Proposed Legislation Would Curb High Generic Drug Costs

Representatives proposed legislation that would require generic drug manufacturers to pay a rebate to Medicaid if product prices rise at a rate greater than inflation.

The Medicaid Generic Drug Price Fairness Act would extend rebate provisions that currently apply to brand name drug manufacturers exclusively. Senator Bernie Sanders (I-VT) and Representative Elijah Cummings (D-MD) introduced the legislation on November 20, 2014—the same day as the first Senate subcommittee hearing on rising generic drug prices.

The hearing, requested in January by the National Community Pharmacists’ Association, included representatives from pharmacy schools, practicing pharmacists, physicians, and a single patient.

Executives from Marathon Pharmaceuticals, Lannett Company, and Teva Pharmaceutical Industries also attended, but refrained from testifying during it.

The 3 company executives were the only generic drug manufacturers who attended the November 20, 2014, hearing. Sen. Sanders and Rep. Cummings requested pricing information from 11 additional generic drug manufacturers in October, although the representatives from Marathon, Lannett Company, and Teva Pharmaceutical Industries were the only manufacturers in attendance.

According to the Generic Pharmaceuticals Association, the hearing mischaracterizes generic drug prices by focusing on only a few select drugs. Ralph G. Neas, the association’s president, notes the drugs scrutinized for their increases are 10 drugs from a field of 12,000 generic medications.

“Unfortunately, the newly proposed legislation makes it clear that the hearing was not intended to be a meaningful examination of ways to ensure savings,” Neas said in a statement. “The proposed bill reflects a basic misunderstanding of the pharmaceutical marketplace, and attempts to impose brand pharmaceutical provisions on generic drugs. This effort is misguided, and will threaten patient access to affordable medicines.”