Team Biden Looks for an Excuse to Impose Price Controls

A new working group has been tasked with redefining the Bayh-Dole Act’s march-in rights 

By Merrill Matthews. Mr. Matthews is a resident scholar with the Institute for Policy Innovation in Dallas. Excerpts:

"Creating something of value in a university lab isn’t the same as manufacturing a product, pricing it and marketing it to the public. That’s why Bayh-Dole allows universities and research institutions to license their innovations to businesses that have the capital, factories and marketing expertise to bring an innovation to market.  

One of the primary beneficiaries of Bayh-Dole is the prescription-drug industry. Researchers at universities and medical schools are working constantly to find the next life-saving drug. Drug companies often pay universities or other public research institutions to license a discovery and bring promising research to the public. These companies invest hundreds of millions and even billions of dollars for the costly clinical trials required to bring a new drug to market. This system has worked remarkably well for 43 years.

But the Biden administration is grumbling over the price of a few prescription drugs and is looking to use a provision in Bayh-Dole known as march-in rights to impose price controls on drugs developed through these partnerships.

Under Bayh-Dole, march-in rights allow the government to step in and license a patent without the holder’s approval if there hasn’t been a good-faith effort to bring an important innovation or discovery to market. These rights are meant to ensure commercialization of a product, not set its price.

Concerned groups have petitioned the NIH several times to use march-in rights to lower the price of prescription drugs. In 2004 petitioners urged the NIH to use march-in rights for Norvir, an HIV treatment, and Xalatan, for glaucoma, and in both 2016 and 2023 for Xtandi, a prostate-cancer drug. NIH denied all of those requests because the drugs were in the market, just not at the lower price available in some other countries.

Recognizing the current roadblock to imposing price controls, Health and Human Services secretary Xavier Becerra and the Commerce Department on March 21 announced the formation of a Bayh-Dole working group to “develop a framework for the implementation of the march-in provision” in which several factors, including price, can be considered when triggering march-in rights.

Put simply, the Biden administration is searching for some justification to claim that the law allows the government to impose price controls on certain prescription drugs. But prescription-drug companies aren’t the only beneficiaries of federally funded research. Any industry that has relied on government-backed research could become a future target."