The wrong pre­scrip­tion

The Washington Post Sunday - - LOCAL OPINIONS - BY WIL­LIAM B. SCHULTZ

Most peo­ple who work in health-care pol­icy agree that ris­ing pre­scrip­tion drug prices pose a se­ri­ous threat to ef­forts to make health care af­ford­able. Pre­scrip­tion drug prices ac­count for 17 per­cent of the na­tion’s health-care costs, up from 7 per­cent in the 1990s.

Ac­cord­ing to data from the Medi­care Pay­ment Ad­vi­sory Com­mis­sion, pre­scrip­tion drug spend­ing ac­counts for nearly 20 per­cent of to­tal pro­gram spend­ing for Medi­care, the largest of the gov­ern­men­tal health-care pro­grams. With back­ing from pow­er­ful lob­by­ing or­ga­ni­za­tions, the brand-name phar­ma­ceu­ti­cal com­pa­nies avoided price con­trols.

The one bright spot in drug pric­ing has been generic drugs. A 1984 law, en­acted in ex­change for pa­tent ex­ten­sions to the branded drug com­pa­nies, cre­ated the mod­ern generic drug in­dus­try. To­day, gener­ics ac­count for 89 per­cent of pre­scrip­tions filled in the United States but only 26 per­cent of the to­tal spend­ing on pre­scrip­tion drugs. Generic drugs lower drug prices through com­pe­ti­tion. Once the patents on brand-name drugs ex­pire and an­ti­com­pet­i­tive busi­ness tac­tics by branded com­pa­nies have been over­come, less ex­pen­sive generic ver­sions of these prod­ucts are al­lowed to en­ter the mar­ket, and drug prices typ­i­cally drop dra­mat­i­cally. Pa­tients and tax­pay­ers re­al­ize the sav­ings from generic drugs ev­ery day.

When I first heard about the law the Mary­land leg­is­la­ture en­acted this year to ad­dress “price goug­ing” and “un­con­scionable” price in­creases for pre­scrip­tion drugs, I liked the idea. That was be­fore I read the leg­is­la­tion, which turns out to ap­ply only to generic drugs and ex­empts any branded drug still un­der pa­tent — in other words, the bill leaves un­touched the seg­ment of the phar­ma­ceu­ti­cal in­dus­try that is re­spon­si­ble for the “un­con­scionable” in­creases in drug prices in re­cent years.

What I call the “Big Pharma carve­out” in the new Mary­land law of course was not an over­sight; in­stead, it is a re­flec­tion of the po­lit­i­cal power of the brand-name drug in­dus­try and its lob­by­ists. In al­low­ing the bill to go into ef­fect with­out his sig­na­ture, Gov. Larry Ho­gan (R) raised two con­cerns about its con­sti­tu­tion­al­ity — namely, that the terms “un­con­scionable” and “ex­ces­sive” in the bill are too vague, and that the bill reg­u­lates com­merce out­side Mary­land.

The bill’s stated pur­pose is to ad­dress re­cent ex­am­ples in­volv­ing sole-source drugs (drugs made by only one com­pany) for which the patents have ex­pired in which drug com­pa­nies have raised prices to ex­tra­or­di­nary lev­els. The most fa­mous ex­am­ple is Dara­prim, a 60year-old drug used to treat a rare par­a­sitic in­fec­tion. Af­ter Tur­ing Phar­ma­ceu­ti­cals purchased the drug in 2015, it raised the price from $13.50 per pill to $750. A few months later, its pres­i­dent, Martin Shkreli, was ar­rested for se­cu­ri­ties fraud. Of­ten lost in the cov­er­age of this un­con­scionable price in­crease is the fact that Dara­prim is not a generic drug; in­stead, it is a brand­name drug whose pa­tent had ex­pired.

The law is a cum­ber­some and in­ef­fec­tive an­swer to a few iso­lated ex­am­ples of sole-source drugs whose prices have in­creased dra­mat­i­cally even though their patents have ex­pired. The best re­sponse to this prob­lem is to fix the ap­proval process for generic drugs at the Food and Drug Ad­min­is­tra­tion so that once patents have ex­pired, com­peti­tors’ ap­pli­ca­tions to mar­ket these sole­source drugs are given pri­or­ity and ap­proved promptly. Com­pe­ti­tion is the most ef­fec­tive method of bring­ing down drug prices.

The Mary­land law dis­tracts from the more dif­fi­cult and im­por­tant chal­lenge of low­er­ing prices of patented brand­name drugs, which of­ten cost $50,000 to $100,000 per year for a sin­gle pa­tient, and in rare cases more than $500,000 a year. These are drugs for which there can be no com­pe­ti­tion and for which gov­ern­ment pro­grams in­creas­ingly are the pur­chasers (and are typ­i­cally pro­hib­ited by law from ne­go­ti­at­ing prices, again due to Big Pharma).

In the past 35 years, the only sig­nif­i­cant vic­tory in the bat­tle to con­trol drug prices has been the en­act­ment of leg­is­la­tion that estab­lished the generic drug pro­gram at the FDA. While generic drug com­pe­ti­tion is not the com­plete an­swer, it must be a ma­jor part of any ef­fort to ad­dress the prob­lem of soar­ing pre­scrip­tion drug prices. Un­for­tu­nately, Mary­land could desta­bi­lize its generic drug mar­ket and di­vert re­sources from the real causes be­hind the high prices of pre­scrip­tion drugs.

The writer is a part­ner at the law firm Zuck­er­man Spaeder, which rep­re­sents generic drug com­pa­nies and other clients. He served as a gen­eral coun­sel in the Depart­ment of Health and Hu­man Ser­vices dur­ing the Obama ad­min­is­tra­tion and was deputy com­mis­sioner for pol­icy at the Food and Drug Ad­min­is­tra­tion dur­ing the Clin­ton ad­min­is­tra­tion.

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