Drug pricing bill introduced

November 1, 1999

Pharmaceutical Representative

Rep. Sherrod Brown (D-OH) introduced a bill that would use market competition to reduce the cost of prescription drugs.

Rep. Sherrod Brown (D-OH) introduced a bill that would use market competition to reduce the cost of prescription drugs.

The Affordable Prescription Drug Act would allow the federal government to require drug manufacturers to license their patent to generic drug companies if a high-priced prescription drug provides a substantial public health benefit. Competitors would be permitted to market generic versions of the drug before its patent expiration as long as the competitor paid the patent holder royalties for the privilege.

If the bill becomes law, individuals or citizen groups could request the Secretary of Health and Human Services to mandate compulsory licensing of a patent-protected drug.

Directly challenging the pharmaceutical industry's stance that prescription drug prices are expensive due to the high cost of research and development, the legislation would also require drug manufacturers to publicly disclose audited financial information relevant to the pricing of their drugs. If a drug manufacturer failed to comply with this provision, it would be ineligible to participate in federal health care programs, including Medicare, Medicaid, and veteran's health care.

"The drug companies must understand how important their products are for the American people, especially the elderly," Brown said. According to Brown, his bill is necessary because drug companies charge Americans higher prices than they charge citizens of other industrialized nations. Brown also noted drug company profits outpace those of every other industry by at least 5% and that drug companies spent $8.3 billion on marketing and advertising last year.

According to the Pharmaceutical Research and Manufacturers of America, however, international pricing is often determined by a host of factors, including the country's health care system and the strength of a country's economy. PhRMA also said that, despite the pharmaceutical industry's high profits, the industry as a whole spent more than 20% of those profits on research and development so far in 1999. PR

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