This controversial policy, known as march-in rights, could be invoked to take over patents for drugs developed with taxpayer funds and share them with other pharmaceutical companies if the public cannot "reasonably" access the medications. The move could pave the way for the creation of lower-priced generic alternatives, thereby impacting the profits of major drug companies and reducing costs for patients.
In a landmark shift, the price of a medication can now be a determining factor in deciding to break a patent. "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," stated White House National Economic Advisor Lael Brainard during a call with reporters on Wednesday.
However, it remains uncertain how federal agencies will implement march-in rights under the new framework. A senior administration official noted that "no agency to date" has exercised the policy, which was established under the Bayh-Dole Act of 1980.
The announcement comes after a nearly nine-month review of the federal government's march-in rights, aimed at updating the framework for using the policy. It aligns with President Joe Biden's commitment to reducing U.S. drug prices, a key component of his health-care agenda and reelection platform for 2024.
The political pressure to lower drug prices has prompted health-care companies to initiate their own measures. CVS, for instance, unveiled a new prescription drug pricing model on Tuesday, which could potentially reduce costs for patients at the pharmacy counter.
According to a July survey by health policy research organization KFF, nearly three in ten Americans struggle to afford necessary medications. Research indicates that U.S. patients spend approximately $1,200 more per person on prescription medications than those in any other nation. This, despite taxpayers having funded hundreds of drugs to the tune of tens of billions of dollars over the last decade — a fact that the Biden administration believes could justify more government intervention to reduce prices.
The administration's push to use march-in rights could have significant implications for the pharmaceutical industry, which has long contended that the policy discourages research and development of new drugs. Drugmakers argue that patent seizure exposes a medication to competition, potentially reducing a company's revenue and limiting its ability to reinvest in drug development.
This resistance has historically made the federal government hesitant to use march-in rights, much to the frustration of progressives on Capitol Hill. The Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry's largest lobbying group, criticized the Biden administration's push to exercise march-in rights. A spokesperson for the group, which represents drugmakers such as Pfizer, Eli Lilly, and Johnson & Johnson, stated, "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."
Both the Obama and Trump administrations have previously rejected march-in requests from lawmakers and patient advocates. The Trump administration even proposed a rule that would prevent the government from exercising the policy based solely on the high price of a drug. However, the Biden administration chose not to finalize that proposal earlier this year, according to a White House release on Thursday.
Despite the new framework, the Biden administration has so far refrained from using march-in rights. In March, it declined to break the patent of the costly prostate cancer drug Xtandi from Astellas Pharma and Pfizer. The drug costs over $150,000 a year in the U.S. before insurance and other rebates, but is sold for a fraction of that price in other developed countries.
The Biden administration has sought to lower drug prices through other means, such as granting Medicare the power to negotiate drug prices for the first time in the federal program's 60-year history as part of the Inflation Reduction Act. However, Xtandi was excluded from the first ten medications selected for government negotiations, leading Astellas Pharma to drop a lawsuit it had filed to halt the price talks.