Biden Wants to Seize Patents of Pricey Drugs and Use Government to Make Them Cheaper

The Biden administration has proposed a new rule that would let the government seize the patents of expensive drugs developed with federal funding.

President Joe Biden speaks at a press conference in Ottawa, Canada, on March 24, 2023. Andrej Ivanov/AFP/Getty Images

The Biden administration has proposed a new rule that would allow federal authorities to seize the patents of costly drugs that were developed using taxpayer dollars and to let third parties use those patents to make the drugs available more cheaply.

The National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce, on Dec. 7 published a set of draft guidelines for government agencies to evaluate when it might be appropriate to invoke what are known as “march-in” rights under the legal framework of the Bayh-Dole Act.

The Bayh-Dole Act, which is shorthand for the University and Small Business Patent Procedures Act of 1980, grants the government the authority to suspend the patents of products of inventions that were developed with federal funding if those products or inventions are not made available to the public.

The new proposed guidelines, which were reviewed by The Epoch Times, seek to modify the Bayh-Dole Act in such a way as to make high price alone (of a product or invention developed using taxpayer dollars) a sufficient condition to trigger the government’s exercise of the act’s march-in provisions.

The march-in provisions—which the government has been asked to invoke in the past but never has—would let authorities seize the patents of drugs deemed too expensive (when offered for sale by the original patent holder) and grant licenses to third parties to produce those drugs to sell more cheaply.

“We'll make it clear that when drug companies won’t sell taxpayer funded drugs at reasonable prices, we will be prepared to allow other companies to provide those drugs for less,” White House adviser Lael Brainard said on a call with reporters.

The draft will be published in the Federal Register on Dec. 8 and is being subjected to a 60-day public comment period.

President Joe Biden hailed the draft proposal as a way to rein in “Big Pharma price gouging,” while the main pharmaceutical industry trade group, the Pharmaceutical Research and Manufacturers of America, said it would be a loss to American patients by causing government-funded research to sit “on a shelf, not benefiting anyone.”

Competing Takes

Under the new draft guidelines, the government would be allowed to consider “reasonableness of the price” when considering whether to invoke the march-in rights.

It gives federal agencies the power to act “if it appears that the price is extreme, unjustified, and exploitative of a health or safety need.”

While the initial price of a given drug when it’s first launched is to be considered, another possibility for triggering the use of the march-in provisions would be a “sudden, steep price increase in response to a disaster.”

President Biden said in a statement that his administration is proposing that if a drug is made using taxpayers funds and it’s “not reasonably available to Americans,” then the government could “march in” and license that drug to a producer who can make it and sell it for less.

“It’s good for competition. It’s good for our economy,” the president said. “And it’s good for the millions of Americans who can’t afford their medications—who know all too well that fine line between dignity and dependence that the price of a prescription drug can draw.”

The proposal drew a critical reaction from the Pharmaceutical Research and Manufacturers of America (PhRMA) trade group.

“This would be yet another loss for American patients who rely on public-private sector collaboration to advance new treatments and cures. The administration is sending us back to a time when government research sat on a shelf, not benefitting anyone,” PhRMA said in a post on X.

The trade group argued that the reason America leads the world in medicine development is precisely because the current structure of the law enables the private sector to work with government and academic research centers “for the benefit of patients.”

“This latest proposal is yet another bad policy from an administration intent on ceding our life science leadership to other countries and robbing Americans of hope that comes from new treatments and cures,” the group added.

In a blog post, PhRMA said that the Bayh-Dole works well in its current form and that, over the past 25 years that it has been in effect, it has contributed $1.9 trillion to the U.S. economy and created 6.5 million jobs.

What Do the Authors of the Bayh-Dole Act Say?

The authors of the Bayh-Dole Act, the late senators Birch Bayh (D-Ind.) and Robert Dole (R-Kan.), have publicly stated that the law they developed did not intend for the government to be able to set prices on products.

“The law makes no reference to a reasonable price that should be dictated by the government,” the pair wrote in an op-ed in The Washington Post. “This omission was intentional; the primary purpose of the act was to entice the private sector to seek public-private research collaboration rather than focusing on its own proprietary research.”

The two senators raised the argument that, for every single taxpayer dollar that the government spends on research of a given product or invention, private industry must spend “at least $10” to bring it to market and that the aim of their law was to “spur interaction” between public and private research so that patients could benefit from scientific innovations sooner.

“Government alone has never developed the new advances in medicines and technology that become commercial products,” the pair wrote, adding that the intention of the law was newer to allow the government to revoke a licence on the basis of the pricing of the product or in some way tied to the profitability of a company that has commercialized it.

“The law we passed is about encouraging a partnership that spurs advances to help Americans,” they wrote.

Under the Bayh-Dole Act, the government has the power to seize the patents of federally funded medicines but not using price as a criterion.

The proposal comes as the Democrat Party’s more progressive wing has heaped criticism on drugmakers over high prices of their products and has called on the Biden administration to use march-in power to lower prices.