(Bloomberg View) — In late April, Patrick Leahy, a Democratic senator, and Tom Marino, a Republican member of the House of Representatives, introduced legislation to promote timely access to low-cost, high-quality generic drugs. Passing this bipartisan CREATES Act is one important way for Congress to push back against soaring prescription drug prices in the United States.
Since 2014, net retail prescription drug prices have risen 10% annually, primarily driven by ever higher launch prices and more frequent markups on brand-name drugs. From 2008 to 2016, the average net price for the most commonly used brand-name retail drugs rose more than 200%. The average list price of a new oral anti-cancer drug now exceeds $130,000 per year.
These price increases have substantial consequences: One-fourth of patients in a 2015 survey said high costs prevented them or their family members from filling a doctor’s prescription.
Brand-name drug makers are able to set such high prices because they have patent-protected monopolies that prevent generic competition. While these monopolies may encourage investment in drug innovation, they’re also supposed to expire after a reasonable time. Then, generic drugs should enter the market and drive prices down. However, many brand-name manufacturers do all they can to delay generic entry.
For example, several brand-name manufacturers sell drugs under tight controls through a limited number of pharmacies, which they have used to prevent generic competitors from acquiring samples to conduct bioequivalence tests required for generic drug approval. The assistant general counsel of Amneal Pharmaceuticals testified to Congress that it took three years to execute a sample-sharing agreement for one drug shielded by such a restricted distribution system. As of March 2016, the Food and Drug Administration had received more than 150 reports from generic manufacturers unable to access drug samples.