New Bipartisan Bill to Lower Prescription Drug Costs
A new bipartisan bill seeks to drive down prescription drug costs for consumers and the federal government.
The Fair Access for Safe and Timely Generics Act or FAST Generics Act (H.R. 5657) was introduced late last week by Rep. Steve Stivers (R-OH) and Rep. Peter Welch (D-VT). It's goal is to close a loophole in drug safety rules (Risk Evaluation and Mitigation Strategies, or REMS) that allows name-brand drug manufactures to withhold access to some drug samples from generic manufactures, who generally use these samples to help produce safe and cheaper generic versions of drugs.
This bill comes on the heels of a report by Matrix Global Advisors that estimated:
[the] delay [in] generic market entry for these products totals $5.4 billion in lost savings to the U.S. health care system annually. The federal government bears a third of this burden, or $1.8 billion… Among government health care programs, Medicare, which accounts for nearly 26 percent of total U.S. prescription drug spending, experiences lost savings of $1.4 billion annually. The economic cost to Medicaid (both federal and state) totals $400 million.
A version of this policy proposal was also contained in a 2012 bill (S. 2516) by Senator Tom Harkin (D-IA), which CBO estimated at the time would reduce deficits by $753 million over ten years.
The FAST Generics Act may be particularly important in the wake of recent CMS data showing that prescription drug spending growth bounced back from its very low level of 0.4 percent in 2012 to 3.3 percent in 2013, in part due to fewer brand-name drugs going off patent. Growth is expected to further accelerate to 6.8 percent in 2014 and 6.4 percent in 2015 and remain around 6 percent through 2023. This growth, averaging 5.9 percent for 2014-2023, is much faster than the 2.4 percent growth we've seen between 2008 and 2013 (for more on the CMS report, see our full blog post here).
More than just this policy is needed to help slow federal expenditures on health care in the coming years, but we applaud Reps. Stivers and Welch for working together in an effort to lower drug costs for consumers and taxpayers.