[Ip-health] US News & World Report: Can the Government Already Control Drug Prices?

Zack Struver zack.struver at keionline.org
Wed Jan 13 14:48:21 PST 2016


Can the Government Already Control Drug Prices?

Lawmakers hope an NIH provision could encourage pharmaceutical companies to
more carefully evaluate the prices they set.

by Kimberly Leonard Jan. 11, 2016, at 3:41 p.m.

Soaring drug costs have become difficult for lawmakers to ignore as they
heap demands on voters and on the federal budget, leaving Congress to look
into every corner of existing government authority to see whether anything
might be done.

In a letter to the National Institutes of Health and the Department of
Health and Human Services Monday, more than 50 Democratic members of the
House – led by Rep. Lloyd Doggett, D-Texas – urged the agencies to consider
an authority called “march-in rights,” which would lift exclusive rights
drug companies have to cures and treatments they developed.

Members stopped just short of asking the agencies to exercise those rights,
instead requesting that they provide specific guidelines about when they
should be used.

“Establishing strong guidelines protects consumers while reducing the need
for having to actually exercise ‘march-in’ rights,” they wrote in the
letter. “With adequate guidance, pharmaceutical companies should be able to
make better-informed pricing decisions.”

It’s unclear whether the letter will have any impact. The NIH, the
country’s largest funder of medical research, has previously taken the
stance that controlling drug prices is Congress’ duty, not its own. It has
rejected five previous requests to use march-in rights, which were
implemented in 1980 as part of the Bayd-Dole Act that sets rules for
patents and trademarks on government-funded products.

The law’s language says march-in rights may be used when “action is
necessary to alleviate health and safety needs which are not being
reasonably satisfied" or when the benefits of the drug are not "available
to the public on reasonable terms."

The letter comes as a result of action promised by the Democratic
Affordable Drug Pricing Tax Force, which launched in November to “combat
the skyrocketing cost of pharmaceuticals.” Increasing prices on
already-existing drugs, as well as the release of expensive drugs used to
treat the liver disease hepatitis C, prompted lawmakers to take action.

“The failure to act in the past has undoubtedly sent an unfortunate signal
that prices for federally funded inventions can be set as high as a sick or
dying consumer will pay,” House members wrote in Monday’s letter.

The federal government has in recent months turned its attention to rising
drug costs, and it has become a central health care topic in the race for
the presidential nomination. A government budget analysis published in
December attributed an acceleration in the growth of health care costs in
large part to more expensive drugs hitting the market, resulting in an
annual growth rate of 12.2 percent in 2014. In comparison, that same year
the country saw a 5.3 percent growth rate in overall health expenditures.
According to the Kaiser Family Foundation, 77 percent of Americans identify
the increasing prices of pharmaceuticals as their No. 1 health concern.

The march-in approach is different from laws introduced by Congress in
recent months that have proposed allowing Medicare to negotiate drug prices
or reducing the amount of regulatory red-tape it takes to bring a drug to
market. Under a 2003 law, Medicare is banned from negotiating prices with
drug companies and the Affordable Care Act, President Barack Obama’s 2010
signature health care reform law, did not do away with the practice.

The pharmaceutical industry is one of the most powerful lobbying groups in
Washington and is opposed to the government setting drug prices, arguing
that they would be arbitrary and stifle innovation. Most drugs under
development never make it to market, they point out, and therefore
companies must recoup the costs associated with failed attempts and future

The Biotechnology Industry Organization, the trade group for the industry,
said it was disappointed with Monday's proposal, adding that it would not
help patients and would disrupt innovation with "intrusive government

“Forcing the NIH to promulgate guidelines to police drug pricing by
exercising its march-in authority would require NIH to divert resources
into tasks it is not designed to do, and would also create tremendous
uncertainty in the technology transfer process," said Jeanne Haggerty,
BIO's senior vice president of federal government relations. "This would
significantly discourage private investment into federally federally funded
inventions, and fewer government inventions would become real-life

Authors of Monday’s letter wrote that “march-in” guidelines would not
threaten innovation because they would only be used when wrongdoing occurs.

The left-leaning Center for American Progress praised the letter in a
statement Monday, noting that many drugs came about as a result of research
funded by taxpayers through the NIH. “If a drug company price-gouges,
taxpayers should not have to pay twice – once for the research and again
for the excessive price,” said Topher Spiro, the group’s vice president for
health policy. “In such a case, it’s time to unleash market competition by
allowing other companies to market the drug.”

Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428

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