December 18, 2018

Warren, Schakowsky Introduce Bicameral Legislation to Radically Reduce Drug Prices Through Public Manufacturing of Prescription Drugs

Warren, Schakowsky Introduce Bicameral Legislation to Radically Reduce Drug Prices Through Public Manufacturing of Prescription Drugs

  Legislation would address market failures and increase competition in the generic drug market by establishing new Office of Drug Manufacturing

 Warren also calls on Senate to investigate alleged price fixing among companies, driving up the cost of hundreds of generic drugs in America

  Bill Text (PDF) | One-Pager (PDF) | Op-ed

 Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today introduced the Affordable Drug Manufacturing Act, an ambitious proposal to address the skyrocketing price of prescription drugs. Her bill would lower prices and increase competition in the generic pharmaceutical market by establishing an Office of Drug Manufacturing within the Department of Health and Human Services (HHS) tasked with manufacturing select generic drugs and offering them to consumers at a fair price that guarantees affordable patient access. Representative Jan Schakowsky (D-Ill.) introduced identical companion legislation in the U.S. House of Representatives.

“In market after market, competition is dying as a handful of giant companies spend millions to rig the rules, insulate themselves from accountability, and line their pockets at the expense of American families,” said Senator Warren. “The solution here is not to replace markets, but to fix them. The Affordable Drug Manufacturing Act will introduce more competition into the prescription drug market, and bring down prices for consumers.”

“Nearly 25% of Americans have skipped a dose of their medication or not filled a prescription due to the prohibitive cost. This includes 50% of medications for chronic disease that are not taken as prescribed. This lack of adherence is estimated to have caused approximately 125,000 deaths,  and we know the names of some people who have died. Meanwhile, pharmaceutical corporations have spiked prices, stifled competition, and thickened their own wallets,” said Representative Schakowsky. “That’s why I’m proud to unveil the Affordable Drug Manufacturing Act with my friend Senator Elizabeth Warren today. It’s time for Pharmaceutical companies to face real, honest competition in the marketplace and it’s well past time for prescription drug prices to come down.”

When patents on brand-name drugs expire, market forces are supposed to kick in to lower prices as companies rush to make generic versions. But the generic drug market—which supplies nearly 90 percent of the country’s prescriptions—is broken in fundamental ways. Today, 40 percent of generic drugs are made by a single company and the majority are manufactured by only one or two companies. Many drugs whose patents have expired simply sit on the shelf with no producer at all. And some companies even buy up expired patents to corner the market and jack up prices—all to rake in cash on the backs of patients.

Earlier this month, the Washington Post reported that forty-seven states and the Department of Justice are currently investigating a massive price fixing conspiracy that’s driving up the cost of hundreds of generic drugs in America. Senator Warren is now calling on Senate committees with jurisdiction over drug pricing issues to open an investigation into these disturbing allegations.

The Affordable Drug Manufacturing Act would authorize the public manufacture of generic drugs where drug companies have twisted markets to drive up prices. If passed, it would bring down costs for millions.

The Affordable Drug Manufacturing Act would:  

  • Lower prices, increase competition, and address shortages in the market for prescription drugs through a newly established Office of Drug Manufacturing within HHS;
  • Authorize the Office to manufacture generic drugs under these key conditions, where competition is lacking:
    • No company is manufacturing the drug;
    • Only one or two companies produce the drug, and the price has spiked or the drug is in shortage;
    • Only one or two companies produce the drug, the price is a barrier to patient access, and the drug is listed as an “essential medicine” by the World Health Organization;
  • Further authorize the Office to manufacture any drug that has been compulsorily licensed by the federal government;
  • Require the Office to begin production of generic insulin within one year of enactment;
  • Allow the Office to sell publicly-produced drugs at a fair price that covers manufacturing costs while taking into account the impact of price on patient access;
  • Improve the ability of new companies to enter the generic drug market by authorizing the public manufacturing of active pharmaceutical ingredients;
  • Jump-start competition by directing the Office to offer to sell its manufacturing rights to any company that commits to keeping the product on the market at a fair price;
  • Reserve any revenue generated from the sale of publicly-manufactured drugs for the use of the Office, making the office self-sustaining.

The Affordable Drug Manufacturing Act is endorsed by Public Citizen, Social Security Works, Open Markets Institute, Physicians for a National Health Program, Housing Works, Knowledge Ecology International, Center for Medicare Advocacy, CREDO, National Physician’s Alliance, AIDS Healthcare Foundation, American Federation of Teachers, and the Business Initiative for Health Policy.

“With generic drug market failures increasingly prevalent, consumers are suffering from price gouging and essential drug shortages. Senator Warren’s Affordable Drug Manufacturing Act offers the remedy for this disease: public manufacture of generic drugs for which there is inadequate competition or supply, for sale at a fair and reasonable price. This common sense bill will address shortages, lower prices, aid consumers and advance public health. Public Citizen applauds Senator Warren for introducing the bill and strongly endorses it,” said Robert Weissman, President, Public Citizen.

“People everywhere were rightly outraged when they learned that Mylan was selling EpiPens for around $300 each, making it impossible for many families to afford them. Without an EpiPen, which was invented with taxpayer dollars, a child with a peanut allergy is one poorly labeled cookie away from possible death. The problem is that when another company ‘came to the rescue’ by introducing a generic alternative they also priced it at $300, because they could. These companies are putting greed above people's lives. That is why Sen. Warren's Affordable Drug Manufacturing Act is so important. It would establish a new office to ensure that generic versions of medications like EpiPen are produced, and that they are priced so that every single person who needs them can get them," said Alex Lawson, Executive Director of Social Security Works.

“Soaring drug prices are compromising access to needed medicines for millions of Americans. Meanwhile, our dysfunctional, profit-driven pharmaceutical system has led to critical drug shortages, hindering care in hospitals throughout the nation. By creating a public drug manufacturer, Senator Warren’s bill could help address both problems, producing inexpensive drugs that will bring down costs, expand access, and shore up the drug supply chain—ensuring that every American can get the medicines they need,” said Adam Gaffney, President, Physicians for a National Health Program.

“Big Pharma has been taking advantage of Americans for far too long. This legislation is a major contribution to the fight to ensure that all Americans are able to access and afford the life-saving prescription drugs they need and deserve,” said Josh Nelson, Co-Director, CREDO Action.

“Absurdly high drug prices are the number one driver of runaway healthcare costs for American businesses, workers and patients,” said Richard Master, Chair of Business Initiative for Health Policy, “anyone who is serious about controlling costs and ensuring more patients have access to life-saving drugs should be supporting this legislation.” 

“Pharmaceutical corporations price-gouge people with HIV and millions of other patients, leaving Americans forced to choose between rent and medicine for products other countries get for much less. Even when those costs are covered, they drive up the price of health care, costing taxpayers, employers and ordinary Americans, who pay far more for coverage than they would otherwise, due to high drug prices. When the pharmaceutical market isn’t working, such as when the lone manufacturer of an essential product prices life-saving drugs out of reach, then it's time for the Office of Drug Manufacturing to step in and safeguard the public. Getting a handle on excessive drug pricing is crucial to efforts to get high-quality, low-cost healthcare to every person in the United States. As a healthcare provider to thousands of low-income people with HIV, and an advocate for universal healthcare, we support of measures like this that will put patients first,” said Charles King, Co-Founder and CEO of Housing Works.

“T1International applauds Senator Warren's efforts to establish an Office of Drug Manufacturing within the Department of Health and Human Services, to increase competition, lower prices, and improve access to life-sustaining medications. We are encouraged that Senator Warren's proposal addresses the insulin price crisis directly. This adds to a growing chorus of politicians and policy-makers that are proposing actions that the #insulin4all movement and people living with diabetes have been advocating for. Bold efforts are needed to address the insulin price crisis in the USA, and drug prices in general. We hope Senator Warren's colleagues support this effort and other forward-thinking initiatives to put an end to completely avoidable deaths of people living with type 1 diabetes,” said Elizabeth Rowley, Founder and Director of T1International.

“Senator Warren’s bill, which authorises public manufacturing of vital generic drugs that are limited or concentrated in supply and high in prices, is a bold and visionary move. Creating a functional generics market that is abundant, affordable and accessible for the public goes far beyond simply fixing market failures: to safeguard the public interest of American citizens, the government as a representative of the public must become a much more proactive player in directly co-shaping and co-creating a generic market that delivers for all,” said Mariana Mazzucato, Professor of the Economics of Innovation and Public Value and Director of the UCL Institute for Innovation & Public Purpose (IIPP).

“Senator Warren and Representative Schakowsky’s bill, the Affordable Drug Manufacturing Act, is a creative and effective way to tackle the prescription drug price crisis. It proposes to create a public option to remedy the monopolistic and oligopolistic control of many generic drug markets. The bill would create an Office of Drug Manufacturing within the Department of Health and Human Services to produce generic drugs that are presently either unavailable or unaffordable due to market concentration. The bill features limits on revolving door staffing of the agency, public reporting requirements, and a mandate to produce a specified number of generic drugs each year. These provisions would ensure that the new Office fulfills its statutory duties to help tackle the economic, political, and social crisis of unaffordable prescription drugs,” said Sandeep Vaheesan, Legal Director of the Open Markets Institute.

A member of the Senate Health, Education, Labor, and Pensions Committee, Senator Warren has been a leading voice in Washington calling for lower prescription drug prices since joining the Senate in 2013.

In July 2018, she introduced the Capping Prescription Costs Act, a bill that tackles high drug costs faced by families placing a monthly cap on their out-of-pocket drug costs. The legislation caps prescription drug copays at $250 per month for individuals and $500 per month for families. The bill, which applies to all group health plans and individual market plans, ensures that individuals and families with high prescription drug costs are protected and can access their necessary medications.