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Caution: drug competition not allowed

About thirty years ago, generic (unbranded) drugs were first approved by the Federal Drug Administration (FDA) for use by patients. These drugs provided competitive alternatives to more expensive name branded pharmaceuticals, and this competition saved consumers $1.68 trillion (not billion) over the last decade, according to the FDA’s Deputy Commissioner. Lower prices from these alternatives made treatment more affordable, which opened up access to millions of patients. It indisputably saved lives and money.

While it may seem hard to image any group wanting to impede the introduction of lifesaving drugs into the market, there are some within the manufacturing drug industry doing everything it can to slow competitors from entering its protected market. Rather than competing for consumers in the marketplace, these big drug manufactures are using the regulatory process to impede competition and drive up prices, and it’s working.

{mosads}Why? Certain large drug manufactures are using a little-known regulatory process – called Risk Evaluation and Mitigation Strategies (REMS) – to impede the introduction of market substitutes. Abusing this FDA program prevents competition, which keeps lower priced drugs off the market. That means that patients, insurers and government programs will pay more.

One strategy that brand name manufacturers employing is to impede the ability of rivals to buy their drugs for testing. Before FDA approval, generic manufacturers need to evaluate their drug, and they do that by comparing their drug’s effectiveness and safety to brand named drugs. However, under current regulations, name brand manufacturers can sometimes prevent generic manufacturers from buying samples of the originator drug, because the FDA’s REMS program allows drug manufacturers to restrict channel distribution – who can sell the drug. This means that drug manufacturers can keep samples away from would-be competitors. But without drug samples, generic drugs cannot be tested for effectiveness, which means the FDA will not have the information it needs to approve them. In this way, some name brand manufactures with expired patents can block competition and keep prices higher.

The consumer cost of this market barrier is significant. One study estimated the annual cost of this delay cost the health care system $5.4 billion, including $1.8 billion is additional payments by the government and nearly a billion more in patient out-of-pocket costs. Money aside, higher drug prices also discourage patient access to medication, which can cost lives. Competition is the solution to the problem.

Similar delays are happening with a new class of generic-like drugs called biosimilars. This next generation of drugs are often used to treat some of the most serious, life threatening diseases. Biosimilar substitutes have been around in Europe and many other countries for well over a decade, but the same barriers that generics are facing are now being used to stall these lifesaving drugs from the U.S. market.

Ending market barriers is essential to bringing lower cost drugs to market and benefitting patients. Now there are bills introduced in the Senate (S. 3056, the CREATES Act) and the House (H.R. 2841, the FAST Generics Act, introduced by Rep. Steve Stivers) that try correct regulatory loophole, as well as end other barriers to competition. The CREATES Act, introduced just this week by Sens. Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.), Pat Leahy (D-Vt.) and Mike Lee (R-Utah), demonstrates that ending stall tactics by originator companies doesn’t have to be a divisive, partisan issue. Together, these bills will help get biosimilar drugs tested for safety and effectiveness, which will mean more competition, lower drug prices and greater access to patients. Given the potential savings to both the government and consumers, Congress should act now.

Considering the $1.68 trillion in savings from generic drugs in the last decade, competition obviously works. Ending barriers to competition for biosimilar drugs – such as abuses to the FDA’s REMS program – will produce huge savings for patients, insurers and government programs. The idea is simple: make the market more competitive and that will give consumer access to lifesaving drugs at more affordable prices. Lowering healthcare costs and saving lives should be the focus of Congress and something that American citizens demand.

Steve Pociask is president of the American Consumer Institute. For more information, visit

Tags Amy Klobuchar Chuck Grassley Mike Lee

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