Durbin Introduces New Bill to Prevent Large Drug Price Hikes

FLAT Prices Act Would Target Abusive Pharmaceutical Companies By Shortening Monopoly Periods, Bringing Lower-Cost Generics To Market Sooner

CHICAGO – As the costs of prescription drugs continue to rise for Americans, U.S. Senator Dick Durbin (D-IL) today joined doctors and advocates at Ann & Robert H. Lurie Children's Hospital to highlight his new legislation to help prevent sudden, outrageous price hikes for prescription pharmaceuticals.  The Forcing Limits on Abusive and Tumultuous (FLAT) Prices Act of 2019, which Durbin introduced in the Senate last week, will reduce the government-granted monopoly period for medications if their prices are significantly increased, enabling lower-cost generic drugs to come to market earlier. 

“Health care is still too expensive for too many working families, and the soaring cost of prescription drugs is one of the major reasons why,” Durbin said.  “That’s why I introduced the FLAT Prices Act, which will prevent large price spikes for prescription drugs by cracking down on abusive Pharma monopolies.  Whether it’s the overnight price hikes by greedy Wall Street executives, or the year-over-year increases for decades-old medications like insulin, these price-gouging practices must end.  It’s long past time Congress puts patients before Pharma, and I hope 2019 will be the beginning of real change.” 

Currently, pharmaceutical companies are awarded “monopoly periods” of five to 12 years by the U.S. Food and Drug Administration (FDA) for new drug approvals.  During this time, FDA agrees not to review cheaper, generic alternatives.  Too often, pharmaceutical companies use this monopoly period—where no generic competition is allowed—to bilk taxpayers and patients with excessive price increases. 

The FLAT Prices Act would reduce this FDA-granted exclusivity period for a drug whose price increases more than 10 percent in a year, or similar amounts over a multi-year period.  Drug manufacturers would be required to self-report their price spikes to the Department of Health and Human Services (HHS), and they would have the opportunity to provide an appeal to justify such a price increase.  Failure to report such a price hike would incur additional reductions in market exclusivity.

Pfizer’s drug for nerve pain, Lyrica, has increased more than 30 percent since President Trump took office, now costing $550 per month.  Lyrica’s patent rights have expired but the monopoly is protected by FDA market exclusivity until November 2021. Because Lyrica has been protected from lower-cost competitor drugs, Pfizer has been able to increase the price with impunity.  Under the FLAT Prices Act, Pfizer’s recent unjustified price spikes would trigger a reduction in its monopoly period, resulting in new competition from lower-cost generic drugs sooner.

Insulin was first discovered in 1923.  The Nobel Prize-winning researchers sold the patent to the University of Toronto for just $1 because they believed that insulin should be made widely available to everyone, without worrying about the cost.  However, the price of insulin today is the subject of anti-competitive practices and constant price increases.  There are only three manufacturers in the U.S., Novo Nordisk, Eli Lilly, and Sanofi.  Lantus, a popular long-acting insulin, cost $88 per vial in 2007.  Today, that vial costs more than $310.  On average, the price of insulin has doubled between 2012-2016.

According to the AARP, retail prices for more than 250 of the most widely used brand-name prescription drugs increased by an average of 10 percent each year from 2011 to 2016.  In 2017, the average price increase was four times higher than general inflation.  Already in 2019, pharmaceutical companies raised prices for hundreds of medicines in the United States.

The FLAT Prices Act is supported by Consumer Reports, Patients for Affordable Drugs Now, Families USA, National Multiple Sclerosis Society, the American Academy of Neurology, Knowledge Ecology International, and the Chicago Medical Society.

The new drug pricing bill builds off Durbin’s legislation to tackle the inflationary impact of direct-to-consumer (DTC) pharmaceutical advertising by requiring price disclosure in television ads.  Each year, the pharmaceutical industry spends $6 billion in DTC ads to steer patients to the most expensive, often unnecessary, brand-name medications.  Durbin’s bipartisan measure with Senator Chuck Grassley (R-IA) passed the Senate, and is now being implemented via regulation by HHS.  Just last week, Johnson & Johnson announced they will voluntarily post price tags in their ads.  Requiring price transparency in drug commercials will help empower patients and lower prescription drug costs.

The FLAT Prices Act is cosponsored by U.S. Senators Kamala Harris (D-CA), Tina Smith (D-MN), Amy Klobuchar (D-MN), Richard Blumenthal (D-CT), and Sherrod Brown (D-OH).