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senate Bill S. 340

Should Branded Drug Manufacturers’ Anti-Competitive Practices Be Regulated?

Argument in favor

Branded drug companies are actively making it harder for generic drug manufacturers to develop and test new generic products, harming consumers and the federal government by keeping drug prices high and reducing competition. This bill would address the problem by making it easier for generic drug companies to get the information and branded product they need for generic development.

jimK's Opinion
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11/22/2019
Yes, regulating anti-competitive practices is a step forward to eliminate profiteering by drug manufacturers and help reduce drug costs. I believe that branded drugs are protected by patent laws for some period of time, as they should be to enable manufacturers to recoup development costs. After the patents expire, any effort to limit broader distribution by others must be regulated. I strongly believe that ‘real capitalism’ is an important aspect of a growing economy and provides the strong incentive to innovate and provide better, more economical and more useful products and services. I believe that ‘crony-capitalism’, which relies on purchasing political favor or subjugating competition is inherently destructive in that it removes the incentives that ‘pure-capitalism’ provides. That is why regulation like this is needed for the pharmaceutical industry and others. The reason that so many critically needed pharmaceuticals have increased so much in price recently needs to be investigated. I believe it to be another example of crony-capitalism at work. The prices have radically increased across the board so that when greater price controls are enacted, the drug companies can claim such undue hardship and company sacrifice when they will have to reduce prices to what was their former, and still profitable levels.
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Amy's Opinion
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11/22/2019
People should not be dying due to lack of prescription access in the world’s richest country.
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Dave's Opinion
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11/22/2019
Competitive drug market will not get though the senate, just like the 275 bills sitting on Mitch McConnell desk! The senate will block not only these bills that would help America, but will also block impeachment.
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Argument opposed

It’s incredibly expensive and difficult to develop a new branded drug, and the manufacturers that manage to do so rightfully should be able to make money on their branded product for however long it takes a generic company to develop the same formulation. Since this bill doesn’t end the seven-year exclusivity period for branded products, it’s unlikely to actually help generic products come to market faster — the only likely effect is that it’ll create frivolous lawsuits that don’t benefit anyone.

JTJ's Opinion
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11/22/2019
This harms innovation and benefits crooked lawyers.
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Matthew's Opinion
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11/22/2019
Congress does not have the constitutional authority to regulate drugs except where product crosses a state border. All other regulations are unconstitutional.
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Robert 's Opinion
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11/22/2019
How did we know Senator Leahy would be the author of this bill. When a drug company spends the time and money to develop a new drug it deserves the right to get that R&D money back. The easiest way to do this is give the developer of the new drug 3 years instead of 7 year to have exclusive market on the drug. Also when a company like the one that developed the AIDS or Hep C drugs some protections from law suits. It use to be that a diagnosis of AIDS was a death sentence and you were going to die in as short as 4 years. There was a desire to come out with some kind of cure at any cost to stop the AIDS epidemic. Now there are lawyers bringing these drug companies to court for all kinds of things. Lastly when a drug company has a new drug on the market with that first 3 years do not try to get all your R&D money back on the first bottle of pills you sell. I take a psoriasis shot that works extremely well and I have to take that shot every 3 months or 4 times per year. The cost per shot is $26,000 dollars per shot or for this one patient &104,000 per year. There are millions of people that have psoriasis and your drug works so many doctors would prescribe it if it was cheaper.
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What is Senate Bill S. 340?

This bill — the CREATES Act of 2019 — would aim to promote a more competitive drug market by creating a pathway for expediting generic drugs’ launches. It’d crack down on anti-competitive practices by branded drug manufacturers by allowing the purchase of samples, which are needed for generic companies to develop and test generic products side-by-side with branded products. It’d also ensure that generic companies are able to access branded companies’ Risk Evaluation Mitigation Strategy with Elements to Saffer Safe Use (REMS with ETASU) protocols, which are necessary safety protocols for certain types of drugs.

When access to samples is blocked, this bill would permit a biosimilar or generic manufacturer to sue in federal court for injunctive relief to obtain the sample it needs for development. In such cases, limited damages could also be awarded as a deterrent in certain particularly egregious cases.

This bill also gives the FDA more discretion to approve alternative safety protocols, rather than requiring the branded and generic companies to develop shared safety protocols. However, any safety protocol would still have to be approved by the FDA, and must meet the same rigorous safety standards as those already in place.

This bill’s full title is the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act of 2019.

Impact

Consumers; pharmaceutical product users; pharmaceutical industry; branded drug developers; generic drug developers; biosimilar drug developers; and the FDA.

Cost of Senate Bill S. 340

Last Congress, the CBO and the Joint Committee on Taxation (JCT) estimated that implementing this bill would have the following effects over the 2019-2028 time period: reduce direct spending by $3.3 billion, increase revenues by $0.6 billion, reduce unified budget deficits by $3.9 billion, and reduce spending subject to appropriation by a net $87 million. All told, this would result in a $3.9 billion net decrease in the federal deficit.

More Information

In-DepthSen. Patrick Leahy (D-VT) reintroduced this bill from the 114th and 115th Congresses to combat anticompetitive practices used by some brand-name pharmaceutical and biologic companies to block lower-cost generic drugs’ entries in the market:

“I hear from Vermonters every day that rising prescription drug prices are a larger strain each year on their tight budgets.  For too long, a few predatory name brand companies have used anticompetitive strategies to delay entry of lower cost generic drugs.  When these companies use unfair practices to keep drug prices artificially high, patients suffer. Patients, families and government programs shouldn’t have to cope with increased drug costs to help name brand companies’ bottom lines.  Our bipartisan bill continues to gain momentum. It is precisely targeted to stop these abuses, and I’m committed to working on behalf of Vermonters in Congress to see that CREATES and other vital efforts to lower prescription drug prices are signed into law.”

Senate Finance Committee Chuck Grassley (R-IA), an original cosponsor of this bill, adds:

“Generic alternatives to brand-name medications provide consumers with greater choice and more affordable prescription drug options, but anti-competitive practices by some brand-name pharmaceutical companies block access to these lower-cost generics. This behavior hurts consumers and costs taxpayers billions. The bipartisan CREATES Act respects intellectual property rights and encourages greater competition that will inevitably lower the price of prescription medications for the American patient. It also saves $3.9 billion in taxpayer dollars and likely far more for consumers and private insurers. I look forward to getting this important tool passed so we can improve access to lower-cost generic drugs.”

Sen. Amy Klobuchar (D-MN), an original cosponsor of this bill who’s running for the Democratic Party’s presidential nomination in 2020, adds:

“No family should ever be forced to decide between filling a prescription or putting food on the table. This legislation will help end the unfair practices that drive up prescription drug costs and deter pharmaceutical companies from blocking cheaper generic alternatives from entering the marketplace. All Americans should be able to afford the lifesaving medication they need.”

In a joint letter to this bill’s four original Senate cosponsors, the AARP, AFL-CIO, and over 50 other organizations wrote:

“The CREATES Act is a bipartisan, market-based solution to increase competition and thus lower prescription drug prices for patients and consumers. This reform helps speed the introduction of generic and biosimilar medicines by facilitating the purchase of brand name drug samples on market-based terms from pharmaceutical companies who otherwise would use anticompetitive tactics to block access. The CREATES Act will help ensure that brand-name pharmaceutical companies cannot take advantage of regulatory rules to forestall the competition that is essential for access and innovation. With its enactment, the CREATES Act will save patients and taxpayers $3.9 billion over ten years, according to the Congressional Budget Office, by allowing lower-priced generic drugs to enter the market earlier. “

Former Rep. Henry Waxman (D-CA), who cosponsored the legal foundation for the U.S. generics drug market, The Drug Price Competition and Patent Term Restoration Act of 1984 (colloquially referred to as “Hatch-Waxman” for its two cosponsors, Reps. Waxman and Orrin Hatch (R-UT)), is among one of this bill’s most vocal supporters. In February 2018, former Rep. Waxman told The Center for Biosimilars that this bill “tackles one of the numerous problems driving high drug prices” and would save patients and the federal government billions:

“[This bill] tackles one of the numerous problems driving high drug prices—drug manufacturers’ use of anti-competitive tactics to block access to generic drugs. If passed, the CREATES Act would increase the development and availability of generic drugs. Not only is it good policy, but it could save patients more than $5 billion and the federal government more than $3 billion over 10 years, helping to pay for other necessary federal spending, including Community Health Centers. Taking these steps to counter generic delay tactics could help address one of the factors driving high prescription drug prices. Such action may also serve as an important opening for further conversations on how we can regain the balance of incentives for drug innovation and competition that was established under the Hatch-Waxman Act.”

However, some of this bill’s detractors argue that it’ll only lead to new litigation rather than a speedier path to generic and biosimilar development and market entry. Writing in The Hill, Peter J. Pitts, a former FDA Associate Commissioner who now serves as president of the Center for Medicine in the Public Interest, contends that this bill as currently written wouldn’t achieve its aims and is “ripe for abuse” via frivolous lawsuits:

“[A]s written, the CREATES Act is ripe for abuse by entities that have no intent to actually develop a generic or biosimilar version of the covered product. This potential for abuse is exacerbated by the significant monetary damages available under CREATES -- up to the amount of revenue generated on the covered product during the period of violation. Indeed, in certain instances, it may be more profitable to litigate and obtain damages under CREATES than it would be to actually market a generic/biosimilar product… As currently drafted, the CREATES Act could have significant unintended consequences: The damage provisions of the current draft create the potential for windfall damages, which will distort incentives. Specifically, the bill allows for damages up to the entire gross profit of the brand medicine during the period of negotiations. This creates a powerful incentive for generic companies to prolong negotiations (increasing their damage award), which will actually delay generic entry and competition in the marketplace. Indeed, generic developers would be able to earn more from a lawsuit than from actually selling the proposed generic drug. An ‘opportunistic’ company (Can you say ‘Shkreli?') could develop a business model of demanding samples and engaging in litigation for damages without ever submitting an abbreviated application to FDA -- undermining the bill’s stated goal to speed availability of lower-cost drugs for patients.”

However, Pitts suggests that adjusting this bill’s approach, rather than scrapping it entirely, is the best path forward:

“Here’s a savvy path forward: Establish an affirmative defense for license holders where the license holder has made a timely offer to provide sufficient quantities of samples at commercially reasonable, market-based terms. Such an affirmative defense is intended to prevent frivolous litigation -- where samples are offered on commercially reasonable terms, the eligible product developer should not be able to decline the offer and continue litigation. The term ‘commercially reasonable, market-based terms’ is defined to provide further clarity to all parties and avoid unnecessary litigation. Remedies would not be available if the license holder has established an affirmative defense by a “preponderance of the evidence.” This affirmative defense also protects good acting companies from protracted litigation and stops generic sponsors from unnecessarily prolonging negotiations to increase damages. Revision to the definition of “eligible product developer” to clarify that the eligible product developer must be a person that seeks to develop “and submit” an application for a generic or biosimilar product. These changes will help ensure that only legitimate manufacturers are considered eligible product developers for purposes of CREATES; entities that seek only to engage in frivolous litigation and do not seek to submit a generic/biosimilar product application would not be eligible for the remedies under CREATES.”

This bill has 31 bipartisan Senate cosponsors, including 15 Democrats, 15 Republicans, and one Independent. A House version in the current Congress, sponsored by Rep. David Cicilline (D-RI) with the support of 39 bipartisan cosponsors, including 29 Democrats and 10 Republicans, passed the House Energy and Commerce Committee unanimously (50-0).

In the 115th Congress, Sen. Leahy introduced this bill with 30 bipartisan Senate cosponsors’ (15 Republicans, 14 Democrats, and one Independent) support and it passed the Senate Judiciary Committee but didn’t receive a full Senate vote. A House version in the 115th Congress, introduced by Rep. Tom Marino (R-PA) with the support of 25 bipartisan House cosponsors, including 13 Democrats and 12 Republicans, didn’t receive a committee vote. When Sen. Leahy first introduced this bill in the 114th Congress, it had 11 bipartisan Senate cosponsors, including six Republicans and five Democrats, and didn’t receive a committee vote.

This bill is supported by a diverse coalition that includes the AARP, Campaign for Sustainable Rx Pricing, American College of Physicians, FreedomWorks, Campaign for Sustainable Rx Pricing, The Heritage Foundation, and others. As of February 5, 2019, there were over ninety organizations signed on to support this bill, and they’d written 10 coalition letters to express their support.

Despite being introduced three times with broad bipartisan support each time, this bill hasn’t passed in the full House or Senate in either of the previous Congresses it was introduced in. This is due in part to stiff opposition from the pharmaceutical industry. In April 2018, The Hill reported that the Pharmaceutical Research and Manufacturers of America (PhRMA) spent approximately $10 million on lobbying efforts, including efforts to halt this bill’s progress, in the first quarter of 2018. The Hill reported:

“PhRMA spent the first quarter of [2018] battling the CREATES Act, a bipartisan bill intended to increase competition among generic and branded drug manufacturers. Congressional supporters of the bill intended to include it in the spending bill passed in February, but it didn't make it in, a huge win for the drug industry and PhRMA, who argued it would have created ‘frivolous litigation.’”

Michael Brzica, vice president of government affairs at AAM, says he sees “a more significant appetite” among lawmakers for addressing high drug prices in the current Congress. He says that renewed interest in drug pricing among lawmakers may be driven by “a tremendous amount of media attention to the issue, either driving or in response to public concern,” creating a “perfect storm” for legislators from both parties to feel compelled to collaborate on legislation like this to target the cause of high drug prices.


Of NoteWhen a new drug is approved by the FDA, the developing company generally receives a patent and a “period of exclusivity” during which no other company — including generics — can market the drug. These exclusivity periods vary in length, but are generally seven years long.

Generics provide lower-cost alternatives to brand-name drugs, but in order for companies to safely develop these versions, they need samples of the original drugs (also known as the “covered product”) to accurately compare their product to the original version. This is needed to test the generic and branded drug side-by-side to prove bioequivalence to the FDA. Some brand-name drug manufacturers have refused to provide these samples, hindering generic competitors’ abilities to bring lower-cost drugs to market.

Health and Human Services (HHS) Secretary Alex Azar and Food and Drug Administration (FDA) Commissioner Scott Gottlieb, M.D. have raised awareness of brand manufacturers gaming FDA regulatory rules to deny would-be generic competitors the ability to purchase brand-name samples for FDA testing. Secretary Azar noted, “We know that certain brand-name manufacturers are abusing the system by blocking access to samples and hiding behind FDA’s rules when they do it...They’re using laws intended to promote the public health to pad their profits instead.”

In 2018, the FDA released new guidance on this issue and published a database identifying over 160 instances where access to samples was at issue. The FDA’s first “name and shame list,” published in May 2018, listed 164 inquiries covering over 50 prescription drugs where access to samples was at issue. FDA Commissioner Gottlieb called anti-competitive tactics “unfair and exploitative practices, and they’re in direct conflict with our broader public health goals.”

The Federal Trade Commission (FTC) has found that pay-for-delay agreements delay generics getting to market by an average of 17 months, during which time consumers are forced to continue paying brand-name drug prices that can be up to 85 percent higher than generic counterparts’ prices. FTC Acting Director Marcus Meier has raised his own concerns about drug companies’ use of anti-competitive practices and endorsed this bill as a solution:

“The Commission supports the goals of the CREATES Act to protect the competitive process by eliminating incentives and opportunities for branded manufacturers to engage in manipulation of the REMS process to delay generic entry.”


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / ShutterWorx)

AKA

CREATES Act of 2019

Official Title

A bill to promote competition in the market for drugs and biological products by facilitating the timely entry of lower-cost generic and biosimilar versions of those drugs and biological products.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
    IntroducedFebruary 5th, 2019
    Yes, regulating anti-competitive practices is a step forward to eliminate profiteering by drug manufacturers and help reduce drug costs. I believe that branded drugs are protected by patent laws for some period of time, as they should be to enable manufacturers to recoup development costs. After the patents expire, any effort to limit broader distribution by others must be regulated. I strongly believe that ‘real capitalism’ is an important aspect of a growing economy and provides the strong incentive to innovate and provide better, more economical and more useful products and services. I believe that ‘crony-capitalism’, which relies on purchasing political favor or subjugating competition is inherently destructive in that it removes the incentives that ‘pure-capitalism’ provides. That is why regulation like this is needed for the pharmaceutical industry and others. The reason that so many critically needed pharmaceuticals have increased so much in price recently needs to be investigated. I believe it to be another example of crony-capitalism at work. The prices have radically increased across the board so that when greater price controls are enacted, the drug companies can claim such undue hardship and company sacrifice when they will have to reduce prices to what was their former, and still profitable levels.
    Like (68)
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    This harms innovation and benefits crooked lawyers.
    Like (12)
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    People should not be dying due to lack of prescription access in the world’s richest country.
    Like (44)
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    Competitive drug market will not get though the senate, just like the 275 bills sitting on Mitch McConnell desk! The senate will block not only these bills that would help America, but will also block impeachment.
    Like (37)
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    We need better and cheaper drugs. Instead of making people suffer with pain there has to be something to help
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    Yes, but only as a preliminary to National Healthcare program. The permafrost is melting and billions of new pathogens are being released into the environment. Without a national healthcare plan protecting all Americans, we are one deadly virus away from an economic disaster and national pandemic. Corporations cannot function without a working class. And the working class will be decimated by a national pandemic. FYI... in America we pay thousands of dollars in out of pocket costs for diabetics care. In Germany or the UK those same prescriptions and routine care average between 20-30 euros. And no, I am not diabetic, nor is anybody in my immediate family. I simply find it ridiculous that in one of the most affluent and innovative nation’s in the world, we are willing to potentially sacrifice 1 out of every 4 US citizens who happen to have a condition which at can be easily treated. Just so a highly profitable industry can become even more profitable and to the illusion of trickle down economic theory. Even when big Pharma does decide to give back, their whimsical offering is considered a charitable donation, and fully tax deductible. Ethical business practices should neither be optional, nor tax deductible. The current system, which is/has been highly subsidized by tax payers for generations, is not representative of a free market. Simply put... Funding for American education, healthcare, housing, and infrastructure should neither be dependent on the generosity of corporations, nor be placed below the interests of PRIVATE CORPORATE INTERESTS.
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    Impeach Trump! Or make him accountable. You will be voted out. Drug prices and insurance are out of control. The average person in Indiana can barely live. Get it together.
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    This will help create more competition and may lower drug prices. The whole research and development argument against this, falls on deaf ears. Especially when Insulin prices have tripled...a drug that was developed in 1923 by Fredrick Banting. He gave the patent away free, as it saved people’s lives. Poor man is spinning in his grave! We now have people dying, as they can’t afford their insulin...and it’s not because of research and development. It’s pure greed. Pure greed & universal healthcare also explain the differences between drug prices in our country compared to others. So, go ahead with this legislation, but better yet....support Medicare For All! Doing so will allow our government to negotiate drug prices & keep them low!!! Americans deserve better!!!
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    Another well-intentioned bill sent to die on MoscowMitch’s desk.
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    Yes, but they spend enough money in Washington to make representatives ignore the needs of the people they represent.
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    We need to take back the power from the drug manufacturers and provide better methods of getting affordable medicines to consumers. I wish drug companies would do this themselves, but they've shown that they won't, so they must be regulated. If Congress has to force them to set competitive but affordable prices, then so be it.
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    Here’s the truth from someone in the healthcare field. Very few pharmaceutical companies spend money doing serious research on drugs. They take information on research paid for by tax payers at the NIH, do a few studies skewed to get the results they want, then act as if they really did something while laws prevent them from having to disclose what actually changed in the new medicine they’re pushing to replace the old one at ten times the price. Drug companies need a lot more regulation. This doesn’t go nearly far enough.
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    It is time for the US Federal government to stop coddling drug companies. The Drug industry has played a fear game with American consumers and voters--and out elected representatives--for far too long. Allow reasonable patent protections
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    Competition is the heart of a successful capitalist system.
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    Big Pharma needs a major overhaul- why is it that the United States and New Zealand are the ONLY 2 countries that allow televised advertising - IT IS DISGUSTING- on constantly peddling drugs for EVERYTHING- and you wonder why the US has a drug problem
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    The cost to produce a drug argument has been debunked TIME AND AGAIN. A vast majority of R&D is conducted with taxpayer dollars. Stop gaslighting people who you owe for helping produce these drugs in the first place. The main reason the brand versions exist aren’t even because they’re new... sneaky tactics help regain/retain exclusivity long after the time that patent laws intended for rewarding scientific development successes. Stop letting greed matter more than human lives.
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    Drugs should be available to all people at the lost cost possible.
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    Yes, this is but one step in the access to affordable drugs and to better health care in general.
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    This bill will help lower the cost of prescription drugs and healthcare overall. By doing this in a bipartisan fashion shows Washington can work for the people.
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    Yes. This will help lower the cost of medications and make them more accessible to people!
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