Health Agency Pushed to License Cancer Drug Patents to Cut Costs

The Biden administration is facing a new call to use its government authority to license an Astellas and Pfizer prostate cancer drug for generic manufacturing.

In a Tuesday letter, nongovernmental organization Knowledge Ecology International, Universities Allied for Essential Medicines, and the Union for Affordable Cancer Treatment urged the Department of Health and Human Services to license patents on the drug Xtandi to outside manufacturers to produce lower-cost versions of the drug.

KEI argues that two sections of the law—35 U.S.C. § 202(c)(4) and 28 U.S.C. 1498—allow the administration to license Xtandi patents to companies without having to pay royalties, and that the government can do so without fear of a court injunction blocking production.

Xtandi is “sold by Astellas and Pfizer at a price three to six times higher in the United States than it is priced in other similar high-income countries,” KEI said in the letter, addressed to Chiquita Brooks-LaSure, administrator of the HHS’ Center for Medicare & Medicaid Services. The letter also asked for the CMS to provide “any qualified drug company” with contracts for supplying generic Xtandi to patients in federal programs like Medicare.

The letter comes amid Biden administration initiatives targeting high US drug prices.

In 2022, the administration announced a program for Medicare to negotiate lower prices with drugmakers for what it pays for high-cost products, spurring a wave of industry-led lawsuits. The administration also capped out-of-pocket insulin costs at $35 per month for Medicare enrollees.

In December, the administration announced a controversial plan for “marching in” and seizing patents on high-cost drugs to license them out to companies willing to produce lower-cost versions, an initiative that has faced blowback from industry. Prior to the administration’s unveiling of that plan, several petitions had been filed with the government to deploy march-in rights to lower Xtandi’s cost. In March 2023, the Biden administration rejected a request to march in on Xtandi.

Sen. Elizabeth Warren (D-Mass.) and other lawmakers have likewise pressured the administration to take a direct hand in lowering Xtandi’s price.

KEI’s Tuesday request isn’t the first time the administration has been urged to use Section 1498 for drug costs. In 2022, petitioners asked the HHS to consider the law for lowering drug prices.

In the letter, KEI argues that the 2023 average wholesale price for Xtandi was almost $200,000 for a year supply. In the US, the per-pill average wholesale price is $136.50 for a 40 mg pill, KEI said, while in Japan the cost is $22 a pill.

Three Xtandi patents were based on government grants, KEI said, and under 35 USC § 202(c)(4), the government has a “worldwide paid-up license” that “can be used at any time” for acquiring generic drugs for government programs.

Section 1498, meanwhile, allows patent owners to sue the government whenever their patents are used for the US without license. KEI said that because the government already has the license to the patents under Section 202, the required compensation for a use by or for the government will be zero.