The White House on Thursday took steps to pressure pharmaceutical companies to lower the price of drugs developed with federal funding, backing a plan that would enable the government to sidestep patent protections for those medicines.
New draft guidelines published by the National Institutes of Standards and Technology permit government agencies to consider “reasonableness of the price” when evaluating whether to invoke so-called march-in rights, which permit the government to suspend patents when federally funded inventions aren’t made available to the public.
The newly published framework gives agencies the power to act “if it appears that the price is extreme, unjustified, and exploitative of a health or safety need.” One example is a “sudden, steep price increase in response to a disaster,” although the initial cost of a drug when it’s launch can also be considered, the guidance said.
The agency is seeking further comment on its guidance — the product of an interagency review that began early this year — before publishing a final version.
“With this draft guidance and request for comment, we are seeking continued stakeholder input to ultimately provide greater clarity on march-in rights and maintain a balance between incentivizing companies to innovate and making sure those innovations serve the American people,” said U.S. Secretary of Commerce Gina Raimondo, in a statement.
March-in rights were established under a 1980 law that governs the transfer of patented inventions, such as new drugs, from government-funded research institutions to the private sector. Although advocates have petitioned the government a number of times to step in, agencies have always declined.
For instance, the government was previously asked to intervene when manufacturing problems forced rare disease drugmaker Genzyme, now owned by Sanofi, to ration a medicine called Fabrazyme. The prostate cancer drug Xtandi, meanwhile, has twice been the focus of rejected petitions.
The law’s authors, the late Sens. Birch Bayh and Robert Dole, stated publicly they didn’t intend for a drug’s price to justify use of the march-in authority baked into the law now known as Bayh-Dole for short.
Advocates for stronger march-in powers, however, point out Bayh-Dole preceded another federal law that has set data exclusivity and patent term extensions. That means Bayh-Dole’s authors couldn’t have anticipated the growth of the pricing power drugmakers can obtain through intellectual property monopolies.
The main pharma industry trade group, the Pharmaceutical Research and Manufacturers of America, criticized the newly released guidance.
“If government bureaucrats are allowed to take away patent protections at any time, there is no incentive for biopharmaceutical manufacturers to collaborate with the government or universities, returning us to the pre-Bayh-Dole era where promising new technologies sat on the shelf, benefiting no one,” PhRMA said in a press release.
On the other side, James Love, head of advocacy group Knowledge Economy International, which has challenged Xtandi’s patents in the past, praised it as “better than I had expected in some ways.”
“If the bar for dealing with high prices is ‘extreme, unjustified, and exploitative of a health or safety need,’ that is going to lead to some unnecessary arguments about what is ‘extreme’ or ‘exploitative,’” Love added.