Sen. Warren proposes government manufacture generics
- Senator Elizabeth Warren, D-Mass., introduced the Affordable Drug Manufacturing Act on Tuesday, which would create the Office of Drug Manufacturing within the Department of Health and Human Services, with the goal of lowering prices, increasing competition and addressing shortages. The proposal has little hope of moving quickly as Republicans control the Senate and the idea may be a step too far even for some Democrats.
- The office would make generic drugs in cases where there is no company manufacturing the drug, there are one or two companies manufacturing the drug but the price has spiked or the drug is in shortage, or the price is a barrier to access and the drug is defined as "essential" by the World Health Organization.
- The drugs, which must include insulin, will be sold "at a fair price" that covers manufacturing. Drug rights can be sold to manufacturers who commit to make the drug available at a fair price, but this can be withdrawn if the commitments are not met.
The proposal, from the unabashedly liberal Warren who is mulling a presidential bid in 2020, comes amid a years-long public debate over rising drug prices, especially for life-saving biologic drugs.
Although generics are touted as a way to cut the drug budget, they have been the source of some of the most dramatic price rises, with price-gouging of off-patent drugs.
The practice shot into public view in 2015 when Turing Pharmaceuticals' CEO Martin Shkreli hiked the price of the toxoplasmosis treatment Daraprim by 5,000%. Other notorious examples include Valeant Pharmaceuticals, now Bausch Health, buying up Isuprel and Nitropress and then upping their respective prices by 525% and 212%, according to investigators for a U.S. House subcommittee.
Despite widespread criticism, including high-profile congressional hearings where lawmakers grilled drugmaker officials, the practice continues.
More recently, Kaléo came under fire from a U.S. Senate investigation that found the company raised the wholesale acquisition cost of Evzio from its introductory price of $575 per pack in 2014 to the current $4,100 by January 2017.
According to a Government Accountability Office report in 2016, more than one-fifth of generic drugs analyzed saw a price rise of 100% or more between 2010 and 2015. The risk of this happening is increased by the finding that 40% of generic drugs are now made by a single manufacturer, and the majority are made by only one or two companies.
Comparable legislation was introduced in the U.S. House by Rep. Jan Schakowsky, D-Ill. The act creates an Office of Drug Manufacturing to manufacture any drug that the federal government had licensed, and this would include compulsory licensing. It could offer rights to manufacturers under fair price commitments, and aims to improve the ability of new companies to enter the generic drug market "by authorizing the public manufacturing of active pharmaceutical ingredients."
Originator drug companies are already facing pressure from potential passage of the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, which lawmakers could take up early in 2019.
That bill would bolster the generics industry by creating a legal pathway to challenge drugmakers that block generic competition by withholding drug samples.
U.S. health systems are looking at this approach. In January this year, a collaboration led by Intermountain Healthcare, along with Ascension Health, SSM Health and Trinity Health Corp., announced a plan to create a non-profit generic drug company to cut prices and end shortages. In September it was announced that the company, now named Civica Rx, will initially supply 14 hospital-administered generic drugs through internal production or external contract manufacturing.
Follow Suzanne Elvidge on Twitter