By Lisa Seachrist
WASHINGTON - Taking aim at what he views as exorbitant drug prices in the U.S., Rep. Sherrod Brown (D-Ohio) introduced legislation to compel companies whose drug prices are deemed too high to license that drug to other manufacturers in order to reduce the price.
Brown, the ranking member of the Commerce Committee's Health and Environment Subcommittee, has named his legislation the Affordable Prescription Drugs Act. It would allow the secretary of the Department of Health and Human Services (HHS) to step in at the request of a citizen's petition and determine whether the price for a certain drug is fair.
"If the price of a drug in the U.S. is prohibitive, that would trigger events at the Department of Health and Human Services and the Commerce Department," a Brown spokesman said. "Drug companies are scoring a triple-double: they are given generous tax breaks for developing drugs, most research and development is publicly funded and they charge the highest prices in the world to Americans."
Brown maintains his legislation is necessary because drug companies charge Americans higher prices than "any other industrialized nation." He highlighted the breast cancer drug Tamoxifen. In the U.S., a one month's supply of the drug costs $156. In Canada, it only costs $12 for the same month's supply.
Brown took issue with such prices, claiming the pharmaceutical industry as a whole made $22 billion last year, 5 percent more than any other industry in America. In addition, he questioned the $8.3 billion the industry had available for marketing and advertising its products.
His legislation aims to cut into the profits by allowing generic competitors into the market early under certain circumstances. For example, if a prescription drug provides a substantial health benefit, the federal government could require drug manufacturers to license their patent to generic competitors. Those competitors would be required to pay the patent holder royalties. Under the bill, individuals or citizen groups can request the secretary of Health and Human Services to determine when a compulsory licensing should occur.
In the course of a review of a drug, the patent holders would be required to publicly disclose audited financial information relevant to the pricing of their drugs. Brown maintained this would allow consumers to assess the reasonableness of drug companies' pricing.
"What we hope is that the threat of invoking these provisions would serve to keep drug prices down," Brown's spokesman said.
In "An Open Letter To America's Pharmaceutical CEO's" that can be found on Brown's web site, Brown likened the lobbying effort of the pharmaceutical industry to the National Rifle Association and vows "something will be done to bring down the cost of prescription drugs. It's just a matter of what."
In that letter Brown predicts the industry isn't "going to like" his solution. He's right. The Biotechnology Industry Organization (BIO) issued a statement criticizing Brown's plans because it would stifle innovation and private sector involvement in drug development.
Chuck Ludlam, vice president for government relations, called the bill an "unprecedented assault on our free enterprise system." Without strong patent protection, it will be nearly impossible for biotechnology companies to raise the capital needed to develop new medicines. Most of the time, he noted, the only thing of value a biotech company has is its intellectual property.
"This is nothing short of an effort to confiscate or appropriate the intellectual property of another firm," Ludlam told BioWorld Today. "You've been given a patent by the government and now they say we are going to steal it from you."
Ludlam said Brown's legislation could dry up money from investors even if it isn't passed.
"This isn't a mainstream proposal," Ludlam said. "But the fact that one of 535 members of Congress has introduced it makes it serious. Somebody in the investor community might think it has some weight and that could affect capital formation."
Another potential problem with the legislation is that competitors could use the citizen's petition provision to compel companies that have entered the market first to license out their product. Brown's spokesman said, "The bill would institute a very rigorous process that would create a wall at the door of HHS to ferret out any of these petitions."