Misguided Use of March-In Rights Will Harm Patients | Citizens Against Government Waste

Misguided Use of March-In Rights Will Harm Patients

The WasteWatcher

The U.S. Department of Health and Human Services (HHS) and the Department of Commerce (DOC) are moving forward with pursuing a “whole-of-government approach” to review march-in rights under  the Patent and Trademark Law Amendments of 1980, or the Bayh-Dole Act.  The law was designed to encourage commercialization of university and nonprofit entities’ discoveries that were funded by the federal government, which at that time were fewer than 5 percent.  The Act allowed the patents to be owned by the research entities and transferred to the private sector, which would take the risk and expense to commercialize them.  March-in rights, which would allow the government to take over the development of pharmaceuticals that received federal funding, are meant as a safeguard and only to be used if efforts are not being undertaken for government-funded research to be commercialized.  Since Bayh-Dole was enacted, this has never occurred.

The March 21, 2023, press release announcing the administration’s review of march-in rights including the following statements:

“The Biden-Harris Administration is committed to increasing access to health care and lowering costs.  And march-in authority is a powerful tool designed to ensure that the benefits of the American taxpayer’s investment in research and development are reasonably accessible to the public,” said HHS Secretary Xavier Becerra.  “We look forward to updates from the Bayh-Dole Interagency Working Group, and at my direction, HHS will review the findings, engage the public, and better define how HHS could effectively utilize our authority moving forward.”

“The Bayh-Dole Act is a cornerstone of our innovation system in the U.S., which carefully balances the interests of the taxpayer, government, and the private sector.  Maintaining that successful balance is critical as we work with HHS and other agencies to develop a framework and criteria for the use of the march-in provision,” said Commerce Secretary Gina Raimondo.

In other words, the review is intended to determine how to use something that has never been used for the past 43 years as an excuse to increase government control over the pharmaceutical industry.  The research and development of new drugs has already been stifled by the price controls in the Inflation Reduction Act.  The arbitrary use of march-in rights will be another significant disincentive for new treatments and cures.  The joint agency effort to determine how (not whether) to use march-in rights is not the first time that Sec. Becerra, the Biden Administration and members of Congress have threatened intellectual property (IP) rights in healthcare in this manner without any consideration of the impact on innovation. 

On July 16, 2020, Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-VT) sent a letter to HHS noting their displeasure with the $3,250 cost of a course of remdisivir treatment.  They demanded that the government should “assert control over the production and distribution of remdesivir” and believed the price was “exorbitant” and “unjustified.” They asked that the administration invoke several legal provisions to take over the production and distribution of remdesivir using compulsory licensing authority and pay a “reasonable and entire compensation,” whatever that means.

On August 4, 2020, then-California Attorney General Becerra joined the senators in this effort by leading a coalition of 34 state attorneys general on a letter to HHS demanding that the department use march-in rights on remdesivir.  HHS rejected the request two days after the letter was sent, noting in a statement from a spokeswoman that, “We can only exercise march-in rights where the intellectual property to make the product, as a whole, was funded by the federal government.  In short, all of the patents underlying the product have to have been conceived or reduced to practice with federal funds for Bayh-Dole’s march-in provision to be of any practical significance.  We do not believe this to be the case here.”

The use of march-in rights to steal intellectual property will neither lower costs nor create more access to healthcare.  Yet, the Biden administration and Democratic members of Congress continue to seek more government control over vast segments of the healthcare ecosystem, which will move the country in the wrong direction and directly harm patients. 

The United States leads the world in drug research and development due in large part to  the protection of IP in the Constitution, which is the only property right given such protection.  Article I, Section 8, Clause 8, grants Congress the enumerated power “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”  Without this extraordinary protection of IP rights, biopharmaceutical innovation to combat diseases like the coronavirus will become increasingly difficult. 

The unprecedented use of march-in rights, which will likely be abused, will cause irreparable damage, hurt medical innovation, and dissuade biopharmaceutical companies from spending their valuable research dollars on future cures.  That will hurt patients, slow economic growth, and destroy America’s global leadership in biopharmaceutical research and development.  Instead of continuing its attack on private-sector innovation in healthcare, Congress and the Biden administration should focus on lowering costs by reducing government interference with market manipulation and price controls. 

 

 

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