Americans take way more generic prescriptions than brand-name drugs. But, all in, we spend a lot more on brand-name drugs. Ninety percent of generic drugs prescribed represent 25 percent of drug spending. Still, in instances in which there is little or no generic competition, generic drug costs can be sky high. Senator Elizabeth Warren and Congresswoman Jan Schakowsky have introduced a bill to dramatically lower generic drug prices when they are excessive.
There is no compelling reason that Americans pay, on average, twice as much as people in other wealthy countries for our drugs. When generic drugs are costly, drugmakers cannot even claim that they need to recoup research and development costs. They are simply copying a drug that has already been developed.
The Affordable Drug Manufacturing Act, the Warren-Schakowsky bill, curbs generic drug costs and establishes fair drug prices through the creation of a government drugmaker. If enacted, the government would either directly or, indirectly–through a contract with a generic drugmaker–manufacture generic drugs that are priced excessively in order to drive competition and bring down their price.
The Affordable Drug Manufacturing Act provides for an Office of Drug Manufacturing which would be required to identify a minimum of 15 different generic drugs for which there is market failure—the drug is not being manufactured, there is a drug shortage or the drug is an “essential medicine” priced excessively. It would manufacture those drugs in its first year.
Unsurprisingly, the trade association of generic drugmakers is opposed to this legislation. Instead of recognizing the failures of the generic drug market, it points to the failures of the brand-name drug market. Fortunately, Senator Sanders and Congressman Khanna have introduced a The Prescription Drug Price Relief Act to lower the price of excessively priced brand-name drugs, which you can read about here.
There is clear evidence of price-fixing or excessive pricing and potential collusion of drugmakers in the generic drug market. The US Justice Department and 45 states are currently investigating this issue, which some claim has cost consumers and businesses more than $1 billion. For example, there is a large investigation underway of Eli Lilly’s role in increasing the price of insulin. Even though insulin is more than 100 years old, its price keeps going up. The Warren Schakowsky bill specifies that insulin be among the drugs the federal government manufactures.
Other Democratic bills to lower prescription drug prices have recently been introduced. Senators Jeff Merkley (D-OR), Kamala Harris (D-CA) and Amy Klobuchar (D.-MN) introduced the CURE High Drug Prices Act. It would give the federal government authority to keep drug companies from raising their prices on some drugs in some instances. Merkley also introduced the Low Drug Prices Act.
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