FLAT Prices Act would target abusive pharmaceutical companies by shortening monopoly periods, bringing lower-cost generics to market sooner
WASHINGTON D.C. – As the costs of prescription drugs continue to rise for American patients, providers, and taxpayers, U.S. Senators Kamala Harris (D-CA), along with Senator Dick Durbin (D-IL), Tina Smith (D-MN), Amy Klobuchar (D-MN), and Richard Blumenthal (D-CT) today introduced new legislation to help prevent sudden, outrageous price hikes for prescription pharmaceuticals.
The Forcing Limits on Abusive and Tumultuous (FLAT) Prices Act of 2019 will reduce the government-granted monopoly period for medications if their prices are significantly increased, enabling lower-cost generic drugs to come to market earlier.
“No one should be forced to forgo lifesaving medication because they can’t afford it,” said Senator Harris. “It’s unconscionable that drug companies jack up prices on medications when there are no affordable alternatives for patients to turn to. This is an abuse of our patent system and it needs to stop. I’m proud to join my colleagues today to introduce legislation that would prevent this from happening and level the playing field between consumers and pharmaceutical companies.”
Currently, pharmaceutical companies are awarded “monopoly periods” of five to 12 years by the U.S. Food and Drug Administration (FDA) for new drug approvals. During this time, FDA agrees not to review cheaper, generic alternatives. Too often, pharmaceutical companies use this monopoly period—where no generic competition is allowed—to bilk taxpayers and patients with excessive price increases.
The FLAT Prices Act would reduce this FDA-granted exclusivity period for a drug whose price increases more than 10 percent in a year, or similar amounts over a multi-year period. Drug manufacturers would be required to self-report their price spikes to the Department of Health and Human Services (HHS), and they would have the opportunity to provide an appeal to justify such a price increase. Failure to report such a price hike would incur additional reductions in market exclusivity.
Pfizer’s drug for nerve pain, Lyrica, has increased more than 30 percent since President Trump took office, now costing $550 per month. Lyrica’s patent rights have expired but the monopoly is protected by FDA market exclusivity until November 2021. Because Lyrica has been protected from lower-cost competitor drugs, Pfizer has been able to increase the price with impunity. Under the FLAT Prices Act, Pfizer’s recent unjustified price spikes would trigger a reduction in its monopoly period, resulting in new competition from lower-cost generic drugs sooner.
According to the AARP, retail prices for more than 250 of the most widely used brand-name prescription drugs increased by an average of 10 percent each year from 2011 to 2016. In 2017, the average price increase was four times higher than general inflation. Already in 2019, pharmaceutical companies raised prices for hundreds of medicines in the United States.
The FLAT Prices Act is supported by Consumer Reports, Patients for Affordable Drugs Now, Families USA, National Multiple Sclerosis Society, the American Academy of Neurology, Knowledge Ecology International, and the Chicago Medical Society.