Legislation stems from only bipartisan investigation into the causes, impacts, and potential solutions to these egregious price spikes
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Washington, D.C. — In response to the sudden, aggressive price hikes for a variety of drugs used widely for decades, U.S. Senators Susan Collins (R-ME) and Claire McCaskill (D-MO), the Chairman and the former Ranking Member of the Senate Aging Committee, have reintroduced the Increasing Competition in Pharmaceuticals Act to help ensure that a clear process is in place for FDA to prioritize the review of generic drug applications.
“The skyrocketing prices of prescription drugs affect every American family, particularly our seniors, 90 percent of whom take at least one prescription drug in any given month,” said Senator Collins. “The Increasing Competition in Pharmaceuticals Act, which was informed by our extensive, bipartisan investigation, would help address egregious price increases on a number of decades-old drugs by making it easier for generic pharmaceutical manufacturers to enter the market and compete to reduce prices. Our legislation would create a strong disincentive for companies that act more like hedge funds to drive up the prices of drugs they did nothing to develop just because, as one executive essentially said, ‘because I can.’”
“Too many folks are struggling with the skyrocketing costs of prescription drugs, and we can take some commonsense steps to help alleviate that burden” said Senator McCaskill. “If we incentivize competition and fast-track new drug approvals, we can bring down costs to make these lifesaving drugs more affordable for the thousands of Missourians who depend on them.”
This legislation stems from the only bipartisan investigation into the causes, impacts, and potential solutions to the egregious price spikes for certain drugs, which was led by Senators Collins and McCaskill last Congress. The Aging Committee held the first in a series of hearings in December 2015. From the beginning, the investigation strived to understand why companies can make these large price increases and to identify which policies should be considered to counter these disturbing practices.
For many decades, federal policy has sought to strike the right balance between maintaining the incentives needed to promote innovation and the development of new drugs and keeping medicines affordable. Once patent protections for medications expire, generic drugs approved by the FDA help establish competitive markets for treatments that improve the lives of millions of American patients. Eighty-eight percent of drugs purchased are generics, which has amounted to $1.7 trillion in estimated savings.
In general, this balance works well; however, the Committee’s investigation revealed that some older drugs lack an FDA-approved generic competitor. This lack of competition is a significant contributing factor that can allow companies to acquire and sharply increase the cost of these older drugs that are no longer protected by patents.
The Increasing Competition in Pharmaceuticals Act aims to help address this issue by improving the FDA’s approval process for certain generic applications. By promoting competition in the generic drug marketplace, the Collins-McCaskill legislation will help lower the cost and improve the accessibility of decades-old prescription drugs.
Among other provisions, Senators Collins and McCaskill’s legislation will establish a clear timeframe for the FDA to expedite the review of certain applications for generic drugs; direct the FDA to report quarterly to Congress on the number of new drug applications filed for review prior to October 1, 2015; and create a new “generic priority review voucher” that would be awarded to the sponsor of a successful application for a medical shortage or sole-source drug that makes it to market.
By authorizing a priority review framework for generic applications and increasing transparency in the review process, the Increasing Competition in Pharmaceuticals Act will help alleviate future shortages, increase competition to lower prices and avoid monopolies, and deter practices that can lead to exorbitant price hikes on drugs that were previously affordable to patients for decades.