Global Health Institute

At noon on Thursday, February 7, 2019, I stood near Congressman Lloyd Doggett (D-Texas) on Capitol Hill as he gave a press conference on a bill that would address the prescription drug affordability crisis in the United States: the Medicare Negotiation and Competitive Licensing Act. This bill would authorize the secretary of health and human services (HHS) to negotiate drug prices covered by Medicare's prescription drug benefit with drug companies. Under the bill, the secretary of HHS could issue a competitive license to a company that is willing and able to produce the generic version of a medication if drug companies refuse to negotiate in good faith. The bill was introduced in Congress later that Thursday.

One might understand why access to medicines remains a problem in low-income countries where some people live on less than $2 per day. But access to medicines is also a problem in the United States: research indicates that one-third of Americans skipped medication or split pills last year because they could not afford them. The United States also pays more for medicines than other high-income countries, even though the U.S. government funds more research and development (R&D) than other developed countries. According to Congressman Lloyd Doggett , between 2010 and 2016, all medicines developed and marketed by pharmaceutical companies received government funding. 

The reasons for this are manifold. First, drug manufacturers in the United States, unlike in other high-income countries, are free to charge the highest price the market can bear on medicines. The same medication in the same packaging costs way more in the United States than in neighboring Canada and Mexico, according to a study by Monali Bhosle and  Rajesh Balkrishnan. Second, while it is true that R&D is expensive, research indicates that only about 20 percent of the amount that pharmaceutical companies claim as R&D costs is spent on R&D, while 70 percent of that amount is spent on marketing and advertising. These costs are shifted to and borne by consumers, resulting in higher cost of medicines here in the United States. Third, three-quarters of the medicines introduced to the market in the last decade are recycled or repurposed existing medicines, patented as though they were new, creating patent thickets. The patent system allows pharmaceutical companies to obtain patent protection over new formulations and other minor changes to existing medicines. They also commercialize them at high cost while investing very little in developing these ‘me too’ medicines.

Although the current bill, if voted into law, would allow the secretary of HHS to issue a competitive license if pharmaceutical companies refuse to negotiate in good faith, other measures should be envisaged by the U.S. government to provide a lasting solution to access to medicines in the United States. Some of these measures include: modifying the patent laws to ensure that patents and/or other forms of monopoly are only available for medicines with added therapeutic value to patients and not ‘me too’ medicines, so as to compel pharmaceutical companies to spend more on R&D; restrict advertisements which cause patients to favor expensive brand medicines over generic substitutes; prohibit price increases on existing medicines; prevent secondary patents and patent thickets; ensure transparency in agreements between pharmaceutical companies to ensure there are no pays for delays on the launch of generics.

Joelle Ofimboudem (LL.M.'19) is a graduate student in the Global Health Law LL.M. program at the Law Center, and a student fellow with the Global Health Initiative.