Democratic Sen. Elizabeth Warren recently introduced legislation to create a government-run pharmaceutical manufacturer that would make generic drugs to help curb skyrocketing prices of prescription medicines.

The bill, called the Affordable Drug Manufacturing Act, is designed to lower prices and increase competition in the generic pharmaceutical market by establishing an Office of Drug Manufacturing within the Department of Health and Human Services (HHS).

Pundits from both political sides would probably agree that the bill doesn’t stand a chance of getting past the Senate as it stands with a Republican majority. However, if Warren, who is looking to make a presidential run, wins the White House and ousts Trump in the 2020 election, we will look back at this proposal as the first step in what could be a radical shift in the government’s role in the pharmaceutical industry. 

“In market after market, competition is dying as a handful of giant companies spend millions to rig the rules, insulate themselves from accountability, and line their pockets at the expense of American families,” said Senator Warren in a news release.

When patents on brand-name drugs expire, market forces are supposed to kick in to lower prices as companies rush to make generic versions. The generic drug market supplies nearly 90 percent of the country’s prescriptions.

According to the Warren news release, today, 40 percent of generic drugs are made by a single company and the majority are manufactured by only one or two companies. Other drugs whose patents have expired simply sit on the shelf with no producer at all. We’ve even seen companies buy up expired patents to corner the market and jack up prices.

“The solution here is not to replace markets, but to fix them,” Warren said.

Adding more pressure on the pharma industry, just ahead of the bill’s proposal, the Washington Post reported that forty-seven states and the Department of Justice were in the process of investigating a massive price fixing conspiracy that’s driving up the cost of hundreds of generic drugs in America.

Warren’s proposed bill would in effect authorize the Office to manufacture generic drugs under these key conditions, where competition is lacking: No company is manufacturing the drug; only one or two companies produce the drug, and the price has spiked or the drug is in shortage; and only one or two companies produce the drug, the price is a barrier to patient access, and the drug is listed as an “essential medicine” by the World Health Organization.

The legislation also would authorize the Office to manufacture any drug that has been compulsorily licensed by the federal government; require the Office to begin production of generic insulin within one year of enactment; and improve the ability of new companies to enter the generic drug market by authorizing the public manufacturing of active pharmaceutical ingredients (APIs).

As stake holders in the industry I’m curious to know your thoughts. What would the passing of such a bill into law mean for the future of the pharma industry? If I hear from enough of you I’ll publish responses (anonimously) in an upcoming issue.


Tim Wright, Editor
twright@rodmanmedia.com