Biden Drug Patent Seizures Would Test Scope of Government Power

A Biden administration move to seize some drug patents would likely be met with lawsuits challenging the scope of its authority to commandeer intellectual property.

The administration on Thursday floated a framework on how it could take over some patents for certain drugs if their prices are determined to be too high. It’s the first time the US government has looked to use so-called “march-in rights” for patents on drugs developed with federal funding to license them to other manufacturers, administration officials said.

If a plan is finalized, an all-but-certain legal challenge to the administration’s exercise of march-in rights would force courts to weigh in on a long-running debate among lawmakers and scholars about whether the rights can be used to influence prices.

The fight “will definitely end up in the courts,” and “likely, in the Supreme Court,” said Robin Feldman, a law professor at University of California Law, San Francisco.

The fact that march-in rights for drug patents have “never been tested in court and the boundaries haven’t been defined makes it more challenging for the first attempt,” Feldman said.

The pharmaceutical industry, which has already sued the government over negotiating the prices for some drugs under Medicare, is expected to challenge such a move.

“Pharma will bring the full force of their resources whenever anything is threatening their bottom line one iota,” said Steve Knievel, an advocate for the Access to Medicines program at Public Citizen. “And when you’re talking about their monopoly power, times two.”

Backers of the administration’s proposal say its a long-overdue step toward shaking up the patent system to spur more drug competition and lower costs.

Opponents say it would be an improper application of the law, threatening investors’ willingness to back innovative new medications while wrongfully blaming the patent system for high prices.

‘Extraordinarily Damaging’

Established under 1980’s Bayh Dole Act, march-in authority can be triggered when a taxpayer-funded product isn’t available to the public on “reasonable terms.”

Biden administration officials told reporters Wednesday that price can be considered in exercising the right. Pharmaceutical prices have never been a target of that authority, and opponents say the law can’t be used for that purpose.

The administration’s stance “is an incorrect interpretation of march-in rights,” said Andrei Iancu, who was the U.S. Patent and Trademark Office’s director during the Trump administration.

“Under the Bayh Dole Act, march-in was never supposed to be exercised for price controls. And the original drafters, Senators Bayh and Dole, have rejected that concept publicly,” Iancu said. “It’s a novel, incorrect interpretation. And, if implemented, I’m sure it’ll be challenged in court.”

But Tahir Amin, CEO of the Initiative for Medicines, Access and Knowledge (I-MAK), an advocacy group pushing for affordable medicines, said those that support that reading of the Bayh Dole Act think the law “is there to serve private industry.”

“I don’t think they’re ever going to let go of that,” Amin said.

‘Robust Lobbying’

Activists, lawmakers, and state attorneys general have previously pressured the government to use march-in rights for controlling drug costs.

Earlier this year, the National Institutes of Health declined a petition to take over a patent on Astellas Pharma Inc.'s prostate cancer drug Xtandi.

The new proposed framework is currently up for public comment, where stakeholders are expected to outline their reasons for and against it. Beyond that, Knievel said he anticipates “a robust lobbying effort” from the drug industry to counter the Biden administration’s plan.

The move “would be yet another loss for American patients who rely on public-private sector collaboration to advance new treatments and cures,” PhRMA, an association representing drugmakers, said in a statement Wednesday.

“The administration is sending us back to a time when government research sat on a shelf, not benefiting anyone,” PhRMA spokesperson Megan Van Etten said in the statement.

The US Chamber of Commerce “will use every tool at our disposal to stop the administration from destroying America’s ability to discover the next breakthrough treatment or cure,” the organization said in a statement.

Knievel, however, thinks the framework “is something to build on,” and should go even further when finalized.

“The problem is the ways in which it provides unnecessary caveats to when price should be considered, which would seem to be more restrictive than a plain reading of the statute,” Knievel said. “For example, it sets a standard that says ‘is the price extreme or unjustified given the totality of circumstances.’”

Knievel said that the final plan should include other reasons besides prices for taking control of drug patents.

“The guidance does not suggest that U.S. consumers being charged higher prices than people in other high-income countries for government-funded drugs would alone be a sufficient ground for using march-in rights,” Knievel said.