Congressman Adam Smith Introduces Legislation to Increase Competition in the Generic Pharmaceutical Market

Washington D.C. – On September 28, 2016, Congressman Adam Smith introduced the Eliminate Price Increases Act, a bill that will improve the process for drug applications to help keep medical treatments affordable:

October 5, 2016

“Under current law, pharmaceutical companies holding a patent for a drug can develop, distribute, and market what is known as an Authorized Generic (AG) through a privileged process provided in the Hatch-Waxman Act (PL 98-417) that allows the brand-name company to introduce and begin sales of a generic product, rather than going through the ‘Abbreviated New Drug Application’ process that third-party generics must pursue. An AG may artificially crowd the generic market for a given drug because it is exempted from a third party generic producer’s market exclusivity period, which is intended to encourage third party pharmaceutical companies to compete in the generic market.

“The opportunity to advance an AG is a benefit afforded only to the brand-name drug company. A 2011 Federal Trade Commission (FTC) study found that AGs harm the generic market in the long-term. In addition, some argue that the practice of allowing AGs can incentivize brand-name drug price increases separate from any changes in supply or demand. This inequitable system can hurt patients and dissuade competition. My bill, the Eliminate Price Increases Act, H.R. 6284, would simply prohibit a company that holds the patent for a brand-name pharmaceutical product from also introducing an AG.

“Recently, those with severe allergies saw a dramatic increase in the price of a life-saving drug, the EpiPen. When a pharmaceutical company dramatically increases the price of a brand-name drug, many families and consumers may be forced to rely on less ideal or potentially riskier options such as using expired medications. It is critical that we keep life-saving medical devices and drugs affordable for American families. I will continue to work with my colleagues in Congress to enact policies that will help keep necessary medical treatments within reach for all those who need them.”