Business community blasts Biden proposal on drug patents

State and national business community advocates are blasting a proposal by the Biden administration that would dramatically curtail investment in lifesaving pharmaceuticals and other technological breakthroughs with the potential to solve some of society’s most vexing problems. 

The National Institute of Standards and Technology last week released its Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights, a proposed rule that would allow the federal government to “march-in” and remove a company’s patent protections if a medicine was developed with federal funding and if the drug in question is not available at what the government deems to be a reasonable price. 

“Let’s be clear, seizing patents is a confiscation of property,” U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley said. “If patents for medicine are seized today, what property will the government seize tomorrow?” He went on to say the administration risks “destroying America’s ability to discover the next breakthrough treatment or cure.” 

NIST says their proposal is intended to uphold the principles of the Bayh-Dole Act. The 1980 law ensured that patents on scientists’ creations would not automatically revert to the government. Under the law, companies could secure exclusive patents if their creations were brought to market and made available under reasonable terms. The federal government has the authority – under limited circumstances – to force businesses and universities to license their inventions to additional companies if the federally funded product is not brought to market. 

In a 2002 column in The Washington Post, the law’s authors, former Indiana Sen. Birch Bayh (D) and former Kansas Sen. Bob Dole (R), now both deceased, wrote, “Government alone has never developed the new advances in medicines and technology that become commercial products. For that, our country relies on the private sector. The purpose of our act was to spur the interaction between public and private research so that patients would receive the benefits of innovative science sooner.” 

Commerce Sec. Gina Raimondo said the NIST proposal is intended to “maintain a balance between incentivizing companies to innovate and making sure those innovations serve the American people.” Health and Human Services Sec. Xavier Becerra said, “March-in authority is one powerful tool to ensure that the American taxpayer is getting a fair return on their investment in research and development.” 

The Bayh-Dole law, however, was silent on whether a new drug that came to market had to be available at a certain price. The authors said that was intentional. 

“Bayh-Dole did not intend that government set prices on resulting products,” the senators wrote. “The law makes no reference to a reasonable price that should be dictated by the government. This omission was intentional; the primary purpose of the act was to entice the private sector to seek public-private research collaboration rather than focusing on its own proprietary research.” 

Under the new proposal, however, price could determine whether the federal government would be permitted to “march-in” and eliminate a company’s exclusive patent, a new interpretation of Bayh-Dole that Arizona Chamber of Commerce & Industry President and CEO Danny Seiden sharply criticized.

“The proposal released by the Biden administration under the guise of lowering drug costs will do nothing of the sort and is just the latest attempt by the federal government to misuse the Bayh-Dole Act to deceptively institute its harmful drug price controls,” he said. “The administration fails to recognize the real victims of its unprecedented drug pricing schemes: the entrepreneurs and startups who will be dissuaded from developing new inventions, and the patients who will lose out on lifechanging and potentially lifesaving pharmaceuticals due to fewer new drug developments and fewer clinical trials.” 

The new Bayh-Dole proposal from NIST comes on the heels of the Medicare drug pricing scheme in the Inflation Reduction Act that the Arizona and U.S. chambers also opposed.