op-ed

FREE MARKETS, LOWER PRICES: Congress Should Pass The CREATES Act

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Robert S. Graham Former chairman of the Arizona Republican Party

Whenever a politician starts going on about high drug prices, you can be reasonably sure that talk of price controls will follow. Hillary Clinton and Donald Trump disagreed about many things in the recent presidential campaign, but both signaled that they were open to government-mandated price controls through new Medicare rules.

Fortunately in President Trump’s case “open to” didn’t mean “sold on,” because price controls are a terrible idea. Practically every time, place, and way government price controls have been tried, the well-intended efforts have led to lines, shortages, rationing, black markets, impoverishment, sometimes even death.

When someone touts price controls as a solution, remember this terrible, tragic track record. Any proposed reform that relies on price controls should simply be written off as a non-starter. It’s price control reform that will leave everyone worse off. Doing nothing would be better than doing something bad.

But is there a way to address high American drug prices that doesn’t rely on government price controls, or are we just stuck?

Good news: We are not stuck. There is an effective way to drive up the production and quality of goods over time while driving down prices…it’s market competition.

And there is a way to inject a good dose of market competition into the drug industry: a bill currently drafted and sitting in both houses of Congress called the CREATES Act (in the House of Representatives, it’s H.R.2212; or S.974 in the Senate).

The CREATES (Creating and Restoring Equal Access To Equivalent Samples Act) Act would, as you might gather from the name, create a way to lower drug prices. The CREATES ACT infuses competition by making it easier for medicines to be sold in less expensive, generic versions after a drug’s patent expires. Further, it helps to assure that big pharmaceutical companies comply with laws supporting a free market.

A wide and diverse group of people and organizations back this bill because it is a no-brainer. Patents essentially grant temporary monopolies, typically about 20 years, to the makers of new drugs. It makes sense to grant patents to inventors that spend billions of dollars creating and testing new drugs. The patents help to assure the investors, who have put their capital at risk, may share in the financial return of creating today and tomorrow’s lifesaving drugs.

But here is the problem. Right now, many drug companies exploit the complexity of the post-patent rules to make it very time-consuming and costly for competitors to enter the field. In some cases, Big Pharma is withholding supplies of their drugs from companies that need the drug supply to make sure they’re safely copying the tested specifications correctly – thus preventing competition from more affordable generic drugs and propping up prices by stifling free market competition. This unchecked maneuver drives or keeps the price of life saving medication artificially high.

In one infamous case, the drug company Turing both refused to sell its off-patent drug Daraprim to would-be competitors, which action is prohibited by law, and hiked its price by an astounding 5000 percent. The price of Daraprim that should have been available in generic and a manageable price, shot up from $14 a pill to $750. Could you afford this type of change?

You almost wouldn’t believe all the strange bedfellows who support this bill. The list includes liberal Democrats such as Dianne Feinstein and Richard Durbin, moderate Republicans such as Susan Collins, very conservative Republicans including Rand Paul and Ted Cruz, and organizations that run the gamut from FreedomWorks to the AARP. The above leaders recognize the pressure put on the hard working tax payers to make ends meet month after month. Competition improves quality and service.

Big Pharma’s efforts to distort current law, artificially hike prices and put undue pressure on American families needs to end. The CREATES Act is the right way to bring value and protect the people. The CREATES Act would reinforce the right of competitive drug companies to purchase necessary samples from Big Pharma and give the courts the authority to force Big Pharma, with expired patents, to sell new competition the necessary samples. The CREATES Act with predictable compliance leads to better living through market competition. The CREATES Act will help save lives both financially and brings affordable access to life saving medication.

Robert S. Graham served as chairman of the Arizona Republican Party from 2013 to 2017.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.