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A Second Look at the Creates Act: What’s Not Being Said

By  |  October 5, 2016

Posted by Social Science Research Network

A Second Look at the Creates Act: What’s Not Being Said

Erika Fisher Lietzan (University of Missouri)

Abstract:         The recently introduced CREATES Act would require innovative drug companies to sell their products to their competitors, and it would also require these companies to share with these same competitors the use and distribution arrangements they developed to manage the risks of the products. Supporters describe the bill as the latest remedy for the “regulatory abuse” and “predatory delay tactics” of the innovating pharmaceutical companies and thus part of a broader program to address high drug prices. Earlier proposals relating generally to the same topic, but differing in approach, were introduced in 2014 and 2015 but failed to move forward. Several recent drug pricing controversies have placed the pharmaceutical industry in the spotlight, however, and momentum for the proposal has picked up.

This brief article offers important additional context for understanding the proposal by laying out some of the things that are not being said — about use and distribution restrictions associated with new medicines, about the underlying complaints from the generics industry, and about the design and likely effect of the bill. The first part explains pharmaceutical risk management and FDA’s decades–old practice of requiring use and distribution restrictions for certain drugs to manage risk. The second part critically assesses the complaints levied against the research–based companies and the proposals offered to address those complaints. The final part explores the possible practical effects of the proposed legislation and broader implications for innovation policy.