Warren Proposes Additional Penalties for Drug Companies

Published February 6, 2015

Sen. Elizabeth Warren (D-MA) announced in January she will introduce legislation hitting pharmaceutical manufacturers with additional fines when they settle complaints with the federal government. Her bill would target large pharmaceutical companies who have so-called “blockbuster drugs” on the market, defined as medicines with more than $1 billion in annual sales.

According to a summary released by Warren’s office, funds raised from the additional fines would be used to boost the budgets for medical research at the National Institutes for Health and the Food and Drug Administration. The summary did not specify what percentage of profits would be taken from pharmaceutical companies, and at press time the text of the legislation had not yet been released.

Warren’s proposal would reduce investment in research and development by pharmaceutical companies, according to the Pharmaceutical Research and Manufacturers of America (PhRMA), an industry trade group.

Robert Zirkelbach, senior vice president of communications at PhRMA, noted profits earned by drug manufacturers fund their research and development budgets. “Misguided policies that siphon funding from the groundbreaking medical research happening in the biopharmaceutical industry will have devastating consequences for patients and society,” said Zirkelbach.

He also explained the fact a company settled a complaint with the federal government doesn’t mean any wrongdoing took place.

“There are powerful reasons for a company to settle this type of investigation, even if the company disputes the allegations,” said Zirkelbach. “The government can wield extremely harsh penalties, including threatening to exclude a company from selling its medicines to Medicare and Medicaid recipients.”

Sean Parnell ([email protected]) is managing editor of Health Care News.