Opinion: Stifling Competition Reduces Access to Affordable Prescriptions

FAST Generics Act easy way to lower costs for patients and taxpayers

Martin Shkreli, former CEO Turing Pharmaceuticals, invoked his Fifth Amendment right against self-incrimination during a House Oversight and Government Reform Committee hearing on "methods and reasoning behind recent drug price increases," in February 2016. Turing had raised the price of a drug used by AIDS and cancer patients  from $13.50 to $750 a pill. (Tom Williams/CQ Roll Call File Photo)

“We don’t want excessive profiteering. But the key word in profiteering is profit.”

When Martin Shkreli told Business Insider this in 2015 he might not have been trying to make a broad statement about perverse incentives in the regulatory status quo. But the statement did belie real problems that arise from a system far more complex than the heroes and villains of many popular media narratives.

A monopoly is rarely built in a day, and while public ire often points at companies who seek to profit, the root of many problems lies instead with the systems that enable unbalanced profiteering in the first place.

And while hauling the infamous “pharma bro” in front of Congressional panels might have been cathartic for lawmakers, actually ensuring patient access to affordable prescriptions will require more serious steps to target the systems that enable abuse to occur.

Luckily for Congress, there’s an easy way to do just that, thanks to new legislation that takes aim at legal structures long overdue for reform.

Americans are rightfully concerned with rising medical costs, but some of the ways by which costs rise can be tedious and difficult to understand for those not already familiar with broader regulatory issues.

What’s going on, though, is actually pretty straightforward: Brand-name producers regularly take advantage of systems designed to protect consumers to instead protect their bottom lines and crush out competition from their generic competitors.

One common way by which anti-competitive behavior occurs is by preventing access to the materials needed to test generic or biosimilar alternatives.

In other words, pharmaceutical companies refuse to let competitors prove their safety, and then enjoy the monopoly that results when theirs are the only drugs proven to be safe. While the Food and Drug Administration rules in question legally cannot be used to stifle competition, the FDA itself admits that intentional stifling does occur.

Another common monopoly-creating behavior is when brand-name companies refuse to let generic competitors participate in certain shared safety protocols used to prove that drugs are safe. Again, these procedures, originally established to protect patients, are being used to prevent access to affordable options.

The FAST Generics Act, introduced by Reps. Peter Welch, D-Vt. , and David McKinley, R-W.Va, would provide a path to relief for generic or biosimilar producers facing this kind of anti-competitive behavior. Contrary to popular myths and industry objections, these reforms do not undermine safety — unless of course you happen to believe that safety is achieved only via brand-name monopolies.

The legislation is earning broad support both from taxpayer organizations like the one I lead and from patient advocates including AARP and the American College of Physicians, and with good reason. A chance to scale back this common anti-competitive chicanery is good news not only for patients but also for taxpayers. For instance, a 2014 analysis showed that industry abuse costs the healthcare system a whopping $5.4 billion every year — including $1.8 billion borne by the federal government.

There are good reasons why economists have praised these types of reforms for their cost-saving potential, but we should not forget the greater potential here: The opportunity to save lives, not just money, as American consumers can get access to desperately needed medications.

Stifling that access via procedures that were intended to keep people safe is not just economically dubious — it’s morally suspect.

For fiscal conservatives and patient advocates alike, supporting this bill is an obvious choice. Healthcare spending is a large and growing sector of the federal budget, and as uncertainty over the future of the Affordable Care Act and healthcare policy in general remains, it is one easy way to ensure lower costs for patients and taxpayers. Instead of fretting over high drug prices and the convenient villains of the world, Congress should take tangible steps to reform flawed systems and help prevent abuse before it begins.

Supporting the FAST Generics Act would be a terrific first step.

Jonathan Bydlak is the founder and president of the Coalition to Reduce Spending, a nonpartisan advocacy group dedicated to limiting federal spending. Follow him on Twitter @jbydlak  

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