penalty,” it seems the message is getting through. President Trump issued an executive order this month aimed at reducing prescription drug prices while eliminating the Inflation Reduction Act’s “pill penalty” that makes lower-cost small molecule drugs subject to Medicare price controls.

I wrote about this subject in an earlier post called Biden’s Pill Penalty, which explained that the Inflation Reduction Act  (IRA) of President Biden passed in 2022 threatens to distort innovation by pushing investment towards expensive biological products. Trump’s order aims to reverse all this and restore the incentives to increase research and development of new drugs.

The Wall Street Journal editorial board calls on Republicans to fix this in the tax bill – “even if they can’t muster the courage to repeal the IRA’s price controls, which have done nothing to reduce overall drug prices.” Prescription drug prices have increased more since the IRA passed in August 2022 than in the five previous years, in part owing to market distortions caused by price controls.

The controls have also led to cuts in pharmaceutical research and development. That’s one reason investors have sold off pharma and biotech stocks. Nasdaq’s biotech index has risen only 10% over the last five years while the Nasdaq is up more than 100%.

Declining biotech investment has some Republicans fretting about the U.S. losing its competitive advantage to China. “We lost our leadership in semiconductors, and we are close to losing that position in biotech if we don’t act now,” said Indiana Sen. Todd Young last week.

The WSJ editors say, “One way to act would be to stop Mr. Trump’s mooted 25% tariff on imported medicines. Most generics and active drug ingredients are made in India or China because of lower manufacturing costs. The U.S. doesn’t want to depend on China for critical drugs, and many manufacturers have been shifting production to other low-cost countries.”

Clearly, the WSJ editors are not fond of Trump’s tariffs, but they don’t seem to understand that tariffs are a weapon in the negotiations that makes change possible. The elimination of the Biden Pill Penalty is a good start and I believe the tariffs will come down when fair trade practices are achieved. The goal has to be security for our country by encouraging pharmaceutical companies to manufacture their drugs in the U.S. We will all be better off in the long run when that happens.