Drug Dealing: Making Public Pharma Work

Abstract

The U.S. market for prescription drugs is failing many Americans. Drug prices in the United States are nearly three times higher than in comparable countries, and evidence shows that patients regularly forego essential medicines because they cannot afford them. Additionally, shortages of important medicines are common. In partial response, California recently passed a law to enable public manufacture and distribution of medicines, starting with insulin, a drug needed by many diabetics in the state. Several other states, as well as the federal government, are considering similar action to drive down prices of older drugs and to help resolve shortages. Public production could yield important benefits, but there are legal obstacles to overcome at every step, from developing the product at the bench to getting it to the patient. This Article maps the primary legal and logistical issues facing public pharmaceutical programs-from intellectual property barriers and PBM-driven market manipulation to regulatory hurdles like FDA registration, ERISA preemption, and product liability. We also propose ways to overcome these obstacles. We focus especially on a troubling reality: even if states succeed in producing affordable, highquality public medicines, they may still struggle to get them to the millions of patients who need them. After all, private generic manufacturers already face major obstacles in breaking through distribution bottlenecks to deliver lower-cost options. But states have tools that private firms lack. Armed with legislative, regulatory, and contractual authority, states can encourage-or require-market intermediaries to carry public products, expanding access at scale. In doing so, they may also help dismantle the bottlenecks that constrain private generic competition more broadly