Best asset to fight rising drug prices: Enhance generic competition

President Trump said recently that the pharmaceutical industry is “getting away with murder,” the clearest signal yet that he intends to take up the fight to reduce drug prices. As the Trump administration prepares to take on this critical issue, nearly all experts agree on a potent and straightforward policy remedy: increase access to safe, effective and affordable generic and biosimilar medicines for America’s patients. 

It’s a universal economic truth that more competition drives down prices. President Trump has shown that in business and politics he understands the power of competition in a healthy market. We could not agree more with that goal. Encouraging generic competition is an effective and politically viable solution to high drug costs in America. Across the aisle and across the country, it is important for policymakers to keep in mind that competition from generic drugs is proven to lower the cost of medicine for patients.

{mosads}The positive impact of generic drugs to the American economy is profound — today, generics make up 89 percent of all prescriptions dispensed in the U.S. but only 27 percent of total spending on medicine. Over the last decade, from 2006 to 2015, generic drugs have saved the American healthcare system $1.46 trillion dollars. On average, generics are 80–85 percent less expensive than brand drugs, and, unlike brand and specialty medications, the generic market overall experiences price deflation year over year. In fact, in September of last year the Government Accountability Office found that generic prices under Medicare Part D fell 59 percent from the first quarter of 2010 to the second quarter of 2015. 

Further enhancing generic competition and ensuring a robust market for biosimilars in the U.S. will bring even more savings, strengthen our economy, and, most importantly, make it easier for patients to access the medicines they need, enhancing the quality of life for millions of people in our communities.

For policymakers seeking to enhance competition, it is important to note that the generic drug industry has a fundamentally different economic model than the patent-protected brand sector. This means that, despite best intentions, if blanket “one size fits all” policy approaches are applied across both the brand and generic pharmaceutical sectors, it would pose a very real risk of stifling, rather than encouraging, strong competition.

GPhA supports five policy priorities the Trump administration should consider immediately to help improve pharmaceutical competition and expand patient access to generics and biosimilars: 

• Streamline the FDA approval process to promote timely access to safe and effective generic drugs.

• Pass the CREATES Act to curb certain brand company abuses of FDA safety programs for commercial benefit. 

• Repeal the generic drug penalty in Medicaid that will thwart the development of generic drugs.

• Increase generic utilization by the low-income subsidy population of the Medicare Part D program, encouraging some of the nation’s most vulnerable patients to choose a generic medicine when appropriate and available.

• Foster an intellectual property framework that balances innovation with the need for cost-saving competition. One way to do this is to put an end to the practice known as “evergreening,” opportunistic efforts by branded drug manufacturers to extend monopolies and block competition. It is also important for the U.S. Patent and Trademark Office to maintain existing legal avenues to address patent disputes.

 Generic medicines provide nearly $4 billion in savings to the healthcare system every week. If the new Congress and administration adopt these policies, that number will grow. 

Despite the clear benefits to be gained through accelerating and enhancing more generic competition, the road ahead to increased access and savings is far from certain.

To that end, PhRMA, the leading trade association for brand drug companies, just launched another advertising and lobbying effort expected to cost tens of millions of dollars. To the extent those resources dedicated to as they say, “enhance the private market,” actually support policies that enhance competition and increase access to affordable medicines, its engagement could be meaningful and productive. Alternatively, if this effort is just another exercise to defend the status quo that President Trump has criticized, then the challenges that led us to our current inflection point will only escalate.

Either way, the Generic Pharmaceutical Association and its Biosimilars Council, our members and patients throughout the nation have great hope that the incoming Trump administration and the 115th Congress can bring more competition to the prescription drug marketplace.

Increasing access to generic and biosimilar medicines will strengthen our nation’s economy while improving patients’ access to the medicines on which they rely. We stand ready to work with all concerned stakeholders committed to meaningful solutions to lower drug costs and bring more treatments within reach for millions of Americans.

Davis is the President and CEO of the Generic Pharmaceutical Association.

The views expressed by this author are their own and are not the views of The Hill.