[Ip-health] Advocates say a Commerce Dept. report would preclude reclaiming patents as a way to lower drug prices

Claire Cassedy claire.cassedy at keionline.org
Mon Apr 8 08:50:06 PDT 2019


Advocates say a Commerce Dept. report would preclude reclaiming patents as
a way to lower drug prices

By Ed Silverman @Pharmalot

April 5, 2019

Nearly a dozen advocacy groups have complained to Congress that a recent
Department of Commerce draft report that offered ways to modernize
technology transfer and innovation would limit the ability of the federal
government to curb “excessive” prescription drug prices.

The 135-page report,[1] which was issued last December by the department’s
National Institute of Standards and Technology, broadly addresses
innovation and proposes various suggestions for maximizing returns on
taxpayer investment in R&D.

However, one particular portion discusses so-called march-in rights, which
involves reclaiming patents as a tool to address high prices for
prescription medicines, a notion has gained traction over the last three
years in response to the national debate about high drug costs.

Under federal law, a government agency that funds private research — such
as the National Institute of Health — can require a drug maker to license
its patent to another party in order to “alleviate health and safety needs
which are not being reasonably satisfied.” An agency can also do so when
the benefits of a product, such as a medicine, are not available on
“reasonable terms.”

As we have noted previously, various advocacy groups and academics have
argued that medicines invented with taxpayer dollars should be affordable
to Americans. But the Commerce Department draft report maintained the law
did not intend march-in rights to be used as a “price control” and cited
industry concerns over the durability of licensing rights.

Instead, the report suggested regulatory changes under existing federal
law, which is known as the Bayh-Dole Act, so that explicit use of march-in
rights[2] is “reserved for a compelling national issue or declared national
emergency when other remedies have failed.” Another change would ensure
that march-in rights should not be used “to control or regulate market
price of goods and services.”

In their April 5 letter[3] to Congress, though, the advocacy groups argued
the “proposals have emerged from a little publicized review of relatively
uncontroversial aspects of licensing practices by federal labs. During
workshops, licensing offices for universities and other research
institutions made proposals to gut the public interest safeguards in the
federal Bayh-Dole Act for patented inventions. …

“At a time when drug prices have become increasingly unaffordable for
American patients, the administration’s proposals in the NIST paper outline
provisions designed to protect pharmaceutical companies that sell expensive
treatments, and exempt them from obligations to ensure that treatments are
affordable and accessible. …

“These proposed changes are motivated by efforts to protect drug companies
from increasing demands from members of Congress and the public to use the
Bayh-Dole rights to curb excessive prices for treatments for cancer, HIV
and other diseases,” according to the letter sent by Doctors Without
Borders, Public Citizen, Knowledge Ecology International, and eight other

A final version of the report is expected in coming weeks, but no specific
date is yet known, a Commerce Department spokeswoman told us. However, she
noted the draft is a discussion document, not a policy commitment and
maintained the draft report was “broadly publicized” through a press
release and a Federal Register request. She also pointed us to a section of
the draft that says “the use of march-in is typically regarded as a last
resort, and has never been exercised since the passage of the Bayh-Dole Act
in 1980.”

She added that, prior to the draft, the Commerce Department sought
comments, some of which expressed concerns that march-in rights could be
used as a price control. “These reasons include impeding the creation of
new drugs and discouraging university and medical school licensees from
making the substantial additional investments necessary to develop and
commercialize new drug discoveries,” the draft report stated.

In general, drug  makers complain about the possibility of price controls.
They are also reluctant to commit to pricing terms while projects are in
the early stages of development, which prompted the NIH back in 1995 to
remove what were called “reasonable pricing” clauses from cooperative R&D
agreements. At the time, former NIH director Dr. Harold Varmus described
these clauses as a “restraint” on new product development.

“Preserving the certainty of intellectual property ownership and providing
reliable patent protections are essential to supporting licensing of
applicable inventions, to the private sector,” the Pharmaceutical Research
and Manufacturers of America, the industry trade group, wrote last July to
the Commerce Department’s National Institute of Standards and Technology as
the subject was being researched.

[1] https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.1234.pdf
[2] https://fas.org/sgp/crs/misc/R44597.pdf
[3] http://freepdfhosting.com/f84b13ec62.pdf

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