It's Time For A Public Option For Drugs

By Joel Dodge (@joeldodge07)

Senator Elizabeth Warren has an exciting new plan to create a public option for generic drugs. Her plan continues the trend of progressives getting serious about using the power of government to push back against the abuses of the pharmaceutical industry.

Warren’s Affordable Drug Manufacturing Act, co-sponsored with Rep. Jan Schakowsky, would allow the government to step in to manufacture and sell any generic drug where the private market is yielding too little competition or exorbitant prices. Warren pitches her plan as a way to correct anti-competitive behavior within Big Pharma, writing in the Washington Post: “[S]o long as these companies continue to game the system, we should insist on competitive markets that actually work for consumers.”

As we’ve written, the pharmaceutical industry enjoys virtually unlimited power to exploit people with illnesses by naming any price it wants for its products. That’s particularly true for patented brand name drugs, where pharma companies possess government-granted monopoly power over life-saving medicines. Fortunately, the government already has strong levers it can pull to counteract Pharma’s power, including exercising its right to eminent domain for drugs to produce cheap generic versions of expensive patented drugs.

Political leaders have inexplicably failed to wield that big stick against Pharma even though doing so polls incredibly well, with net 30 percent support among eligible voters (51 percent support, 21 percent oppose). Rural white voters are particularly supportive of government efforts to produce generic versions of life-saving drugs, endorsing the idea by a whopping 36 percent margin (56 percent in support, 20 percent opposed).

That’s a huge political opportunity for progressives -- one that Warren is now seizing. As she writes in the Post, lack of competition isn’t just a problem in the brand-name drug market. It’s also an issue that plagues the generic market, where 40 percent of drugs are produced by just a single company. That creates market conditions where even generic drugs are priced beyond the reach of many Americans.

When we first explored the idea of a public option for prescription drugs in October, we spoke to Lindsay Pugh, a Minneapolis mother of a five-year-old girl with epilepsy, about her family’s struggle to keep up with the exorbitant cost of the drugs needed to keep her daughter alive. For one rescue medication that she needed to purchase as many as five times a month, the brand-name version -- known as Diastat -- cost $560 for two doses. Even the generic version cost Lindsay more than $250 per order.

But now the brand-name version of Diastat is the only game in town. The generic version is produced by a single manufacturer, Teva Pharmaceutical Industries, which is under-producing the drug. “According to our pharmacists and children’s hospital, it’s on backorder through all the suppliers,” Lindsay tells us. With the generic unavailable, Lindsay has been forced to buy the more expensive brand-name drug to respond to her daughter’s seizures. (Because of the generic shortage, however, her insurer is providing Diastat at the cost of the generic drug.)

Increased generic competition through a public option would help families like Lindsay’s. Senator Warren put it well when she told us in October, “Generic drugs can only drive down prescription prices if there’s real competition among multiple manufacturers. Public manufacturing is an important way to address existing market failures around generic drugs and deliver lower prices.” Now her plan puts that belief in the government’s essential role to serve as a public option in under-competitive markets into action.

Warren’s prescription drug plan follows on the heels of another plan offered by Sen. Bernie Sanders and Rep. Ro Khanna. But where Warren targets the generic market, the Sanders-Khanna plan targets brand-name drugs, threatening to terminate the patents of any drug that is priced too high in the U.S. relative to the prices charged abroad. That would essentially import the more aggressive price control regimes in Europe into the U.S., forcing drug companies to offer similar prices here or else have their patents pierced.

These plans share one core element: wielding the power of government to counteract the out-of-control market power of pharmaceutical companies. It’s time for progressives to make it a priority to get government in the business of fighting for patients whose lives depend on access to affordable prescription drugs.

Joel Dodge (@joeldodge07) is a lawyer and contributor to the People’s Policy Project think tank. 

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