Sen. Elizabeth Warren has an idea for dealing with shortages of generic drugs, and sky-high prices for generic drugs: Have the U.S. Department of Health and Human Services (HHS) make generic drugs.
Warren, a Democrat from Massachusetts, and Rep. Jan Schakowsky, D-Ill., have posted a draft of a new “Affordable Drug Manufacturing Act” bill.
Warren said Monday, in a public letter sent to other senators, that she is concerned about recent Washington Post articles suggesting that lack of competition in the U.S. generic market is letting the companies still in the market fix prices at high levels.
“These allegations, if true, may help explain the numerous and increasingly troubling reports in recent years of rapid and unexplained price increases for generic drugs,” Warren wrote in the letter.
The Pharmaceutical Research and Manufacturers of America (PhRMA) has argued that generic drug shortages and high generic prices often reflect a variety of factors beyond the manufacturers’ control, such as the high cost of ingredients, high compliance costs, manufacturing problems, and the effects of health insurers’ and pharmacy benefits managers’ negotiating and pricing strategies.
The draft bill would create a new Office of Drug Manufacturing at HHS.
The office could produce a generic drug itself if no supplier was selling the drug in the United States; fewer than three companies were selling the drug in the United States, and the price of the drug had spiked; or fewer than three companies were selling the drug in the United States, the drug was classified as “essential” by the World Health Organization, and the price of drug was high.
If the office made a drug, it would have to set what the bill classifies as a “fair price.” The “fair price” would be based partly on manufacturing or procurement costs, on the impact of the drug price on patient access to the drug, and the impact of the drug price on government health programs, such as Medicare and Medicaid.
The “fair price” calculations would also include the administrative costs of operating the Office of Drug Manufacturing.