This week, the Maine Senate passed “Making Health Care Work for Maine,” a package of bills in the legislature that would give state government tremendous power over the prescription drug market. In an attempt to reduce the cost of prescription drugs for the people of Maine, this legislation will deal a horrible blow to the generic drug industry, which actually drives savings for patients year after year.
As the legislation moves forward to the House, it must be rejected as it’s currently written.
We can all agree that high drug prices are a vexing problem worthy of thoughtful policy solutions. However, the legislation fails to recognize and address the dynamics of the prescription drug market. This proposal ignores the fact that generic medicines are delivering significant savings for Mainers, as well as the overall health care system.
While generics are the most commonly prescribed medicines, it is brand name drugs that are the most costly to the state. Generic drug prices consistently decline as a result of intense competition. In 2019 alone, the use of generic medicines saved nearly $1.2 billion in Maine. Nationwide, generics saved patients $313 billion in 2019.
Overall, generics account for over 90% of all prescriptions, yet are responsible for just 20% of total spending on medicine. Generics are not the problem with prescription spending – and Maine’s own data bears this out.
According to the Maine Health Data Organization (MHDO), every one of the 25 most costly prescriptions in the state is a brand name drug. Not a single generic was anywhere near the top. Let’s get some perspective: Total spending on the drug that was Number 25 on MDHO’s list of the most costly medicines was $12.5 million. Meanwhile, total spending on the most costly generic medicine for Maine does not come close to one-third of the spending on the brand drug that occupies the position as the state’s 25th most costly medicine.
The reason generics are so much less expensive goes back to simple market economics – more competition and choice brings down prices. That’s why it’s disappointing to see Maine’s elected officials mistakenly believe that isolated price increases in select drugs are representative of the generic market. While it may be true that one generic version of a drug increased in price one time, the overall price of all generic drugs declined significantly while the brand drug price equivalents have increased.
Despite the overwhelming evidence of the benefits of generics, the “Making Health Care Work for Maine” package would target generics with new regulations and price controls that would counteract the benefits of these medicines. By interfering in beneficial price competition, the state risks chilling the competition that drives savings.
Additionally, the proposed law may be unconstitutional if it’s determined it violates the Commerce Clause of the US Constitution. Maine has no right to regulate the price of drugs sold in other states, and that’s what this bill would allow.
Simply put, generics are the solution to combating high drug prices – not the problem. Rather than stymieing competition, we should work to expand access to generics so more people can realize the incredible savings they provide. The people of Maine deserve reliable, affordable prescription drugs and generics are the way to make that a reality.