A Legislative Solution to High Rx Prices

A Legislative Solution to High Rx Prices
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During the 2016 Presidential campaign, then-candidate Donald Trump railed against Big Pharma for keeping drug prices artificially high. Last month, in his State of the Union address, President Trump said that he wants his administration “to make fixing the injustice of high drug prices one of our top priorities.”

While there are scarce issues — if any — on which you can get both Republicans and Democrats to agree these days, high drug prices is one of them. There is bipartisan agreement that something must be done to help Americans get greater access to the medicines they need with prices they can afford. But the political class of lobbyists and corporatists have consistently blocked any meaningful reform.

Even though President George W. Bush had a Republican Congress, nothing was done to bring market reform to the crisis of rising Rx prices. President Barack Obama had a Democrat supermajority in Congress for the first two years of his first term. Yet, instead of addressing rising drug costs, Democrats used the opportunity to pass the unmitigated disaster of Obamacare. So Republicans have failed in promoting free-market reform, while Democrats enacted a law that has caused health-care costs to skyrocket. Washington has failed — “big league.” But 2018 may be the year that both parties finally come together to get something done.

Enter the CREATES Act a pro-patient and pro-market bill that is supported by a wide coalition of patient organizations and free-market advocates. The legislation will protect patient safety and lower drug prices by closing corporate loopholes and encouraging market competition.

We’ve heard this call to fix the problem of high Rx prices before from politicians and Big Pharma. But nothing substantive has been achieved. What’s different now? We have a president determined to make a change — “drain the swamp” — as well as private sector forces that are gearing up finally to bring prices down. At the center of this convergence is a legislative fix that will not pile on new, onerous regulations — the swamp’s way — but will instead reform the regulatory state to unleash market competition.

To answer the “But how?” question we need to go back and unpack some regulatory gobbledygook.

Since it was created in 2007, the Food & Drug Administration’s (FDA) Risk Evaluation and Mitigation Strategies (REMS) program has been a critical mechanism for patient safety, ensuring that the benefits of a drug or biologic outweigh its safety risk. FDA-mandated REMS programs serve a powerful public good by providing additional information to patients and providers. Yet, some brand companies have been exploiting a loophole in the law and have been abusing the REMS Elements to Assure Safe Use (ETASU) requirements to prevent competition for products with and without required REMS programs.

The CREATES Act would stop the misapplication of REMS by bad actors to prevent or delay the market entry of lower-cost generics and biosimilars. This bipartisan remedy is narrow in its application, only addressing the specific problem of REMS abuses. CREATES will not establish any new or burdensome regulations on brand companies. On the contrary, if enacted, this legislation would support marketplace competition by allowing generic manufacturers to purchase samples at market-based prices. Specifically, it would promote Rx price competition — rather than, say, imposing price controls — by allowing medicines with expired patents to be sold as less expensive generic versions.

In short, the CREATES Act removes barriers to competition to deliver medicines to patients at lower costs, while also protecting the intellectual property rights of brand manufacturers — a free-market solution. That’s surely why the bill has the support of conservative stalwarts such as Sens. Mike Lee (R-UT), Ted Cruz (R-TX), and Rand Paul (R-KY). What’s more, the CREATES Act would reduce both the federal deficit and national debt. Falling Rx prices would lessen the financial burden on Medicare, saving taxpayers up to $5 billion annually.

The Institute for Liberty’s (IFL) Center for Health Security and Access is focused on ensuring that America's health-care system remains the best in the world, which means protecting the free-market principles that have allowed Americans to have access to our superior quality of treatment. We urge Congress to take up President Trump’s call and pass the CREATES Act, using market competition to lower prescription drug prices and thereby better meet patients’ needs.

Andrew Langer is President of the Institute for Liberty.

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