AB 824 Aims to Reduce Prescription Costs

State Senator Jim Wood

Assemblymember Wood and Attorney General Becerra Announce Bill to Outlaw “Pay for Delay” Tactics of Drug Companies

 

SACRAMENTO– Today, Assemblymember Jim Wood (D-Santa Rosa), partnering with California’s Attorney General Xavier Becerra, introduced AB 824 to stop pharmaceutical companies from pocketing billions in profits by using a “pay-for-delay” practice that results in an extension of their patents on brand name drugs beyond what Congress intended when it passed the Hatch-Waxman Act of 1984.

 

“Pay-for-delay” refers to a system in which a brand name drug manufacturer enters into a contract with a generic drug manufacturer which agrees to delay marketing a generic version of its drug in exchange for some benefit, most often a monetary payment.

Some brand name drug manufacturers have adopted this approach in order to stifle competition, violating the basic principles that govern the pharmaceutical patent system. When a brand name drug patent expires, prices should decrease as generic manufacturers enter the market, decreasing costs to patients and health insurance companies.

 

“It’s unfortunate that the egregious acts of some drug companies taint the entire industry,” said Wood. “The original purpose of the patent system established by the Hatch-Waxman Act was to allow drug companies to regain the funds they have invested in research, development and testing and to incentivize them to continue to innovate, not to reap billions beyond the patent expiration date. When drug companies use these quiet pay-for-delay agreements with generic drug manufacturers it hurts consumers twice – once by delaying the introduction of an equivalent generic drug that is almost always cheaper than the brand name and again by stifling additional competition when multiple generic companies begin producing even less expensive generic equivalents. This is just plain wrong.”

 

Generic drugs cost substantially less than brand name drugs, with discounts off the brand price averaging 20 percent when the first generics are manufactured to up to as much as 90 percent when multiple companies are producing generics. Generic manufacturers can produce these drugs less expensively because they do not have to invest in research, development and testing. According to the IMS Health Institute, generic drugs saved the U.S. health care system $1.67 trillion from 2007 to 2016.

 

As the various lawsuits have come to their conclusions, drug manufacturers may look for more creative ways to implement pay-for-delay tactics to increase their profits and delay the manufacture of lower cost generic drugs. The results of an FTC study concluded that these contracts led to $3.5 billion in additional costs for pharmaceutical drugs every year. This expense is directly passed on to consumers, health plans and government, and thus, taxpayers.

 

“Patients and consumers deserve to be free of unfair practices and price manipulation within the pharmaceutical industry,” said Attorney General Xavier Becerra. “This legislation is a crucial step in combating predatory pricing practices, like “pay-for-delay” schemes, by drug companies and in defending access to affordable care.”

 

“When expensive brand name drug patents expire and the drug companies intentionally protect themselves from losing profits to generic manufacturers through these agreements, the only entities making a profit are the brand name drug manufacturer and the generic manufacturer – when all the generic manufacturer needs to do in order to make money is absolutely nothing,” said Wood. “Who loses? The patients who deserve access to less expensive drugs and all of us who end up paying more for health care and, in turn, health care premiums. Affordability is a huge issue in health care, and this calculating practice makes it worse and we need to stop it.”

 

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16 Comments
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Willie Caso-Mayhem
Guest
5 years ago

🕯Wow,that was really informative Kelley thank you.

shak
Guest
shak
5 years ago

That’s a start, but they’re not heroic by any stretch of the word.
Once they get on ball with POTUS’s plan, then maybe they can be called heroic.
https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-blueprint-lower-drug-prices/

Willie caos- mayhem
Guest
5 years ago
Reply to  shak

🕯We see that “not my potus ” still has his hmmm shoved up your ,we’ll just say it’s were sun don’t shine very much.

I like stars
Guest
I like stars
5 years ago

Who is currently “your POTUS” Willie?

Willie caos- mayhem
Guest
5 years ago
Reply to  I like stars

🕯Well if you listen to yourself and to some others on here for 8yrs they didn’t claim the greatest President of our generation so will not claim this one.🖕🏿 Four deferments ard a lame ass medical excuse kept him from Vietnam, and now we find out that the medical excuse was a flat out lie,oh yeh he’s not my potus.

shak
Guest
shak
5 years ago

IOW, you’re against lower costs and even free generics? You’re against the long list of goals to reduce the cost of meds and create a fair playing field? You’re against the goal to remove the block to affordable health costs that was lobbied into place during Boehner and Pelosi’s funnest day in the WH?
That’s your right, Willie.
It’s my right to decide for myself what to root for or against.
It’s also the right of the people to be informed of what they are unknowingly or unwittingly being TOLD to thumb their noses at or to worship.

More info on the goals. (some costs have already been reduced, much to the chagrin of those who demand higher costs). https://www.hhs.gov/about/leadership/secretary/priorities/drug-prices/index.html

tax payer
Guest
tax payer
5 years ago
Reply to  shak

i think they are just trying to tie their name onto the prices of meds going down because of the Trump administration, stealing credit. they even state that no matter what law they make the companies will find loopholes. and uniformed people will not give credit to the Trump administration

Willie caos- mayhem
Guest
5 years ago
Reply to  tax payer

🕯👍🏾🖖

Mary Ella Anderson
Guest
Mary Ella Anderson
5 years ago

Wood is no friend to medicare for all. He is no friend to seniors either. His loyalties are with his for-profit medical donors. We’ll never have decent health care in this country electing corporate hacks like Wood.

Guest
Guest
Guest
5 years ago

When did we have decent health care? My favorite pick on that is when we had an abundance of private practice gp’s so that you could change doctors if you found the one you had was not best for you. Now the government has their hand so heavily into dictating how a doctor practices that, while constantly regulating the newest (and most expensive) technology, many doctors have no time to talk to their patients much less time to use their education and experience to diagnosis what doesn’t neatly fit the Center for Medicare and Medicaid standards. Which BTW is almost everything. If it weren’t for foreign born doctors coming here, there would be practically no medical care at all as the government determined payment system so disadvantages general practitioners that most new doctors are specialists. Anyone who likes the idea of seeing to their patient’s needs on a personal basis is going to be seriously overworked and unable to do that because so much of their effort will be spent trying to bill so as to pay for all the requirements and keep up their electronic records.

It seems like the progressive’s agenda of the government running medical care means that, when it gets worse because of regulation, they double down on trying to regulate it more. Eventually I suppose the desired result of a national health plan will make care available to all. If they can get it at all of course.

shak
Guest
shak
5 years ago
Reply to  Guest

Exactly. What follows full govt control? Those who live off the govt’s handouts but who don’t follow the mandated rules, will not receive a check the following month or whichever time allotment they declare. Behavior control v survival instincts.

Willie caos- mayhem
Guest
5 years ago

🕯Do you think England is a Democracy or a Socialist Country?

C'mon elections
Guest
C'mon elections
5 years ago

If it actually happens and the greedy legal drug dealers don’t find a way around it like they always have and continue to rip off the seniors like they have been.old folks need this stuff to stay alive and end up spending there whole social security checks on it which leaves them no money left to eat and have a place to live,it’s really sad and disgusting how our government has taken advantage of our elders for so long .On another note woods is a worm and a trader and theif to our region he’s also a trader to his partyby backing that slimy theif sunberg (republican) in the supervisors race and should have his credentials pulled! !!!! Just another rip off politician! !!!!!!!

shak
Guest
shak
5 years ago

POTUS is pushing for free generic meds for seniors.

“BUDGET PROPOSALS TO LOWER DRUG PRICES: The President’s blueprint includes proposals from his budget that would increase competition and reform Federal programs.

President Trump has proposed reforms to the Medicare Part D program, including:
Allowing greater flexibility in benefit design to encourage better price negotiation.
Offering free generics to low-income seniors.
Requiring plans to share a minimum portion of drug rebates with patients.
Discouraging plans from accelerating beneficiaries into the catastrophic phase of the benefit with costly brand name drugs.
Protecting seniors from catastrophic costs through a new out-of-pocket maximum, while ensuring plans are incentivized to limit excessive costs.
Medicare Part B reforms proposed by the President would limit payment for price increases that are above the inflation rate and cut incentives for doctors to write high-price prescriptions.
Reforms would ensure hospitals paid under Medicare Part B that provide more than one percent of their patient costs in charity care could retain a discount under the 340B program.
The President has proposed actions to maximize competition and innovation, including curbing abuse of FDA safety rules and the 180-day “first-to-file” exclusivity clock.”

https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-blueprint-lower-drug-prices/

C'mon elections
Guest
C'mon elections
5 years ago

And the supreme court ruling on agregous fines by state and federal government across the nation last wedsday is something to be celebrated living in a rip off state like we do!!! And the fact that they voted unanimously for the first time in years shows how out of hand it’s gotten! !! They specifically pointed out California and new York for generating(ripping off)the most from there citizens. Thank you supreme court for upholding the constitution against this theiving tyranny (politicians )and looking out for the slaves (revenue).

Really?
Guest
Really?
5 years ago

It says nothing about forfeitures that are not in excess of the fines that are established by government- only forfeiture that is in excess of established fines. So, since the Country applies high levels of fines, mostly as an enforcement tool, forfeitures will continue on as the County has practiced it in the last few years.

And cash forfeiture are specifically mentioned as acceptable unless there’s proof that the cash came from legal means.