Time and time again, lawmakers propose legislation to help reduce drug costs for patients. But all too often, their proposals have the opposite effect: They jeopardize patient access to low-cost medicines. With two newly proposed bills in Minnesota, HF17 SF168, lawmakers have an opportunity to ensure this does not happen in their state. Here’s why opposing HF17 SF168 is so critical to Minnesota patients.
Generic medicines represent 91 percent of prescriptions filled in the United States but account for only 18 percent of spending on drugs. Thanks to a well-functioning, hyper-competitive market, generics are less expensive than brand drugs and more affordable in the U.S. than in other developed countries. At a time when many people are struggling with high cost of healthcare, generic and biosimilars offer more affordable, high-quality options for prescription medicines. Patients and the state of Minnesota saved $5.3 billion in 2021 through generic and biosimilar medicines.
HF17 and SF168 put generic and biosimilar savings at risk for Minnesota patients. The bill would outlaw the imposition of an excessive price increase, whether directly or through a wholesale distributor, pharmacy, or similar intermediary, on the sale of any generic or off-patent drug sold, dispensed, or delivered to any consumer in the state.
These provisions will not apply to brand-name prescription drugs which are responsible for increasing health care costs and instead penalize generic manufacturers who introduce cost-lowering competition against high-cost brand-name drugs. Conditioning review of a drug on the percentage change in the price, the proposal is more likely to focus on lower-cost medicines even though these do not increase overall spending. In fact, the small number of generics that take a price increase do not result in increased costs – often because other competing manufacturers of the same generic do not increase prices. This generally results in a significant loss of market share for the manufacturer that increased its price but not an increase in costs for patients or other payers.
Further, state proposals seeking to regulate the price of generic medicines have been found to be unconstitutional. For example, the state of Maryland passed a substantially similar proposal (HB 631) in 2017. The Fourth Circuit Court of Appeals held that HB 631 violated the dormant Commerce Clause of the U.S. Constitution because states may not regulate commercial transactions that occur wholly outside its borders. Most financial transactions related to generic drugs occur across multiple state lines. The U. S. Supreme Court has held for almost a century that no state may “project its legislation into [another state] by regulating the price to be paid in that state, even when the goods sold in that out-of-state transaction are destined for resale in the state.”
To bring down drug prices in Minnesota, lawmakers must focus on high-cost brand-name drugs.