Making drugs more affordable with the Creates Act

By Jim Martin

The politicians who set out to fix America’s health care system ended up making many things worse. This is no surprise. It’s the Washington way. Costs are still rising, even for those of us who’ve reached the age where Medicare has stepped in and become our primary insurance.

Make no mistake — we’re as cost conscious as anyone but we’re not willing and shouldn’t have to accept a reduction in the quality of services we receive because some bureaucrat is concerned with finding ways to bend the cost curve downward. There’s balance to be struck, particularly where prescription drugs are concerned, that can be a win-win for all.

America’s seniors have a lot to be thankful for. The pharmaceutical industry achievements that have made it possible for us to live longer, better lives are investments in the future until someone tries to cheat.

The Hatch-Waxman Act of 1984 has led to the creation of a thriving, responsible, generic industry that allows seniors (as well as just about everyone else) access to copies of brand drugs approved by the Food and Drug Administration (FDA) once government-granted monopolies end and generic competition begins. These drugs are available at significantly lower cost, driven entirely by competition.

This is a great benefit to seniors on fixed incomes even as we enjoy the benefits of the Bush-era Medicare Part D program that helped make prescription drugs more affordable. The cost of Part D is significantly lower than originally estimated due, in part, to the increased use of FDA-approved generic medicines. You and I benefit not only as users of this program, but also as taxpayers. And, it should be said, more choices often lead to better care.

Credit should be given to the brand-name pharmaceutical industry for the many millions they spend on research, testing and winning approval of new drugs — for which they are compensated financially by the extraordinary patents and market exclusivities their products receive. Those monopoly protections eventually expire. Products that were once exclusive to the company that developed them are supposed to become available for mass production by the generic industry under what we all understand to be the right to compete.

Some companies, though, are trying to find ways around that balance and extend their monopolies far beyond what was intended or is reasonable. Some brand drug companies are trying to find new and creative ways to keep generics from coming to market and keep drug prices artificially high. Some brand manufacturers even refuse to sell their product to would-be generic drug makers who need to purchase the samples just to begin the FDA-approval process.

Brand manufacturers claim that since some of these drugs have unique safety risks that require special handling at FDA’s insistence, they can’t sell the drug to a potential competitor. The FDA has tried to step in and help generic developers overcome this obstacle, but the tools the FDA has have been unable to solve the problem. As a result, potential generic versions of high-cost brand drugs are sitting in limbo and patients are left holding the bill in the form of unnecessarily high drug costs.

To resolve this problem Congress is considering legislation — the Creating and Restoring Equal Access to Equivalent Samples, or Creates Act of 2017, to assure FDA-approved generic drug companies receive appropriate and timely access to supplies of drugs necessary to begin the agency’s rigorous approval process. This legislation does not, as some critics have suggested, lay the groundwork for abusive lawsuits that will enrich the trial bar. It is instead a narrow, targeted, even measured response to the misuse of safety protocols to mask anticompetitive behavior in the medical marketplace.

To give you a sense of the economic impact of this issue the non-partisan Congressional Budget Office estimated the Creates Act would, if enacted, save taxpayers $3.6 billion. The FDA itself is on record as late as December 2016 as saying the Creates Act “would — appropriately — leave unchanged FDA’s authority to ensure that generic developers are using acceptable safety standards” but it would also make a number of needed FDA-approved pharmaceuticals available at lower cost to those who need them.

Without the research conducted by the brand-name companies, a lot of people would die. Without the cost savings produced when many of those brand names become generics, many seniors are put in the position of making hard choices. The Creates Act would lessen the burden to everyone’s benefit without imposing price controls or other government mandates that would ultimately have a chilling effect on innovation and ruin what is still the best health care system in the world.

Hatch-Waxman is one example of bipartisan success. It made generics available to the public more quickly than otherwise possible because it created a unique exception to U.S. patent law that allowed FDA-approved generic manufacturers to begin making products for approval — but not sale — before the original patent had expired. The Creates Act, which is backed in the Senate by Republicans like Chuck Grassley of Iowa and Utah’s Mike Lee and Democrats including Illinois’ Richard Durbin and Minnesota’s Amy Klobuchar, is another bipartisan step forward in the process Congress created to protect the right of generic manufacturers to compete in a fair and open market.

Even with Medicare Part D, the cost of prescription drugs is a major budgetary factor for millions of American seniors. Drug costs can be addressed within our borders, through market methods, as long as the playing field is level and everyone plays by the same rules. The Creates Act is worthy of bipartisan support, just like Hatch-Waxman.

Jim Martin is the Founder and Chairman of the 60 Plus Association.