Sen. Elizabeth Warren has a novel idea for lowering drug costs: Let the federal government manufacture cheaper generic versions of brand-name prescription treatments.
Legislation introduced on Tuesday by the Massachusetts Democrat and expected 2020 presidential candidate would establish an office at the Department of Health and Human Services that is “charged with lowering prices, increasing competition, and addressing shortages in the market for prescription drugs,” according to a fact sheet on the measure.
The office would be permitted to acquire manufacturing rights for generic drugs under specific conditions, including if only a select few companies are currently making the treatment or there is a shortage. The federal government would then mass-produce the drug — or, perhaps more likely, contract the production out to an outside entity — and set what the bill refers to as a “fair price” for the treatment, taking into account the cost to create and the impact of the price on market competition.
Within a year, the office would need to launch the public manufacturing of insulin, a response to the skyrocketing cost of the treatment, and identify at least 15 other generic drugs to produce. By three years after enactment, the government would need to be manufacturing at least 25 copycat treatments, effectively turning the new federal health office into a large generic drug company.
A Warren spokeswoman said the new office would be funded from “revenues from the sale of the publicly-manufactured drugs.”
“The drugs are also to be priced at a level that covers the office’s operating costs,” she said in an emailed statement.
A spokesperson for the Association for Accessible Medicines, the generic industry’s top lobbyist group, said it “is hard to fathom why anyone would call this system broken or insist that the government commandeer the business of developing, manufacturing, and distributing these medicines.”
“At best, this legislation is an unrealistic distraction from polices that would meaningfully reduce drug prices, such as combatting patent abuse and cultivating a robust biosimilars market,” the spokesperson said in an emailed statement.
The measure, which would also bar any drug lobbyists or certain industry executives from running the new office, is unlikely to move any time soon. But the fact that Democrats are even considering such an extreme measure to curb the high cost of prescription drugs will serve as another significant warning sign to the pharmaceutical industry.
Democrats are expected to make drug pricing a signature part of their legislative and oversight agenda when they retake control of the House of Representatives next year. While Republicans still control the Senate, the industry no longer views the chamber as a reliable buffer against any damaging legislation, particularly after Senate Majority Leader Mitch McConnell, R-Ky., and other GOP leaders relented earlier this year and allowed an unfavorable provision to be added to a measure to fund the federal government.
Other likely top Democratic candidates have also made tackling drug prices a cornerstone of their early campaigning. Sen. Bernie Sanders, an independent from Vermont who caucuses with Democrats, introduced legislation earlier this year that would force pharmaceutical companies to match international benchmark pricing for treatments or lose any lucrative market exclusivity.
The proposal, which is also unlikely to be passed into law anytime soon, mirrors a similar proposal from President Trump, another warning shot to the industry that, despite some Republican objections, Democrats and the White House may be able to come to agreement on drug pricing legislation in a soon-to-be divided Congress.
A Sanders spokesman and spokespersons for other 2020 Democratic hopefuls, including Sens. Kamala Harris of California and Cory Booker of New Jersey, did not respond to an emailed inquiry as to whether they would support Warren’s new legislation.
