Editor's Note: This column was written by Jake Grant.
At the recent State of the Union address, President Trump said, “One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”
This is a noble cause, one that both Republicans and Democrats can get behind. Prescription drug prices are rising faster than any other part of healthcare spending. Four of the top ten prescription drugs in the U.S. have doubled in price since 2011. The annual cost of widely used prescription drug therapies have surpassed the median U.S. household income; the rise in cost is now completely unsustainable. President Trump is correct in focusing on this issue and thankfully, there is bipartisan legislation out there that seeks to find a solution.
The Creating and Restoring Equal Access to Equivalent Samples Act of 2017 (or CREATES Act), has the potential to bring down prices for both government and consumers by encouraging competition in the drug market. Under FDA regulations, drug companies are legally required to provide samples to FDA-approved generic companies. This is done once a drug patent expires, so that generics can prove that their drugs are not dangerous. FDA regulations also require that manufacturers participate in Risk Evaluation Mitigation Strategy with Elements to Assure Safe Use—or REMS with ETASU—when dealing with dangerous and possibly life-threatening drugs, but brand-name manufacturers often refuse to share samples or allow other companies to participate in their shared safety protocols. The enactment of CREATES will give generic manufacturers a path to relief if companies refuse to sell them samples of their drugs or participate in the risk mitigation strategies.
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In addition to bringing potentially life-saving drugs to market, the Congressional Budget Office projects that the CREATES Act is bill would save $3.3 billion in healthcare costs for the federal the government bears. More recent CBO scores, that are not yet available, estimate the savings at closer to $4 billion. For both consumers and private insurers, the savings would be even greater than that. A majority of Americans under age 65 have private health insurance so they and their employer bear the cost. Lowering drug prices doesn’t just save money for government sponsored insurance, but anyone else who has coverage in the private sector. Millions of Americans would benefit from a simple reform like this.
CREATES erases the loophole that allows drug companies to receive no penalty for refusing to comply. Critics of the bill argue that the legislation would lead to increased litigation, but to avoid going to court, drug companies can simply abide by the current law by sharing samples of the drugs and/or risk strategies with the generic manufacturers. To say the law would “weaken patent protections” is also misleading. The generic drugs would come to market after a patent is expired, so it would not infringe on the property rights of the original manufacturer.
In 2015, Turing Pharmaceuticals, increased the price of their anti-parasitic drug, Daraprim, from $13.50 to $750 per pill. Turing’s CEO at the time was the infamous Martin Shkreli, who was dubbed by more than one news source as “the most hated man in America”. A former employee at the pharmaceutical company testified that a significant part of their plan was to restrict the drug’s distribution so that generics could not produce a product at a cheaper price, forcing consumers to pay the 5000% price hike. Stopping abuses like this is integral to ensure safe drugs come to market as quickly as possible.
The bill has a lofty list of cosponsors. In the Senate, it’s sponsored by Senators Patrick Leahy (D-VT), Chuck Grassley (R-IA), Mike Lee (R-UT), Rand Paul (R-KY), Ted Cruz (R-TX), and Tom Cotton (R-AR). In the House, Rep. Marino (R-PA) and Rep. Cicilline (D-RI) are spearheading the efforts. President Trump has signaled to sponsors that he is supportive of the bill, another indication that it could be one of many needed fixes to our broken healthcare system. Further, the White House’s Council of Economic Advisors released a paper on reforming pharmaceutical pricing arguing that, “The objective of government in biopharmaceutical policy is to ensure that the private sector competes and invests in meaningful innovations that lower the price of health, rather than incentivizing market exclusivity and high prices on products.”
If for no other reason, Congress and the executive branch should support this bill for political reasons. After passing tax reform, lowering drug prices would be a great talking point for members heading home to their districts for the 2018 primaries. So far this year, there has not been much talk about fixes to Obamacare or anything other than the abstract on welfare reform. It’s time to get this important legislation across the finish line, doing so will not just help the bill’s many sponsors, but the millions of Americans who will save money and potentially lives by getting their hands on life-saving drugs.
Jake Grant is the Outreach Director for the Coalition to Reduce Spending and an Advocate for Young Voices. The views expressed are his own and do not necessarily represent the views of the Coalition to Reduce Spending.
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