Biden Decides to ‘March In’ on Drug Patents

The plan aims at lowering prices but will stumble all over lifesaving innovation

By Joel Zinberg. Excerpts:

"March-in rights were created in a 1980 law sponsored by Sens. Birch Bayh and Bob Dole, which allowed universities, nonprofits and small businesses to retain ownership of patents for inventions discovered with the aid of federal funding. This ensured those inventions could be developed and made available to the public.

Before the Bayh-Dole Act, the government owned federally funded inventions and granted only nonexclusive licenses to developers. Few companies were willing to invest the money and time to transform a scientific discovery into a practical product unless they could own the discovery and exclude others from using it. The federal government owned tens of thousands of patents that sat unlicensed and undeveloped. Publicly funded research wasn’t benefiting the public.

Bayh and Dole recognized that government couldn’t turn scientific advances into usable products. Only the private sector could. Their statute unlocked the discoveries made with taxpayers’ money, leading to development of the biotechnology sector and enormous numbers of life-saving drugs. The statute included a safeguard if patent holders were unwilling or unable to turn beneficial inventions into products. Government could “march in” to abrogate their intellectual-property rights and grant licenses to other developers.

Nothing in the statute supports the Biden administration’s claim that price should be part of determining if a drug is “accessible to the public.”"

"Bayh and Dole maintained that “the law makes no reference to a reasonable price that should be dictated by the government,” that march-in rights are “not contingent on the pricing of a resultant product or tied to the profitability of a company that has commercialized a product that results in part from government-funded research,” and that government should march in “only when the private industry collaborator has not successfully commercialized the invention as a product.”"

"It costs an average of $2.6 billion to develop a drug and gain Food and Drug Administration approval primarily because 90% of drug candidates fail in clinical trials."

"In 1989 the NIH began using “reasonable pricing” clauses in its patent licenses and cooperative research and development agreements with private companies, giving the agency the option to review the introductory price of products developed from government-funded research. Private development plunged, leading the agency to remove the clauses six years later. Former director Harold Varmus noted that “the pricing clause has driven industry away from potentially beneficial scientific collaborations with [government] scientists without providing an offsetting benefit to the public.”"

"less than 15% of new drugs are based on at least one patent derived from public funding."

"nearly all drugs using Bayh-Dole patents also rely on other privately held patents"

"there is no guarantee companies will undertake the lengthy and expensive process of developing and producing a competitive drug—especially if the government is likely to scrutinize the price they offer."