The cost of health care is an unceasing concern for Americans, as prices have soared over the past 30 years. Total health expenditures have risen from $74.6 billion in 1970 to $1.4 trillion in 2000. Even more troubling, health expenditures exploded to $3.3 trillion in 2016, according to the Centers for Medicare and Medicaid Services.
Rising costs have been compounded by government “fixes,” such as the Affordable Care Act, which sought to lower costs. Obamacare increased premiums and still requires massive taxpayer subsidies. The Trump administration, seeking to lower health care’s massive costs, has strategically targeted areas of the health care market that can be improved. One of those areas is pharmaceuticals.
{mosads}In recent years, the prices of certain drugs have been artificially inflated to unaffordable levels, jeopardizing public health. For example, former Turing Pharmaceuticals CEO Martin Shkreli charged $750 per pill for Daraprim, a treatment for infectious diseases. Consumer outrage was further exacerbated when pharmaceutical giant Mylan was accused of inflating the price of its signature allergy treatment, EpiPen, a lifesaving epinephrine injection product that many schoolchildren with fatal allergies depend on.
When Mylan raised the price of EpiPens by roughly 400 percent from 2010 to 2016, consumers were not complacent. Mylan ultimately agreed to pay the federal government $465 million amid allegations they violated the False Claims Act by knowingly misclassifying EpiPen as a generic drug in an attempt to avoid paying Medicaid rebates.
In 2015, an estimated 3.6 million Americans were prescribed an EpiPen, according to a report from The Wall Street Journal. Because of the dramatic price increase, consumers and health care groups requested help from the Trump administration.
Fortunately, in late August, U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb announced the approval of the first generic version of EpiPen. This affirmed the administration’s philosophy that competition in health care keeps drug prices low and increases access.
According to the Association for Accessible Medicines’ (AAM) 2018 Generic Drug Access and Savings Report, generic drugs saved for consumers and governments nearly $265 billion nationally in 2017. When broken down into savings for Medicare and Medicaid, the savings translated to an average of $1,952 for every Medicare enrollee and $568 for every Medicaid enrollee.
Furthermore, consumers are more than willing to purchase generic drugs. According to the AAM report, nine out of every 10 prescriptions in the United States were filled with generic versions in 2017.
EpiPen was classified as “off-patent” because its patent had expired. However, despite its “off-patent” status, Mylan maintained its near-monopoly on the epinephrine injector market because competitors were not able to reproduce the effective injection mechanism of the EpiPen. FDA regulations prohibited any generic form of the product that didn’t offer an exact replica of Mylan’s injector.
While waiting for Congress to possibly amend the Federal Food, Drug, and Cosmetic Act’s regulatory oversight of “complex” drugs, Gottlieb used the FDA’s authority to approve complex generics.
“We remain committed to doing our part to provide scientific and regulatory clarity for sponsors seeking to develop complex generics,” Gottlieb stated. “As well as prioritize the approval of medicines with little or no generic competition as part of our overarching effort to remove barriers to generic development and market entry of critically important medicines.”
Thanks to the efforts of the Trump administration, hundreds of thousands of schoolchildren and their parents can rest a little easier this fall.
Sarah Lee is a health care research fellow at The Heartland Institute, a nonprofit group dedicated to limited government.