New Bipartisan Senate Bill Would Lower Prices for Drugs That Benefited From Federal Funding

A great deal of prescription drug research and development is funded by the National Institutes of Health (NIH) and other federal programs, and this support has lead to amazing new medicines. But too often, patients do not benefit from these drugs because drug companies charge very high prices, even though the drugs were developed because of the federal government. A new bipartisan bill, introduced by Senators Chris Van Hollen (D-MD) and Rick Scott (R-FL) would require drug companies that receive research funding from federal agencies to follow pricing restrictions for the drugs they are selling.

This bill, the We PAID Act of 2019, is welcome and long overdue. A study published last year found that federally funded studies contributed to the science that underlies all of the 210 new drugs approved by 2010 and 2016. Right now the federal government is effectively providing subsidies for research on prescription medicines but failing to ensure that those medicines are affordable for consumers. Often drug companies will not conduct the foundational research themselves, but swoop in and buy the rights to a drug after the hard work has already been done.

The We PAID Act would change that. Drugs whose patents are clearly tied to NIH research will have to offer reasonable prices to consumers. And these patents will include patents held by the federal government that are licensed out to supporters. The bill will commission a study by the National Academies of Science, Engineering, and Medicine, who will collect information about the drugs and use that data to determine reasonable prices.

It would also establish a Drug Affordability and Access Committee made up of seven agency officials, two consumer representatives, three provider representatives, a researcher, an economist, a health insurance plan representative, a pharmacy benefit manager representative and a drug manufacturer representative. The Committee would use the study to determine a fair list price for the drug, and once they make that decision, the drug would only be available on the market at that price. Increases in the drug's price could not exceed the rate of inflation.

If drug companies don't adhere to the Committee's list price, they would face two penalties. First, they would lose any exclusive rights to a drug, so more affordable generic versions of the drug could be made. And second, the companies would be prohibited from entering into future licensing agreements on patented technology. This means they can't leverage drug research that the NIH or other federal agencies have contributed to.

This proposal would affect around 25% of all drugs that are launched. And it would not apply to drugs that drug companies develop using their own research and funding, but just ones that the federal government helps develop. This is only fair-right now many companies want to benefit from federal drug research, but squawk like agitated chickens when the federal government tries to ensure their research will benefit the public.

The We PAID Act is an excellent proposal that will lower drug costs and ensure that federal research on prescription drugs leads to affordable medicines. Hopefully it will be included in the bipartisan drug pricing package that Senators are putting together.