Bill would penalize drug companies for ‘price gouging’ on generics

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Martin Shkreli (center), the former biotech CEO best known for hiking up the price of a life-saving drug and for trolling his critics on social media, at his federal securities fraud trial last year. | AP Photo

Recalling the case of the pharmaceutical entrepreneur who hiked the price of a pill in an HIV treatment 5,000 percent three years ago, State Rep. Will Guzzardi, D-Chicago, announced legislation intended to stop price-gouging on generic drugs.

Guzzardi, speaking at the Thompson Center downtown, said H.B. 4900 isn’t a “silver bullet.”

“It’s a clear attempt to target an unjust and egregious practice by certain bad actors in the generic market and it will curtail this practice, which is exploiting the sick and vulnerable for the profit of big corporations,” Guzzardi said.

Though a generic drug is often seen as less expensive than the original, under certain circumstances they can end up becoming far more expensive — particularly when companies seek to buy a drug that’s the only one of its kind to treat a specific ailment, the bill’s supporters say.

State Rep. Will Guzzardi’s bill would give the Illinois attorney general’s office the power to investigate price increases on generics when they surpass certain threshholds, such as a 30 percent jump in one year. | Sun-Times file photo<br>

State Rep. Will Guzzardi’s bill would give the Illinois attorney general’s office the power to investigate price increases on generics when they surpass certain threshholds, such as a 30 percent jump in one year. | Sun-Times file photo

“They buy the exclusive rights to manufacture that drug and then raise the prices exorbitantly with no price controls whatsoever,” Guzzardi said.

Guzzardi recalled the case of Martin Shkreli, the pharmaceutical entrepreneur — better known as “Pharma Bro” — who became well known after raising the price of a pill used for an HIV treatment from $13.50 a tablet to $750.

When drug prices skyrocket, families sometimes must choose between paying for often-lifesaving medicines and other basic necessities, like groceries, Guzzardi said.

The bill would give the Illinois attorney general’s office the power to investigate price increases on generics when they pass a certain threshold: A 30 percent jump in one year, 50 percent over three years or 75 percent over five years. Companies would then have to provide documentation showing they are increasing costs due to increased production costs.

Penalties would include: making restitution to overcharged patients; up to a $10,000 fine per violation; and a requirement to sell the medications at the old price (before the hike) for at least one year.

A trade association representing generic drug manufacturers objected to the measure, which is scheduled for a hearing next week.

“Expensive brand drugs are responsible for the drug price crisis that is hurting patients in Illinois and the rest of the country, but Rep. Guzzardi’s bill inexplicably gives them a free ride,” said Rachel Schwartz, spokeswoman for the Association for Accessible Medicines. “Ninety percent of all generic prescriptions filled with a copay are less than $20, so why is Rep. Guzzardi jeopardizing the one part of health care whose prices are going down year-over-year and avoiding a meaningful fix to this problem?”

Drug companies also sometimes point out that higher prices help pay for research and development. Guzzardi said that doesn’t apply in this case.

“It’s worth pointing out that research doesn’t go into this because these are generic manufacturers. So the pharmaceuticals are already researched and developed by some other company,” Guzzardi said.

Contributing: AP

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