This guest post was submitted by Will Holley.
Congress and the Administration are poised to deliver on one of the key promises made to voters during the last election cycle: lowering out-of-control prescription drug prices. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act is a bipartisan piece of legislation that would take aim at some of the most egregious tactics that brand-name pharmaceutical companies use to prop up drug prices.
As part of a compromise struck over three decades ago known as Hatch-Waxman, manufacturers of brand name prescription drugs are rewarded for innovations through a period of time during which a new drug is protected from competition by a government-granted monopoly. The trade-off for that monopoly is that, once that period of time expires, generic drug manufacturers are free to make exact copies of brand-name drugs and sell them at a significantly lower price. This compromise ensures that brand-name manufacturers have ample incentive to create new and groundbreaking cures while, at the same time, providing for more affordable generic versions after a drug’s patent expires.
Because those monopolies are enormously lucrative for brand-name manufacturers, certain companies go to extreme lengths to extend those monopolies beyond what the law provides. One of the most egregious tactics that these companies use to stave off competition from generic drugs is known as REMS abuse.
Risk Evaluation and Mitigation Strategies (REMS) are an FDA-mandated tool designed to ensure that drugs with potentially dangerous effects are used properly and safely by the patients that need them. Unfortunately, some companies use these REMS as a pretext to maintain monopolies by preventing generic drug manufacturers from purchasing the samples of a brand-name drug.
Generic manufacturers must have access to samples of a brand-name drug to conduct necessary testing to gain approval from the FDA. By denying generic manufacturers access to these samples, brand name manufacturers are able to artificially extend their monopolies and the profits that come with them.
To provide some perspective, a report commissioned by the Association for Accessible Medicines, the trade association for generic pharmaceutical manufacturers, found that these abuses cost the healthcare system $5.4 billion each year, and the Congressional Budget Office projects that, by addressing these abuses, the federal government would save $3.8 billion. Consumers would save billions more.
The CREATES Act is a market-based solution: it does not grant the government any new powers, it creates no new bureaucracies, and it would not add any new regulations. Instead, it would provide a generic drug manufacturer the right to take a brand-name drug manufacturer to court to end its anticompetitive tactics.
Some have argued that trial lawyers will unduly benefit from this new legal pathway, protections in the bill ensure that this will not be the case. Only generic drug manufacturers who have gone through a rigorous FDA approval process and are being denied the ability to purchase a brand name drug on the market would have standing to go to court. The CREATES Act does not allow plaintiff’s attorneys to sue on behalf of patients, hospitals, payers, or others who may be inclined to be litigious.
Members of Congress on both sides of the aisle recognize that out-of-control drug prices are literally a life-or-death issue for far too many Americans. Too often, however, the solution becomes a partisan football. The CREATES Act is an exception. Over two dozen Members of Congress, ranging from Senators Chuck Grassley (R-IA), Mike Lee (R-UT), Ted Cruz (R-TX), and Rand Paul (R-KY), on the Republican side to Democrats like Pat Leahy (D-VT), Dianne Feinstein (D-CA), Dick Durbin (D-IL), and Tammy Baldwin (D-WI), are all co-sponsors of this legislation.
Congress has held countless hearings on skyrocketing drug prices. There are no silver bullets or perfect solutions to this problem, but the CREATES Act is a bipartisan first step that will have a real impact on the lives of patients by reducing drug prices through the power of market-based competition. Congress should seize this opportunity to fulfill the promises made to address the drug price crisis by passing the CREATES Act now.
Will Holley is the Communications Director for the Campaign for Sustainable Prescription Drug Pricing (CSRxP), a broad-based coalition of leaders – physicians, nurses, hospitals, consumers, health plans, PBMs, pharmacists, and businesses – promoting bipartisan, market-based solutions to lower drug prices in America. Prior to his work with CSRxP, Holley spent fifteen years working in Republican politics in various roles ranging from the Bush Administration, to Capitol Hill, to presidential campaigns.