Generic drug manufacturers warn Democrats' drug plan could lead to higher prices

Drug makers argue bill will disincentivize competition by preventing manufacturers from entering the market.

Updated: August 9, 2022 - 12:48am

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Generic drug manufacturers oppose Democrats’ bill allowing Medicare to negotiate drug prices.

The Senate passed its climate, tax, and healthcare bill on Sunday, which permits Medicare to negotiate what it pays for drugs.

“For seniors who’ve faced the indignity of rationing medications or skipping them altogether, the Inflation Reduction Act will lower prescription drug costs and finally cap out-of-pocket expenses,” said Senate Majority Leader Chuck Schumer, D-N.Y.

Generic drug manufacturers argue the bill will disincentivize competition by preventing manufacturers from entering the market, thereby making medication more expensive.

“The Senate has chosen to replace competition – the only proven way to provide patients relief from high brand drug prices – with a flawed framework for government price setting that will chill the development of, and reduce patient access to, lower-cost generic and biosimilar medicines," said Dan Leonard, CEO of the Association for Accessible Medicines. "While the bill’s ill-advised price setting scheme will harm Medicare and seniors, its negative impact will extend to employers and patients that rely on generic and biosimilar medicines to keep costs down.”

Generic drug manufacturers also argue that the reduction in competition will benefit brand drug manufacturers by granting them higher prices for their products compared to when competition is present in the market.

“The price control proposals would actively harm millions of patients by rewarding brand drug manufacturers with a perpetual monopoly,” said Craig Burton, Executive Director of the Biosimilars Council, a group of manufacturers and stakeholders advocating for accessible biosimilar medication. “Congress should reject this proposal and instead support solutions that will sustainably lower drug prices by encouraging generic and biosimilar adoption.”

Some experts agree with generic manufacturers and say that the bill could lead to a decrease in the number of generic drugmakers entering the market due to fears of unprofitability. Under current law, if a generic drug manufacturer can break a brand manufacturer’s patent, then they get the right to be the only generic manufacturer of the drug for 180 days. However, if the bill becomes law, the manufacturer may fail to generate the necessary revenue to challenge brand patents and decrease future competition.

Democratic lawmakers, however, say the bill will lower overall drug costs for Americans who deserve affordable Medicare.

“Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit, while making the wealthiest corporations finally pay their fair share,” said President Joe Biden. “This bill caps seniors’ out of pocket spending for prescription drugs at $2000 per year – no matter what their drug bills would otherwise be, seniors will not have to spend more than $2000. In addition, 13 million Americans, covered under the Affordable Care Act, will see their health insurance premiums reduced by $800.”