WASHINGTON, D.C. — The Federal Trade Commission (FTC) recently applauded the National Institute of Standards and Technology (NIST) for its draft framework to guide the federal government’s use of “march-in” rights on patents funded by taxpayer dollars. The FTC’s endorsement signals a potential shift in how the government approaches the pharmaceutical industry and drug pricing.
Under the Bayh-Dole Act, the federal government can “march in” on patents for inventions created with public funds. This allows the government to require patent holders to license these patents to other applicants. Despite the law being in place for over 40 years, these rights have not been utilized before.
The draft framework proposed by NIST, a part of the U.S. Department of Commerce, provides guidance on when the government should exercise these rights. Notably, it suggests that high drug prices could be an appropriate trigger for march-in actions.
In its comment, the FTC lauded NIST and the Interagency Working Group for Bayh-Dole, which includes the U.S. Department of Health and Human Services, for their efforts to reactivate march-in rights. The FTC sees this as a crucial check on companies charging Americans inflated prices for drugs developed with taxpayer-funded research.
Drawing upon its experience in promoting competition and combatting anticompetitive practices in the pharmaceutical industry, the FTC expressed support for an expansive and flexible approach to march-in rights. It contested industry claims that high drug prices are necessary to fund research and development, arguing that prices often depend more on whether the drug faces competition than on R&D costs.
Despite nearly three in 10 Americans reporting rationing or skipping their medications due to high costs, pharmaceutical firms continue to benefit from hundreds of billions of dollars of taxpayer investment in R&D. March-in rights, according to the FTC, are an essential check to ensure that taxpayer-funded inventions are affordable and accessible to the public.
However, the FTC also acknowledged that while march-in rights can be a valuable tool to address potential harms in the pharmaceutical industry, broader challenges requiring government-wide solutions remain. For instance, “patent thickets”, where pharmaceutical companies use large patent portfolios to protect a single treatment, could potentially weaken the utility of march-in rights. This is because some drugs may be protected by privately funded blocking patents in addition to government-funded patents subject to march-in rights.
To address such patent thickets, the FTC urges agencies to work collaboratively. The Commission voted 3-0 to approve the filing of the comment.
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