Conservatives Want Prescription Drug Reform

Posted by on May 4th, 2018 and filed under Congress, Economy, Government Spending, Legal, Regulation. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

by George Landrith

When the Affordable Care Act was debated and passed, Americans were promised that a typical family would save $2,500 a year due to the act’s provisions. Yet, costs have continued to rise. In particular, prescription costs have been rising at an alarming rate — rocking upward by 20% from 2013 to the 2015. 

Some may assume that Americans are burned out on debating healthcare issues given the length, intensity and partisanship of the entire ObamaCare fiasco. But when I recently spoke at a public policy conference in North Carolina, I learned that Americans want solutions. We discussed the CREATES Act — which is aimed at lowering the costs of prescription drugs by harnessing the power of competition, rather than using command and control regulatory regimes and price controls that were so common in the Affordable Care Act. At the same time, the CREATES Act honors the intellectual property rights of those who develop new medicines so it keeps incentives alive for innovation and new cures. 

Too often inside the Beltway, solutions focus on subsidies which do not actually lower costs, but merely shift costs to taxpayers. Another failed approach is regulatory control of prices which distorts markets, creates shortages, and kills incentives to develop new drugs. And fans of government control often promote some form of eliminating or reducing intellectual property rights to keep costs in check. What they seem to miss is that if we want the next generation of cures and breakthrough medications, we must have a viable patent system that incentivizes their development. 

The beauty of the CREATES Act is that it achieves substantial cost savings without falling into any of these usual traps. The CREATES Act promotes lower prices by making it easier for medicines whose patents have expired to be sold as generics. The CREATES Act removes barriers to robust competition by allowing so-called generics to enter the marketplace more quickly after the patent has expired. 

Generic drugs saved consumers more than $1.68 Trillion in the last decade and $254 Billion in one recent year alone! An FDA Study shows that when a second competitor enters the marketplace, the price of medicines drops by almost half. As more competitors come on line, the price drops are even greater.  

How the CREATES Act works is actually pretty simple. That’s why it will work as advertised. Often after a drug’s patent has expired, the drug company that produces the drug will engage in dilatory tactics to prevent competitors from obtaining FDA approval to produce a generic version. This is typically done by disregarding the law and refusing to sell any of the medicine to be used in tests to prove the new generic is the same. 

As it stands now, if a drug company plays such regulatory chicanery, the only option is to file an unwieldy antitrust lawsuit which can take years and waste millions in legal fees. The CREATES Act fixes this and allows the generic company to file a very simple and quick action where the drug maker will be required to abide by the law and sell sufficient supplies of the drug to be used in the testing process. There is no unmanageably or ponderous antitrust litigation. Just a simple court filing asking the judge to order compliance with the law. 

This will speed generics to the market and begin much sooner the time when medicines cost a small fraction of their original cost. This will save consumers trillions of dollars. It will also save taxpayers trillions of dollars. So if you’re a taxpayer and a consumer, you will save big twice!

When I spoke with conservatives at the conference about this approach, they were not only supportive, but excited to hear about a solution that harnesses the power of competition to lower prices. And the fact that conservative Senators like Mike Lee, Ted Cruz and Rand Paul are co-sponsors of the bill added a powerful testimonial that this wasn’t a big government approach to healthcare. 

Interestingly, there are also thinking liberal senators willing to throw their support to the CREATES Act — Dianne Feinstein, Richard Durbin and Susan Collins, for example. I don’t think the conservative activists at the conference were swayed by the support of these liberals, but they did see it as a good sign that a sensible, needed reform can still gain bipartisan support on Capitol Hill. Hopefully, the rest of Congress will catch on and get behind the CREATES Act. The time for consumers to start saving billions in medical costs and the taxpayer to save billions in Medicare costs is yesterday! 

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