CBO: Cornyn Drug Pricing Bill Saves $500M

In: All News   Posted 07/22/2019

WASHINGTON –U.S. Senator John Cornyn (R-TX) released the following statement after the Congressional Budget Office (CBO) published its cost estimate for the Affordable Prescriptions for Patients Act, which it determined would lower federal spending on prescription drugs and health insurance subsidies by $507 million over ten years: 

“This legislation would encourage competition within the pharmaceutical industry, lowering Texans’ costs at the pharmacy,” said Sen. Cornyn. “Now that we know it would also save taxpayers half a billion dollars, there’s no reason the Senate shouldn’t support this bill to protect patients and reel in skyrocketing costs.”

The legislation recently passed the Judiciary Committee unanimously. The CBO estimates savings of $507 million for Medicare and Medicaid over a ten year period as a result of generic and biosimilar competition coming to the market sooner. CBO found that generic or biosimilar drugs entering the market earlier, on average, would result in lower federal spending for prescription drugs and subsidies for health insurance.

Background on the Affordable Prescriptions for Patients Act:

To help prevent drug companies from deliberately abusing the patent system, the Affordable Prescriptions for Patients Act aims to curb the pharmaceutical drug industry’s anti-competitive behaviors of ‘product hopping’ and ‘patent thicketing’ that restricts patient access to generic and biosimilar drugs.

Product Hopping

Product Hopping takes advantage of our current FDA approval system to get around pharmacy-level generic substitution laws. When making a new version of a drug, like a minor reformulation, that new drug can’t be substituted for the generic, because the generic is tied to the old version. Sometimes the manufacturer will go so far as to remove the old version from the market completely. This leaves the generic with nowhere to go, as patients are forcibly switched to the new version.

  • The Affordable Prescriptions for Patients Act:
  • Codifies definitions of product hopping within the FTC Act, empowering the FTC to challenge this behavior as anti-competitive.
  • Enables the FTC to use its equitable remedy authority to keep companies from capitalizing on their abuse of the system.

Patent Thickets

Pharmaceutical drugs, especially the category known as biologics, are complex products that often have several patents to their name. Some manufacturers take advantage of the complex interplay of the different kinds of patents that belong to one drug and deploy these patents strategically in order to prevent competition. Would-be competitors, known as generic or biosimilar manufacturers, have to fight through these patents (the so-called ‘thicket’) before they can get their drug approved, or they risk losing their chance to sell their drug.

  • The Affordable Prescriptions for Patients Act:
  • Disarms the patent thicket by implementing guardrails that provide greater certainty to generic manufacturers and transparency for brand drugmakers.
  • Creates greater efficiency in the process by allowing resolution of patent differences between brand and generic drugmakers prior to litigation.
  • Allows courts to stop drugmakers from using patent thickets to unjustly limit competitors from coming to market, ensuring more choice and affordable prices.  
  • Limits the number of late-filed, unutilized, and non-method of use patents branded drugmakers can use to lengthen litigation and keep more affordable alternatives off the market.