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A Free Market Approach to Prescription Drugs

In his first State of the Union speech, President Trump once again promised to lower the swelling costs of prescription drugs. The question is – will the administration do it without imposing price controls.

The federal government has intervened in the free market before, and history shows that artificial price controls create more problems than it solves. Rather than try and manipulate the market, the administration should try a free-market approach to the issue.

The current drug approval process is riddled with barriers that can suppress competition. The CREATES Act, sponsored by Sens. Patrick Leahy (D-Vt.) and Mike Lee (R-Utah), would lower barriers by making it easier for generic competitors to get their products to market. Economists agree that this will allow cheaper generic drugs to emerge in the market.

One of these obstacles are called “patent thickets” which can be hundreds of patents for different aspects of one particular drug. These can keep dozens generics off the market as it makes it more difficult to challenge each and every one of them. Another tactic called “product hopping” is when minor changes are made to a drug causing generics to restart their approval process and delaying their market entry. This makes it more difficult for generics to get prescribed by physicians.

In order for biosimilars to get approved by the FDA, generic drug manufacturers need samples in order to share safety protocols with branded pharmaceuticals to show that their biosimilars are just as safe and effective. But generic companies get derailed when brands refuse to provide these essential samples. This prevents generics from being able to use a shared Risk Evaluation and Mitigation Strategy (REMS), and delays their access to market. This keeps drug prices high and limits consumer choice.

The CREATES Act aims to tackle this issue by allowing generic manufacturers to file injunctions against a brand manufacturer if they refuse to provide samples of their drugs. Many organizations are spreading blatant lies that the CREATES Act is a boon for trial lawyers. The truth is, the CREATES Act would simply use injunctions as a deterrent to delaying competition. They also claim the CREATES Act allows generic companies to bypass safety protocols, but the current FDA safety process remains fully intact.

FDA commissioner Dr. Scott Gottlieb has called these tactics “shenanigans” and “unfair and exploitive tactics.” A recent poll shows over 80 percent of voters support the CREATES Act – a bill that would save patients more than $5 billion each year. With over $100 billion worth of new medicines going off patent in the next five years – the time for change is now! Lower costs through increased competition and rethinking regulations – what conservative would be against that?