The Free Market Path to Lower Prescription Drug Prices

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Many of the same legislators that pushed Obamacare are now trying to push another healthcare fix down the throats of the American people: prescription drug price controls. They point to rising prescription drug prices and suggest that the only solution is for more government involvement.


That’s a false choice. Instead, the solution to out-of-control prescription drug prices is more competition and fewer loopholes that prevent it. A bill in Congress, the CREATES Act, would do just that.

In an era where bipartisan cooperation is near an all-time low, in the Senate the CREATES Act is co-sponsored by Democrats and Republicans alike, including Sens. Chuck Grassley (R-Iowa), Ted Cruz (R-Texas), Dianne Feinstein (D-Calif.) and Amy Klobuchar (D-Minn.). If that group can agree, Congress should be able to move forward. It’s also supported by groups from the AARP and AFL-CIO to FreedomWorks and the Heritage Foundation.

Sources on the Hill say that President Trump is telling sponsors he supports the CREATES Act. And during his State of the Union Address, the president said reducing prescription drug prices is one of his “greatest priorities”:

One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.

The beauty of the CREATES Act is in how it solves the drug price issue, while still respecting the free market and patent rights.


A strong Patent rights system, which provides a monopoly on an innovation for a defined period, is critical in prescription drug development, where pharmaceutical companies invest billions in finding the next breakthrough medicine.

But when a patent expires after 20 years, competition begins. And prices for that drug come down.

The problem with the current system is that the Food and Drug Administration (FDA) makes generic drug manufacturers prove that their generics are chemically identical to the brand-name drug to win final approval. To do that, manufacturers physically need the brand-name drugs.

So in recent years, pharmaceutical companies have restricted access to those drugs. If the generic manufacturer can’t get the drug, they can’t meet the FDA’s requirement. Such was the case when Turing Pharmaceuticals denied generic manufacturers access to its drug, Daraprim, which was used to treat parasitic infection. Then, it hiked prices from $14 per pill to $750 per pill.

Meanwhile, Allergen used a different tactic to protect its patent. It tried to transfer ownership of one of its drugs to the St. Regis Mohawk Tribe – an Indian tribe with sovereign status.

Turing and Allergen aren’t alone in going to extraordinary measures to protect their revenues. Nearly 40 generic drugs are being delayed because of stalling tactics on the part of brand-name pharmaceutical companies.


Without legislation like the CREATES Act, generic manufacturers have no recourse. Neither does the FDA.

In these egregious examples, the CREATES Act would enable generic manufacturers to sue the brand-name pharmaceutical company in federal court for injunctive relief to obtain the sample it needs, or to enter court-supervised negotiations for a shared safety protocol). The legislation also authorizes a judge to award damages to deter future delaying conduct.

The Congressional Budget Office estimates that the CREATES Act would save taxpayers $3.6 billion, while maintaining high safety standards of those generic drugs.

This is a win for patients, taxpayers and the pharmaceutical industry by upholding patent law and empowering the free market.


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