There are two opposing forces at play today as patients across the United States struggle to afford their medicines.
On one hand, there are the brand name pharmaceutical companies that account for only 11% of overall prescriptions but are responsible for 74% of the costs. The brands drive valuable innovation in the marketplace, but they also do whatever they can to protect their monopolies and insulate their drugs from competition.
On the other hand, there are generic manufacturers that account for 89% of all American prescriptions but only 26% of the cost, and provide lower cost alternatives to more expensive branded medications.
Over 30 years ago, Congress sought to strike a careful balance between encouraging innovation in drug development and accelerating patient access through the availability of lower-cost alternatives by enacting the law commonly known as Hatch-Waxman.
For years this balance worked effectively -- America was a leader in pharmaceutical innovation while developing a competitive generic marketplace. Unfortunately, that balance has slipped away, due in large part to brand companies' relentless and increasing efforts to keep generic competition from entering the market.
But now, Congress has an opportunity to put the brakes on this anti-competitive behavior by passing new legislation -- The CREATES Act. This bill would be a step toward providing reasonably priced generic drugs to the people who so greatly need them.
As it stands, the system is failing not only patients, but also job creators whose ability to provide health coverage to their employers is hurt by out-of-control drug prices, the taxpayers who ultimately foot the bill for expensive branded drugs purchased by state and federal programs, and the generic drug manufacturers we, the Association for Accessible Medicines, represent.
Competition from generic medicines drives prices down year after year. Generic drug manufacturers are proud to be able to deliver these benefits to patients and our economy. But as a result of a combination of policy miscues and anti-competitive behavior on the part of brand drug manufacturers, generic manufacturers are in a precarious position.
Brand name drug companies are perverting the measures originally designed to reasonably protect their intellectual property and allow them to recoup R & D expenses. These anti-competitive business practices by certain branded companies, which subvert and undermine Hatch-Waxman, have shocked the conscience of even some of their own leadership.
Perhaps the most egregious example of anti-competitive behavior is Allergan's recent ploy to thwart a challenge to a patent for its blockbuster drug, Restasis, by transferring the drug's intellectual property to the Saint Regis Mohawk Tribe in order to "rent" the tribe's sovereign immunity from legal proceedings.
This prompted the CEO of one major pharmaceutical company to publicly call out Allergan CEO Brent Saunders for being "desperate to circumvent our system." In response, Saunders blamed the patent system for the steps his company has taken.
In his confirmation hearing, the newly sworn in Secretary of Health and Human Services Alex Azar spoke truth to power, pledging to bring down drug prices and highlighting the need "to fight gaming in the system by patents and exclusivity agreements." Mr. Azar's experience in the industry -- as the leader of Eli Lilly, the Indianapolis-based pharmaceutical company -- gives him ample insight into the factors driving up drug prices.
His vision appears to align with that of FDA Commissioner Dr. Scott Gottlieb, who, in a November workshop held by the Federal Trade Commission, counseled brand companies to "end the shenanigans" when it comes to their efforts to prevent competition from reaching the market.
Now, some generic drug manufacturers are being forced to restructure their business. Headlines of shuttering plants and layoffs portend a trend that, if not addressed swiftly with smart policy solutions, will increase the cost of medicine for patients throughout this nation.
But with the passage of the CREATES Act, generic drug manufacturers who must obtain branded drug samples to make a safe, effective copy would be able to sue branded drug manufacturers that refuse to sell samples of their medications.
This legislation would, most crucially, benefit patients like those with multiple myeloma being kept alive by the drug Revlimid, but who cannot afford the drug after the price rose by nearly 20% in 2017 alone, and 88% over the last 7 years. Currently, a single tablet of the drug costs about $600.
Revlimid's manufacturer, Celgene, is accused by generic drug company Mylan of simply refusing to sell samples of the drug to generic drug makers. Celgene has denied these claims but, sadly, this manufacturer is not alone in being accused of manipulating the FDA's safety programs to avoid selling samples of their drugs to generic manufacturers.
These "shenanigans" are estimated to cost $5.4 billion annually in pharmaceutical spending, and now it's up to the members of Congress to end them. The ability of patients to access life-saving drugs depends on it. We urge them to pass the CREATES Act to ensure that those who need medications can afford them.
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