HHS Says NO to AGs Trying to Steal Patents | Citizens Against Government Waste

HHS Says NO to AGs Trying to Steal Patents

The WasteWatcher

After the heads of the Department of Health and Human Services (HHS), the National Institutes of Health, and the Food and Drug Administration, were asked in an August 4, 2020 letter signed by 34 attorneys general to use Bayh-Dole Act march-in rights to steal the patent for remdesivir, a drug invented by Gilead that is currently being used successfully to treat COVID-19 patients, Citizens Against Government Waste (CAGW) urged the agency to reject their demands.  The AGs erroneously claimed that the price was too high, and that Gilead could not produce enough supply.  They also believed because Gilead had accepted government financial assistance to work on serious diseases like Ebola and SARS, the march-in rights could be invoked.

On August 17, the AGs received a clear and firm answer: “No.” 

According to an August 17 Inside Health Policy article, HHS said the department would only use march-in rights if all of the patents for a product were owned by the federal government.  But Gilead owns the patents, so such an action would not apply here.

This is another of many continuing efforts by government-run healthcare aficionados to illegally demand that the Bayh-Dole Act be used to grab pharmaceutical property rights to lower drug costs or allow other companies to manufacture a biopharmaceutical, but that is not why the act was written.  In fact, it is quite the opposite.

Bayh-Dole was signed into law in 1980 to solve a serious patent and manufacturing problem. At that time, only 5 percent of government-funded technology was being successfully commercialized, a clear waste of federal research dollars.  Bayh-Dole allowed the title of an invention to be awarded to the inventor, like a university research lab, or a government contractor.  But the government does retain a “nonexclusive, nontransferable, irrevocable, paid-up license” for itself.  March-in rights allows the government under certain circumstances to order the titleholder, or successors, to grant the license to another applicant(s).  Such a circumstance includes when the current titleholder has not taken or is expected to take action to commercialize the invention or when such action is necessary to alleviate health or safety needs.

Joseph Allen, a former staff member for Sen. Birch Bayh (D-Ind.), the co-author of the law, wrote in an August 6 IPWatchdog article, that in the remdesivir case, march-in rights do not apply because it was not an invention discovered with federal funding.  He pointed out that the AGs were mistaken in their belief that march-in rights could be used to control drug prices, a bogus idea that was promoted in an article 25 years after the law was passed and quickly dismissed by Sens. Bayh and Bob Dole (R-Kan.).  Allen said, the “march-in authority is intended to make sure that good faith efforts are being made to bring federally-funded inventions to the marketplace, which certainly seems to be the case with remdesivir.”

In this case, if the AGs had been successful in their request, it would have taken months to hold a required administrative hearing and deal with judicial appeals.  Even if eventually given the go ahead to allow other companies to manufacture the drug, there would be many more months of delay to upscale production, causing unnecessary pain and suffering to COVID-19 patients.

As further evidence of the absurdity of the AGs’ demands, Gilead announced on August 6 that it had been taking multiple steps since January to ramp up production on Veklury®, or remdesivir, by expanding its global network to meet the demand, including nine generic drug manufacturers to provide the drug to 127 “low-income and lower-middle income” countries.  Then on August 7, Pfizer announced that it was entering into a multi-year agreement with Gilead to manufacture and supply Veklury®, stemming from Pfizer’s five-point plan, announced in March 2020, to commit to work together in response to the COVID-19 crisis.  And Gilead had already been commended by drug-pricing watchdogs in June that their price was responsible, long before the AGs wrote their letter.

March-in rights under Bayh-Dole have never been used and there is a good reason why.  The purpose of the act was to get government-funded research into the marketplace.  The kind of action the AGs desired to undertake would have dissuaded future cooperation by a private company to work with the government at enormous financial risk to get a potential life-saving product through the FDA-approval process and commercialized.  And it would have deprived COVID-19 patients of a life-saving drug for an unnecessary period of time.  Longer term, the country would return to the 1980s, when government-funded pharmaceutical research laid dormant and was of little use to anyone.