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Opinion: Reduce drug spending by drastically simplifying monopolies on drugs
The Hatch Waxman Act and the Biological Price Competition and Innovation Act have incentivized efforts to improperly prolong the monopolies on existing drugs. It’s time for reform.
In 2024, total U.S. spending on prescription drugs was almost $800 billion. Although low-cost generic drugs filled 91% of all prescriptions, the 9% of prescriptions filled with a branded medicine accounted for 84% of drug spending. The monopolies on new drugs last so long, launch prices are so high, and price increases are so steep that they more than wipe out the savings Congress hoped to achieve by encouraging robust generic competition.
As Congress scrambles to find $2 trillion in cuts to government programs to pay for tax cuts, it needs to revisit the Hatch-Waxman Act and the Biological Price Competition and Innovation Act (BPCIA). These laws granted longer and stronger monopolies for drugs in the mistaken belief that such an incentive was essential to promote investment in the discovery of new drugs. Instead, they have incentivized efforts to improperly prolong the monopolies on existing drugs. Reining in these abusive monopolies could reduce government spending on new drugs by $100 billion annually and still leave drugmakers with healthy profits.
