Presented by Joseph Damond, EGA Health Chair

When it comes to healthcare, a delicate balance exists between fostering innovation and ensuring patient access to life-saving medicines. The Biden administration recently announced plans to establish new rules broadening its authority to seize patents from pharmaceutical companies for new drugs that have benefitted from publicly financed research. These plans are not only controversial but also raise critical questions about the future of pharmaceutical innovation in the United States.

The US pharmaceutical and biotech sector has long been a global leader in innovative drug development—owing much of its success to a combination of effective life-science policies such as federally funded research grants, robust intellectual property protections, and technology transfer policies. These policies have historically, and effectively, provided companies with incentives to invest in high-risk and costly drug development, which has resulted in countless groundbreaking medical advancements that we benefit from today.

Established as part of the Bayh-Dole Act of 1980, the so-called “march-in” rights allow the government to seize and license a patent stemming from government-funded research should the manufacturer fail to make a drug available to the public under certain circumstances. The law establishing those rules was meant to promote private sector development of government research, and it has helped foster the explosive development of new medicines in past decades. Case in point: no federal agency has utilized “march-in” rights since the passage of Bayh-Dole 43 years ago.

A chief reason that the government has never made use of these rights is because the seizure of patents due to perceived high drug prices raises numerous legal and technical challenges. First, the original legislation makes no mention of prices in its provisions. The National Institutes of Health (NIH) has repeatedly denied petitions to exercise such rights, noting that pricing alone is not sufficient and that it “does not believe that use of the march-in authority would be an effective means of lowering the price.”[1] Second, the lack of clarity on crucial details—such as what constitutes “too high” a drug price, or the complexity of multiple patents protecting a single drug—adds further uncertainty to how these rights could be applied. Third, FDA standards for quality, safety, and efficacy must still apply, which pose logistical challenges for any potential new manufacturer and may introduce delays and additional expenses in the drug development process.

As the Biden administration considers how to move forward with its proposal, there is an opportunity for stakeholders, particularly innovative biotech and pharmaceutical companies, to provide input and shape the final regulations. The National Institute of Standards and Technology (NIST) is currently seeking public comments on the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights. Comments are due to NIST by February 6, 2024.

For stakeholders, engaging in this process will be crucial to ensuring that the administration and policy makers understand the potential implications on industry research and development. EGA’s experienced leaders can help companies navigate the complexities of such a policy and formulate positions that yield the best results for companies, and most importantly, for patients who depend on these life-saving products and continue to rely on medical innovations from drug developers.