Bill on generic drugs stalls
Cornyn’s flip-flop votes illustrate lobbying battle
When the price of Daraprim shot up from $13.50 to $750 a pill in 2015, doctors and patient advocates were shocked because the patent on the decades-old AIDS drug had expired long ago.
Even if a generic drug maker had wanted to develop a cheaper alternative, executives at Turing Pharmaceuticals — the drug company founded by convicted hedge fund fraudster Martin Shkreli — made clear that they had no intention of making Daraprim available to rival companies to make their own versions.
The public outcry over the drug’s 5,000-percent price hike led to media accounts of Shkreli as “the most hated man in America” and helped galvanize a national debate over prescription drug prices.
Now a broad-based effort to hold down drug prices and bring new generic medications to the market has put Texas U.S. Sen. John Cornyn in the spotlight of a high-stakes lobbying battle as billions of dollars hangs in the balance for both investors and taxpayers.
Cornyn, the No. 2 Republican in the Senate, abruptly changed his “aye” vote several hours after a crucial Judiciary Committee meeting that advanced a bipartisan bill to increase generic competition. Cornyn’s switch to “nay” didn’t change the outcome of the 15-6 vote, but it signaled that consensus may still be difficult to reach in the Republican-controlled Congress.
Cornyn has lauded the
“overall goal” of the so-called CREATES Act, which would give generic drug companies more leverage in the Food and Drug Administration approval process, including the right to sue brand drug manufacturers that use tactics like Turing’s to stifle the development of cheaper generic alternatives.
But concerns about trial lawyer abuses have caused Cornyn, a Republican leader in the debate, to hold out for changes that would limit court remedies and raise the standard of proof for alleged anti-competitive practices.
“What I’m concerned about is providing unintended incentives for frivolous litigation for the sole purpose of extracting nuisance settlements or otherwise making it hard to address our goal, which is to promote generic alternatives,” Cornyn said in the June 14 committee hearing.
Generic drug lobbyists fighting to win passage of the CREATES Act say Cornyn’s proposed amendment would weaken the bill and create regulatory loopholes for predatory practices.
“The Martin Shkrelis of the world could drive a dump truck through this,” said Michael Brzica, vice president for federal government affairs at the Association for Accessible Medicines, the main group representing the generic drug industry.
Lobbyists slow the process
Despite backing from more than two dozen senators across the political spectrum — including Texas U.S. Sen. Ted Cruz — the current version of the CREATES Act has languished in a protracted legislative duel between two well-funded pharmaceutical lobbies.
On one side is the principal pharmaceutical lobby known as PhRMA, which has spent nearly $36 million lobbying Congress in the last two years on behalf of makers of brand name drugs. On the other side is the Association for Accessible Medicine, which has spent $4.5 million on federal lobbying during the same period, according to the Center for Responsive Politics.
PhRMA executives, who have made tens of thousands of dollars in contributions to both Cornyn and Cruz, argue that generics already account for 90 percent of the prescriptions dispensed in the U.S., a higher percentage than in most other countries. They also cite the record 1,027 generic medicines the FDA approved for the U.S. market last year.
Still, while generics enjoy a volume advantage, brand drugs account for 77 percent of all American consumer spending on prescription drugs, industry officials say.
But the debate is not just about big drug companies vying for a bigger slice of the market. The Congressional Budget Office estimates that federal health programs and taxpayers would save $3.8 billion over 10 years if CREATES is enacted. Those projected savings have helped bring along liberals as well as conservative fiscal hawks who see it as preferable to other proposals to reduce health care costs.
The pharmaceutical industry has been forced to acknowledge reports of drug company abuses that are now in the crosshairs of the CREATES Act. Among them are delay tactics that FDA Commissioner Scott Gottlieb has described as “shenanigans.”
Much of the controversy over the bill has focused on the misuse of FDA protocols that restrict access to drugs with safety concerns, sometimes by controlling distribution. Intended to prevent harmful side effects or abuse, the restrictions have allegedly been used to block sales of brand drug samples to would-be generic developers, who need them for clinical studies as part of the FDA approval process.
PhRMA takes seriously concerns about drug companies delaying the development of generics, said Andrew Powaleny, the group’s director of public affairs.
“We are committed to working with policymakers to find a path forward to amend the CREATES Act and find a solution that preserves the U.S. Food and Drug Administration’s role in the … process to protect patient safety and at the same time facilitate generic competition,” he said.
But while Powaleny concedes the possibility of drug company delay tactics, Brzica goes further: “It’s not a possibility,” he said. “It’s a known fact.”
‘Spirit of camaraderie’
With the contours of the battle well established, Cornyn’s June 14 vote switch came as a surprise to both sides. As one of the ranking Republicans on the Judiciary Committee, he was expected to be one of six GOP members out of 10 on the panel to vote against the CREATES Act.
While saying he “heartedly” supported the aims of the CREATES Act, Cornyn told Committee Chairman Chuck Grassley of Iowa — a leading Republican sponsor of the bill — that he intended to introduce an amendment narrowing the legal options for generic drug developers. One of Cornyn’s changes would cover only drugs protected by the FDA’s safety protocols. Critics say that would not have touched Daraprim, the off-patent drug that was not on any FDA risk plan when Shkreli boosted its price.
But rather than fight over the amendment in an open hearing, Cornyn accepted Grassley’s offer to work with him behind the scenes in what Cornyn called “the spirit of camaraderie and collegiality.”
Cornyn then cast an “aye” vote for the CREATES Act, catching many Congress watchers off guard — as well as the five other Republicans on the committee who voted “nay” on a bill that clearly has broad public appeal.
Hours later, Cornyn exercised his prerogative to change his vote to “nay,” tipping the balance of the Republicans on the committee — from five out of 10 opposed, to six out of 10, a symbolic majority of Republicans on the panel.
Even though the bill advanced to the full Senate by a lopsided vote — Cruz and all 10 Democrats on the panel voted in favor — Cornyn’s switch was seen by observers as a sign that the bill’s fate is far from certain in a chamber that requires 60 votes to pass most legislation.
Since then, Cornyn has made clear that the CREATE Act’s backers have yet to win him over.
Former Turing Pharmaceuticals CEO Martin Shkreli’s decision to dramatically increase the price of the drug Daraprim, often used by patients with AIDS, led lawmakers to consider ways to lower prices and boost the powers of generic drug makers.
Senate Majority Whip John Cornyn, right, says he has concerns about the CREATES Act “providing unintended incentives for frivolous litigation.” Cornyn’s wavering votes on measure indicates its insecurity, despite bipartisan support.