[Ip-health] ​KEI Advisory on NIST Green Paper

James Love james.love at keionline.org
Tue Apr 23 18:04:46 PDT 2019


The Final NIST Green Paper is expected to be published on Wed.  The Final
report has been toned down a bit, but still proposes to use regulations to
redefine "available to the public on reasonable terms" as "to allow a
product or service to reach the marketplace rather than reasonable pricing
terms to the consumer" (although the recommendation is somewhat hedged as a
stakeholder proposal) and to prevent the government's royalty free license
from being used to make good or services available to the public, unless
the government directly provides the goods or services.

Our comment on the report is here:

https://www.keionline.org/30451
*KEI Advisory on NIST Green Paper*

RE: Publication of NIST Green Paper on Innovation and Federally-funded R&D
Date: Expected Release by NIST on Weds, April 24, 2019

*Background*

On Wednesday, April 24, 2019, The National Institute of Standards and
Technology (NIST), which falls under the Department of Congress, publishes
a Green Paper that proposes curbing the ability of the federal government
to use its rights in federally-funded inventions, including but not limited
to drugs, vaccines, diagnostic tests, new cell- and gene-therapies and
other biomedical inventions.

*Statement, by James Love, Director of KEI*

The NIST recommendations on march-in and government use rights are part of
an effort undermine the central protections in the Bayh-Dole. The Final
Report has been softened in some areas, although only marginally.

*Compelling national issue or declared national emergency.*
In one welcome change, the proposal in the Draft Green Paper to limit
march-in rights to a “compelling national issue or declared national
emergency” was eliminated in the Final Green Paper.

There are, however, two key areas where the NIST Report intends to narrow
the public’s rights.

*Reasonable terms definition. *
In the section of the report on march-in rights, NIST quotes selectively
critics of the march-in rights, and suggests that rulemaking could be used
to define the phrase “available to the public on reasonable terms,” so the
obligation is only “to allow a product or service to reach the marketplace
rather than reasonable pricing terms to the consumer.” [page 33] This is
justified on the grounds that it would address a “lack of clarity” in the
statute, and is consistent with current practice by the NIH and the U.S.
Army, but is controversial. A regulatory change would make it binding on
agencies to ignore excessive and unreasonable prices for drugs and other
health technologies invented on federal grants or research contracts, and
eliminate an important if underutilized tool the government has to reduce
prices.

*Government use license. *
The NIST report proposes narrowing the rights the United States government
has under what NIST refers to a “government use license.” After mentioning
specifically the possible use of the license to obtain discounts on
pharmaceuticals, the NIST Finding 1 [Page 27] states:

“The scope of the government use license should not extend to goods and
services made, sold, or otherwise distributed by third parties if the
government—or a government contractor in the performance of an agreement
with the government—does not directly use, provide, or consume those goods
and services.”

The language in the final report was only slightly modified from the draft
version, adding the word “provide.” The proposal is intended to limit the
possibility that the governments royalty free right in the patents can be
used to as leverage or to provide a low cost supplier for the public, in
some circumstances, although even this will depend upon how “directly . . .
provide” a good or service is interpreted. Certainly NIST intends to make
it difficult to use the federal government’s right in patents to permit a
company to manufacture and sell a drug or vaccine at regulated but
unsubsidized prices to the public, to broaden access to cancer treatments
in developing countries, or any number of other possible uses of the
government’s license.

Since the Bayh-Dole Act was passed in 1980, there have been several
occasions where government agencies have been asked to exercise either the
march-in or the government use rights in patents. In general, agencies have
done a poor job of protecting the public, but in some cases, the
government’s rights have achieved important benefits. This is a link to a
webpage describing several cases, and the results, which were mixed:
https://www.keionline.org/cl/march-in-royalty-free

In recent years, there has been growing interest by Congress to force
federal agencies to protect the public from excessive prices in
federally-funded inventions. One such effort was the 2017 proposal by the
Senate Armed Services Committee to direct the Department of Defense to use
the march-in rights when prices in the U.S. were higher than the median
price in seven large high income countries. The NIST proposals are an
attempt to prevent agencies from responding to Congressional demands for
action.

The development of new cell- and gene-therapies (invented with federal
grants, and extremely expensive for U.S. residents) are among the new areas
where the government’s rights in inventions can be used to unblock patent
thickets and reduce prices, if not under President Trump, under a successor
who is more inclined to use those rights on behalf of the public.

*Union for Affordable Cancer Treatment (UACT)*

2019, February 26. UACT Letter to Congress Regarding NIST Recommendations
to Limit Bayh-Dole Act Safeguards
<https://cancerunion.org/2019/02/26/uact-letter-to-congress-regarding-nist-recommendations-to-limit-bayh-dole-act-safeguards/>
.

*Joint NGO Open Letter to Congress*
Eleven non-governmental organizations sent a letter to Congress urging them
to heed this threat to the safeguards in the Bayh-Dole Act.
2019. April 5. Open letter on NIST Draft Green Paper on Bayh-Dole Act
Policies and Regulations
<https://www.keionline.org/wp-content/uploads/Letter-NIST-Bayh-Dole-GreenPaper-5April2019.pdf>

*Knowledge Ecology International (KEI) Comments and Blogs*
2019. January 4. The December 2018 NIST Draft Green paper on “Return on
Investment <https://www.keionline.org/29518>.
2019. January 10. KEI Comments Regarding the NIST Special Publication 1234
Draft Green Paper on Return on Public Investment
<https://www.keionline.org/29555>.
2019. February 20. KEI asks NIST to extend comment period on their Special
Publication 1234 Draft Green Paper on Return on Public Investment
<https://www.keionline.org/29751>. 20 February 2019.

*Media Coverage*

2019. April 5. “Advocates say a Commerce Dept. report would preclude
reclaiming patents as a way to lower drug prices.” Ed Silverman. 5 April
2019.
https://www.statnews.com/pharmalot/2019/04/05/commerce-report-patents-drug-prices/,
Stat.

2019. April 18. “A rare deterrent to limitless drug price increases may die
under Trump.” Christopher Rowland. 18 April 2019.
https://www.washingtonpost.com/business/economy/a-rare-deterrent-to-limitless-drug-price-increases-may-die-under-trump/2019/04/17/7578e5e0-5bcd-11e9-a00e-050dc7b82693_story.html,
The Washington Post.

2019. April 19. “Commerce department expected to slash march-in rights for
drugs.” Sarah Karlin-Smith and Sarah Owermohle. 19 April 2019.
https://www.politico.com/newsletters/prescription-pulse/2019/04/19/commerce-department-expected-to-slash-march-in-rights-for-drugs-426742,
Politico.
------------------------------

Final Green Paper, ROI-Initiative, NIST SP 1234
<https://www.keionline.org/wp-content/uploads/FINAL-GREEN-PAPER-ROI-INITIATIVE-NIST-SP-1234_FINAL_042419.pdf>,
April 24, 2019.
NIST December 2018 Draft Green Paper
<https://www.keionline.org/wp-content/uploads/2019/01/NIST.SP_.1234.pdf>.

-- 
James Love.  Knowledge Ecology International
U.S. Mobile +1.202.361.3040
U.S. office phone +1.202.332.2670
http://www.keionline.org <http://www.keionline.org/donate.html>
twitter.com/jamie_love


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