Upsher-Smith Drafts Statement on Pending Minnesota Generic Drug Price-Gouging Legislation

As a Minnesota pharmaceutical company focused on making generic medications, Upsher-Smith’s mission is to provide America’s patients with high quality generic medication options that are cost effective. As such, we support government efforts to help prevent price-gouging in our industry. However, recent state legislation misses the mark in protecting Minnesota’s patients. In fact, if left unaddressed, elements of this legislation could potentially increase patient costs and / or reduce access to key medications by making a challenging environment even worse for generic pharmaceutical manufacturers like Upsher-Smith. Minnesota’s House bill HF2680 / Senate bill SF2744 unfairly targets generic companies by imposing new, complex and potentially costly regulations on our industry, despite the fact that these products reduce pharmaceutical costs significantly. IQVIA recently reported that in 2022, generics accounted for nearly 91 percent of all adjusted prescriptions, but less than 16 percent of total prescription costs. Understood another way, the Association for Accessible Medicines (AAM) reported that in 2021 alone, generic medications saved America’s patients, consumers, employers and taxpayers $373 billion dollars. Locally, patients and the state of Minnesota saved $5.3 billion in 2021 through generic and biosimilar medicines. Overall, widespread use of generics in the U.S. over the past decade has translated into $2.6 trillion in savings, according to AAM.

Generic product manufacturers have achieved these trillion-dollar savings in a highly regulated and intensely competitive market. In recent years, a consolidated U.S. purchasing base coupled with increased FDA approvals and significant offshore sourcing of US drug products has resulted in rock-bottom prices for generic manufacturers, which has forced many generic pharmaceutical companies to drop products they can no longer afford to produce. In some cases, these manufacturing stoppages have disrupted the supply of medications, leading to shortages. By contributing to the regulatory burden and cost of producing and selling generic medications, the generics provisions in this legislation will only worsen this trend.

Cutthroat competition has also driven the manufacture of many generic products offshore. However, as we witnessed during the COVID-19 pandemic, these offshore companies also leave our nation vulnerable. Over the course of the pandemic, several countries banned the export of medical supplies, leading some experts to fear “that faraway factories might one day cut Americans off from their drugs.”* Companies like Upsher-Smith want to continue competing with off-shore manufacturers and to contribute to securing our nation’s supply of high-quality, cost-effective generic medications. However, the additional burden presented by this state legislation will make successful competition increasingly challenging for our company to achieve.

What is most puzzling about HF2680 / SF2744 is that its provisions target only generic manufacturers.  Yet branded prescription products contribute more than 80 percent to overall drug spending, even as they account for less than 10 percent of adjusted prescriptions in 2022, as reported by IQVIA. Put another way, instead of going to the heart of the drug cost problem, the pending legislation takes aim at its solution – and hometown companies like our Maple Grove-based organization.

Unfortunately, comments during recent Senate Judiciary hearings make it evident that those introducing and perpetuating these bills have some basic misunderstandings about how the industry works and even which industries are impacted. Upsher-Smith asks that our legislators speak with industry experts and reconsider the language in HF2680 / SF2744 that would create additional regulatory burdens for Upsher-Smith and other generic companies like it. These regulations could potentially derail the manufacture of low-cost generics in Minnesota and spell disaster for patients in our state and nationwide, not to mention the hundreds of people employed by our industry in Minnesota. Upsher-Smith alone employs more than 400 people, and has recently opened a 270,000 square-foot, state-of-the-art greenfield manufacturing facility to help onshore the production of more cost-effective generic medications. As an employer, taxpayer, and producer of life-saving, highly accessible medications, we urge the Minnesota legislature to reconsider the elements of the new legislation aimed at manufacturers of generics and biosimilars.

Farah Stockman, Opinion, Our Drug Supply Is Sick. How Can We Fix It?, N.Y. TIMES (Sept. 18, 2021), https://www.nytimes.com/2021/09/18/opinion/drug-market-prescription-generic.html