LeAndra Ilugbusi

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Protecting Consumer Access to Generic Drugs

I. Introduction
The debate on generic drugs versus name-brand drugs dates back to 1928. Historically the focus
was on the efficacy of generic drugs in comparison to their name brand counterparts. Currently
up for debate, is the issue of consumer access to generic drugs. Access to generic drugs is
increasing, and in turn driving up consumer out-pocket-costs. This issue is widespread and has
social, economic, legal, and political implications. Many people rely on the affordability of
generic drugs and would otherwise be unable to obtain treatment. Rising costs of drugs such as
insulin and epinephrine in the form of epi-pens have brought this issue to the forefront for many
Americans (DiabetesMine, 2020). The news has been littered with stories of individuals
rationing insulin to make ends meet. Sadly, many stories have concluded in the deaths of these
individuals (DiabetesMine, 2020). This is due in part to the difficulty of maneuvering the U.S.
patent system and acquiring FDA approval (DiabetesMine, 2020). A large hurdle in the U.S.
patent system are issues surrounding generic drug entry in the market. There has been an effort
on the part of Brand-name drug companies to reduce generic drug competition.

H.R. 153: Protecting Consumer Access to Generic Drugs Act of 2021, is an attempt to help
reduce the burden of drug cost on the consumer, by giving them access to generic drugs in a
timely manner (GovTrack.us, 2021). Typically, when a new drug is approved it gets a period of
exclusivity. This exclusivity period in most cases is five years (Food and Drug Administration
[FDA], n.d.). During this period, no generic drugs are allowed to be approved. This allows drug
innovation to continue unburdened by generic drug competition (FDA, n.d.). Extra years beyond
the standard five can be added for a variety of reasons such as a drug requiring clinical
investigation for a new active ingredient, or for a drug that is required by a group with a low
population (FDA, n.d.). Brand name drug companies are now offering compensation to generic
drug manufacturers to delay the entry of their drugs into the market. This is known as reverse
payment patent settlement or pay for delay deals. This delay allows innovator drug companies to
create monopolies. H.R.153 is an attempt at making that practice illegal to help promote
consumer access. The most obvious stake holders are the consumers. Other stakeholder groups
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impacted by this issue include Medicaid/Medicare beneficiaries, brand name drug companies,
generic drug companies, insurance companies, and legislators.

II. History and Background

Generic Drugs differ from brand-name drugs only in name. For generic drugs to meet approval
they must be bioequivalent to their brand name counterparts. To be bioequivalent means that the
generic drug must work in the body in the same way the brand-name drug works in the body
(West, n.d.). In addition to being bioequivalent, the generic drugs must include the same active
ingredient, be the same strength, the same dosage, and have the same route of administration
(West, n.d.). These strict standards required for generic drugs to enter the market have not
always been the case. Generic drug makers were for the most part operating unregulated for most
of the early 20th century (Al-Jazairi et al., 2008). Laws like the 1938 Act required drug
manufactures to provided evidence to the Food and Drug Administration about the safety of their
drug enabled generic drug companies to piggyback on the safety evidence provided by the brand-
name drug company (Al-Jazairi et al., 2008). The increased use of generic drugs in the 1950s
caused the brand-name drug companies to push for generic drugs to be restricted. This was
accomplished via the Kefauve-Harris Drug Amendments Act of 1962. As a result, drug prices
started to rise in the 1970s and the government was forced to make Provision that allow easier
access to generic drugs again (Al-Jazairi et al., 2008). Like in the 1970s the United States is
currently reaching a point where healthcare spending is growing to unsustainable levels.

Healthcare spending has been steadily rising for the past several decades. It has increased in the
United States 4.6 percent during 2019, totaling $3.9 trillion (Centers for Medicare and Medicaid
Services [CMS], 2020). That comes out to $11,582 per person in 2019. (CMS, 2020). 10 percent
of that $3.9 trillion was spent on prescription drugs (Centers for Medicare and Medicaid
Services, n.d.). Of the prescription drugs used in 2016, 84 percent of prescriptions ordered were
generic drugs that cost less than their name-brand counterparts (Kesselheim, 2016). Generic
drugs range from 20 to 70 percent less than name-brand drugs (Federal Trade Commission, n.d.).
With rising healthcare spending, access to generic drugs is vital for low-income individuals
especially those that are uninsured. In a study of medication under usage in adults with diabetes,
researchers found that the groups with the highest rates of underuse are African Americans and
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Latinos (Tseng et al., 2008). This underuse was attributed to factors such as lower incomes and
high self-pay fees for prescription drugs (Tseng et al., 2008). Low-income individuals that are
insured, primarily utilize health insurance programs such as Medicaid and Medicare. In 2019, 84
percent of the 4,176,772 Medicare plans were generic drug-only coverage plans (Dusetzina et al.,
2020). 

Many people who are enrolled in Medicare prescription drug plans have associated out-of-pocket
costs (AJMC, 2020). The population that relies on these prescription drug plans are the elderly. It
is reported that 80 percent of older adults have at least one chronic disease and 50 percent have
two or more (AJMC, 2020). Also, the average elderly person requires a minimum of three to five
medications per day (Morris, 2005). The financial burden from this has caused some elderly
people to forgo taking the necessary medications needed to treat chronic conditions (Morris,
2005). The elderly population in 2018 was 52 million and it is predicted to double by the year
2060 (Mather et al., 2019). Due to the elderly population living longer, there has been an
increase in healthcare spending that will only continue to grow.

There has been legislation in the past that has aimed to solve the problem of decreasing
consumer access to generic drugs. Two of those bills included the Hatch Waxman Act and the
2019 CREATES Act. The Hatch Waxman act encourages the manufacturing of generic drugs
and established generic drug regulation (The Pharmaceutical Research and Manufacturers of
America [PhRMA], n.d.). It was the first to regulate generic drugs. This Act was established at a
time when congress realized that patent and regulatory laws were being manipulated by
innovator drug companies to reduce competition (PhRMA, n.d.). The 2019 CREATES Act
intended to reduce drug prices by promoting generic drug access and competition (GovTrack.us.,
2019). While the main goal of H.R. 153 and the CREATES ACT are the same, they aimed to
achieve this shared goal through different means. Instead of stopping pay for delay deals, the
CREATES Act focused on the generic drug company’s difficulties with obtaining samples to test
for bioequivalence (GovTrack.us., 2019). As stated earlier a generic drug must be bioequivalent
to gain FDA approval. By drawing out the process for obtaining samples, the generic drug’s
entrance into the market will be delayed.
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III. Outcome, Stakeholders, and Competing Proposals

The American Association of Retired Persons or AARP is a non-partisan and nonprofit interest
group that advocates for the wellbeing of individuals 50 and older (AARP, n.d.). As of 2008,
they serve over 38 million seniors in the united states (AARP, n.d.). The AARP is in favor of
promoting consumer access to a wider array of generic drugs (AARP, 2019). The AARP Public
Policy Institutes reported that in 2015 the price of 750 prescription drugs frequently used by
older adults increased by 6.4 percent. This rise has burdened older adults and has led to increased
advocacy efforts by the AARP. The organization launched its campaign in 2019 called “Stop Rx
Greed” which focuses on lowering prescription drug prices through advocating at both the state
and federal level for legislative, executive, and regulatory actions to be taken (AARP, n.d.). They
advocate for the dismissal of practices that are designed to stop generic drug competition such as
closing the loopholes that keep low-cost generic drugs off the market (AARP, n.d.). Historically
the AARP has supported legislation at the federal level that has aimed to promote greater access
to generic drugs like in bill H.R. 153. They supported the CREATES Act of 2019 that sought to
stop brand name drug companies from delaying the entry of generic drugs into the market
(AARP, 2019).

The Pharmaceutical Research and Manufacturers of America [PhRMA} is a trade association

that represents the top biopharmaceutical research companies (The Pharmaceutical Research and
Manufacturers of America [PhRMA], n.d.). Their mission includes advocacy for policies that
support research for new medicines (PhRMA, n.d.). Historically the PhRMA has opposed
legislation that seeks to, in their opinion, stifle innovation. An example is the CREATES Act of
2019. The CREATES ACT granted drug companies the ability to sue innovator drug companies
to obtain product samples so that biosimilar generic products can be created (AJMC, 2018).
Loopholes the CREATES Act sought to close allowed brand name drug companies to make large
profits undisturbed by competition (AJMC, 2018. The PhRMA asserts that the problem is not in
the pricing of prescriptions on their end, but instead the middlemen in a broken system that are
acquiring the majority of the money (PhRMA, n.d.). They believe that the best solution to lower
consumer costs would be to eliminate the middleman. Due to the bill's current position in the
legislative process, there has been no outright opposition yet. Based on the PhRMA’s history of
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opposition to bills that do not favor the innovator drug company it is fair to assume that they will
oppose H.R. 153 if it is slated for approval.

The Association for Accessible Medicines [AAM] is a trade association that represents generic
drug manufacturers and distributors. Nine out of ten prescriptions used in the U.S. are
manufactured by an AAM organization (Association for Accessible Medicines [AAM], n.d.).
THE AAM does not support pay for delay deals and believes that these agreements pose a threat
to consumer access (AMM, n.d.). Currently, the Association for Accessible Medicines does not
have a position on H.R. 153, but they have supported past legislation that is similar. They
supported the previously mention CREATES act. They believe that the passage of legislation
that promotes generic drug access is essential to the health of consumers. Solutions proposed by
the AAM include strengthening the law and enabling the federal trade commission to review
patent settlements (AAM, n.d.).

The Federal Trade Commission or FTC was established in 1914 as a means to regulate
competition in the market (Federal Trade Commission [FTC], n.d.). Their mission is “Protecting
consumers and competition by preventing anticompetitive, deceptive, and unfair business
practices through law enforcement, advocacy, and education without unduly burdening
legitimate business activity” (FTC, n.d.). The FTC supports legislation that stops pay for delay
deals. Also, they have actively been working to stop these deals from happening by filing
lawsuits against companies that engage in this practice. (FTC, n.d.). The FTC claims that these
deals have cost consumers $3.5 billion every year (FTC, n.d.).

The American Health Insurance plans or AHIP is a national trade association for health
insurance companies. Their vision is to advocate for policies that promote access to affordable
healthcare to Americans through market competition (American Health Insurance Plans [AHIP],
n.d.). They have an advocacy coalition made up of a combination of grassroots and educational
initiatives (AHIP, n.d.). They supported past legislation aimed at generic drug access like the
CREATES Act (AHIP, 2019). Additionally, they supported a previous version H.R. 153, H.R.
1499 Protecting Consumer Access to Generic Drugs Act (AHIP, 2019). Also, they are a part of a
campaign called Campaign for Sustainable Rx Pricing or CSRxP, which is a nonpartisan
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coalition of organizations that endeavors to find the solution to drug pricing issues (AHIP, n.d.).
One of the organizations partnered with them in CSRxP is the AARP.

Top democratic politicians have historically been in support of bills that improve consumer
access to generic drugs through promoting competition. During the 2020 election cycle, many
candidates affirmed their goals to lower prescription drug prices. Senator Amy Klobuchar
sponsored the Preserve Access to Affordable Generics and Biosimilar Acts which, much like
H.R. 153, would stop pay for delay agreements (Health Affairs, 2019). Also, H.R. 153 was
sponsored by a Democratic representative from Illinois, Representative Bobby L. Rush. The
majority of Republican politicians tend to agree with trade unions like PhRMA when it comes to
the best course of action. They believe that increasing competition will lead to the decrease of
new drugs being created (Hellmann, 2020). There has been some bipartisan cooperation on past
legislation that aimed to lower drug prices for consumers. The previously mentioned 2019
CREATES Act had bipartisan support (GovTrack.us., 2019)

There is potentially one major unintended consequence that could occur if H.R. 153 is passed.
The PhRMA believes that increasing the competition in the pharmaceutical market will stop drug
innovation and ultimately negatively impact consumers (PhRMA, n.d.). It takes many resources
to create new drugs. Money, time, and manpower. If drug manufacturers are unable to make
enough money to cover their research costs due to generic drug competition, it is unlikely that
they will research in the future. This would have serious implications for society as a whole
Another aspect to consider is the economic impact of not addressing the problem of consumer
access to drugs. As previously stated, healthcare spending is increasing every year. This increase
signifies an increase in the burden that consumers bear when it comes to taking care of their
health.

Two bills that could affect the issue of promoting competition in the market by stopping pay for
delay deals, are S.562 and S.225. S.225 is concerned with reforming antitrust laws to promote
competition in the economy (GovTrack.us., 2021). This bill would enable the federal trade
commission or FTC to enforce antitrust laws. This would include the Pay for delay deals that
hinder consumer access to generic drugs and that create monopolies (GovTrack.us., 2021). This
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bill could prove to be effective, but it might be too broad an approach to make the needed
change. A narrower focus on the issue of pay-for-delay deals might be needed. S. 562: Ensuring
Timely Access to Generics Act of 2021 is another bill that concerns consumer access to generic
drugs. The bill intends to amend the federal food, drug, and cosmetic act when it comes to citizen
petitions. Citizen petitions grant individuals and the community the ability to make requests for
changes to health policy. Drug companies frequently use citizen petitions to delay the entry of
generic drugs into the market. The passage of this act would remove another barrier for generic
drugs to enter the market but at the same time, it could make it difficult for individuals or
companies with legitimate citizen petitions.

IV. Recommendation
U.S representatives should vote for H.R.153 to pass. The bill could be a helpful solution in
increasing consumer access to generic drugs while also lowering national healthcare spending. It
is projected that in the years between 2019 and 2028, healthcare spending will increase 5.4
percent each year (Keehan et al., 2020). Medicare is predicted to have the highest spending due
to the baby boomer population shifting from private insurance to Medicare (Keehan et al., 2020).
This population’s longer life expectancy is driving up the usage of prescription drug by Medicare
beneficiaries. Between 2024 and 2028 prescription drug spending is supposed to increase even
more than the previous 3 years by 5.9 percent (Keehan et al, 2020). Increased healthcare
spending is a major threat to the economic health of our nation. By 2028 healthcare spending is
expected to be 19.7 percent of the GPD or Gross domestic product (Keehan et al, 2020). There is
also potential for healthcare spending to increase more than what is predicted because of the
impact that covid 19 has had and will continue to have on public health and healthcare spending
for the foreseeable future (Keehan et al., 2020).

H.R153 seeks to increase consumer access to generic drugs through outlawing pay-for-delay
deals. This solution is a good start but could be strengthened with the addition of other options.
Options could include preventing evergreening in drug exclusivity and lessening the barriers to
FDA approval for generic drugs. Evergreening means employing strategies that prolong the
lifetime of a patent. Once the exclusivity period is over for an Innovator drug, the manufacturer
will add a new active ingredient to the product that will initiate a new exclusivity period
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(Engelberg, 2016). This practice essentially doubles the exclusivity period and in turn delays
entry of the generic drug into the market. FDA approval of generic drugs requires that they be
bioequivalent to the brand name drug. To test this, generic drug manufacturers must receive
samples from the brand drug manufacturer (Engelberg, 2016). Brand name drug companies use
system loopholes to avoid giving the sample (Engelberg, 2016).

Combining these two strategies with H.R. 153 will be instrumental in increasing generic drug
access. If implemented, the success of this intervention could be measured by comparing data
trends with the predicted trends. The benchmarks could be measured every year against the
predictions that healthcare spending is supposed to increase by 5.4 percent each year from 2019-
2028. At the end of each year, if the healthcare spending increase is below 5.4 percent, the
interventions discussed should be continued. Resource should be devoted to solving the issue of
consumer access to generic drugs because prescription drug costs are a major contributor to
increased healthcare spending. Not addressing this problem puts the health of the country and the
health of the economy at risk.  

 
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