[Ip-health] Secretary Alex Azar’s comment on 28 USC 1498 submitted for the record of the 2018 confirmation hearings

James Love james.love at keionline.org
Wed Aug 1 16:33:16 PDT 2018

Not sure if ip-health members had seen this question and answer from
Senator Sherrod Brown to Alex Azar, on the use of 28 USC 1948.



Secretary Alex Azar’s comment on 28 USC 1498 submitted for the record of
the 2018 confirmation hearings

The following is a question for the record from Senator Sherrod Brown, and
a response from Alex Azar, in connection with Azar’s confirmation hearing.

Questions for the Record
January 9, 2018 Hearing to Consider the Nomination of Alex Azar to be
Secretary of Health and Human Services
Senate Finance Committee
Page 90

Senator Brown

Mr. Azar, in your opening statement, you mention your experience at HHS
during the post 9/11 anthrax attacks and their threat on our nation’s
public health. Your boss at the time – then-HHS Secretary Tommy Thompson –
publicly considered using his authority under a section of the United
States Code, Title 28 Section 1498, that would have allowed the government
to buy generic versions of an otherwise patented anti-anthrax drug at a
steep discount. Mr. Thompson’s threat of invoking Title 28 Section 1498
allowed the government to leverage a deal with the brand name manufacturer
and cut the price of the anti-anthrax medication Cipro in half, saving
taxpayer dollars and protecting public health.

Did you play a role in advising then-Secretary Thompson in threatening to
invoke the authority behind section 1498, which led directly to cheaper

Azar Response: I was involved in the negotiations with Bayer to acquire
ciprofloxacin in the aftermath of 9/11 and during the anthrax attacks. As I
noted in a letter to the editor of the American Lawyer, Alex M. Azar II,
Letter to the Editor, The Cipro Dilemma, American Lawyer, Jan. 31, 2002,
Bayer was never threatened with the use of section 1498, and it was my view
and the view of the Department’s attorneys that section 1498 would not
authorize FDA to approve a product in violation of the market exclusivity
provisions of the HatchWaxman Act. Section 1498 is not a regulatory
provision that would allow the FDA to approve a product under the Food,
Drug, and Cosmetics Act when that Act does not so permit. Section 1498 does
not authorize the government or its contractors to engage in patent
infringement, but rather provides a remedy in the event that that were to
occur. If, for example, a suit were filed against a government contractor
for infringement and various conditions were met, the government would step
in, defend the suit, and ultimately pay. Section 1498 has never been used
in a situation like this, does not automatically result in a lower drug
price, and it is not a cost free option.

Azar’s answer can be contrasted with the Bayer account of the negotiations,
in this 2002 SEC filing.



FILED AS OF DATE: 20020114

The extent of patent protection varies from country to country. In some of
the countries in which we operate, patent protection may be significantly
weaker than in the United States or the European Union. Piracy of
patent-protected intellectual property has often occurred in recent years,
particularly in some Asian countries. In addition, in an effort to control
public health crises, some developing countries, such as South Africa and
Brazil, have recently announced plans for substantial reductions in scope
of patent protection for pharmaceutical products. In particular, these
countries could facilitate competition within their markets from generic
manufacturers who would otherwise be unable to introduce competing products
for a number of years. Furthermore, in response to the recent bioterror
attacks in the United States, the U.S. and Canadian governments
contemplated compulsory licensing of our ciprofloxacin antibiotic — in
effect, permission to generic manufacturers to market ciprofloxacin before
the expiry of our patent rights. Although we reached agreements with the
two governments intended to ensure adequate supplies of ciprofloxacin while
preserving our existing patent rights, we cannot assure you that these or
other governments would not impose compulsory licensing in future in
response to renewed or increased bioterror attacks. We do not currently
expect any proposed patent law modifications to affect us materially.
Nevertheless, if a country in which we sell a substantial volume of an
important product were to effectively void our patent rights in that
product, our revenue could suffer.

James Love.  Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love

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