Anticompetitive behavior by brand name companies and generic drug companies is one reason why prescription drug prices are so high. These abuses have become increasingly prevalent over the past few years; fortunately members of Congress recognize this problem and are working on possible solutions. One worthy bill is the Expanding Access to Low-Cost Generics Act, introduced by Senator Tina Smith (D-MN). It has not yet been formally introduced, but it will be after the August recess. This proposal would bring low-cost generic drugs to market, increase generic competition on a timely basis, and help patients access their medications.
The problem: currently a practice named "parking" leads to higher drug costs. Parking is when a brand name drug company agrees not to file lawsuits against the first generic drug company that submits an application to create a generic version of a drug, as long as the generic company agrees to delay bringing that drug to market. This parking by the generic company means that both companies strike an anti-competitive bargain, and consumers do not have access to more affordable generic drugs, leading to higher prices.
This is an unintended flaw in the Hatch-Waxman Act, which regulates the making of generic drugs in the United States. The act currently gives 180 days of market exclusivity to first filing generic companies. And many patent settlements between brand companies and generic companies result from these harmful deals, which drive up drug costs.
The Expanding Access to Low-Cost Generics Act would fix this flaw. It would give generic companies that win their litigation against a brand company’s patent the ability to share market exclusivity with the first filer, so a generic company can't park its product and delay market entry of other generic drugs. The bill will also change the incentive structure for generic companies seeking timely approval of their products, encouraging generic companies to bring their drugs to market instead of parking them. And it will also stop the bottleneck of generic drugs waiting to come to market.
Senator Smith's bill is most welcome, and we hope that it will be added to the bipartisan drug pricing packages that Congress is currently considering. Right now Senators and Representatives are working on multiple packages to reduce drug costs. Both the Senate Finance Committee and the Senate Health, Education, Labor, and Pensions Committee have reported out bills. Speaker Pelosi will release her proposal to bring down costs in September, and the Trump administration just announced it will also roll out a major initiative in September.
For too long brand and generic companies have exploited loopholes in our laws to keep prices high and delay and stop competition. The Expanding Access to Low Cost Generics Act will close one of those loopholes and should be part of any reform that Congress passes.