Money & The Economy

Elizabeth Warren Introduces Legislation To Create A Government-Run Pharmaceutical Manufacturer

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Democratic Sen. Elizabeth Warren introduced legislation on Tuesday that would establish a government-run pharmaceutical manufacturer to effectively compete with the private market.

The Affordable Drug Manufacturing Act seeks to address the increasing prices of prescription drugs by injecting competition into the marketplace, consequently lowering the cost of mass-produced generic drugs. Warren contended that by creating a government agency, called the Office of Drug Manufacturing, industry consolidation will lessen.

“In market after market, competition is dying as a handful of giant companies spend millions to rig the rules, insulate themselves from accountability, and line their pockets at the expense of American families,” Warren said in a press release. “The solution here is not to replace markets, but to fix them.”

According to a summary of the bill, the Office of Drug Manufacturing would be tasked with producing drugs “in cases where the market has failed,” if:

  1. No company manufactures the drug;
  2. One or two companies manufacture the drug and the price spikes above medical inflation (or there is a shortage); or
  3. One or two companies manufacture the a drug considered to be an “essential medicine” by the World Health Organization (WHO) and the price is “a barrier to patient access.”

It is not clear what the cost to the taxpayer would be to create the Office of Drug Manufacturing, but Warren said that “it would bring down costs for millions.” She further said that the program is not a takeover of the prescription drug market, but rather the government’s attempt to mend the market.

Democratic Rep. Jan Schakowsky of Illinois simultaneously introduced corresponding legislation into the House on Tuesday.

Just prior to the debut of the Affordable Drug Manufacturing Act, Warren sent lettersto the upcoming GOP leadership on each of the three Senate committees that oversee issues relating to pharmaceutical drug prices: Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander, Finance Committee Chairman-designate Chuck Grassley, and Judiciary Committee Chairman-designate Lindsey Graham.

The letter called for an investigation into generic drug producers for alleged price-fixing, as first reported by The Washington Post.

“The investigation should include the impact of such behavior on the Medicare and Medicaid programs, the Affordable Care Act, and the private health insurance market, as well as potential shortcomings in antitrust law and antitrust enforcement, and in laws governing generic and biosimilar drug competition,” Warren wrote. “All of these issues are within your Committees jurisdiction, and Congress has a responsibility to investigate these concerns and legislate if necessary.”

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