Conservatives Urge HHS to Deny Turning Bayh-Dole March-In Provision into Price Controls

“Using march-in rights to regulate prices would have a chilling effect on drug development and on other innovative sectors.”

https://depositphotos.com/6496641/stock-photo-looking-at-the-opinion-section.htmlThirty-one signatories from 29 center-right public policy organizations have written U.S. Health and Human Services Secretary Xavier Becerra, urging him to deny a petition from Knowledge Ecology International that requests use of march-in rights under the Bayh-Dole Act against the prostate cancer medicine, Xtandi.

The conservative organizations represented on the letter include some of the most prominent center-right groups, such as the American Conservative Union, Americans for Prosperity, Americans for Tax Reform, the Competitive Enterprise Institute, Eagle Forum Education & Legal Defense Fund, FreedomWorks Foundation and Heritage Action for America. Conservatives for Property Rights led the letter initiative.

An Historically Unsuccessful Approach

KEI’s Xtandi petition, like many others previously lodged over the past 40 years, seeks march-in based on the price of a product. That is, advocates want to turn exceptional march-in into routine government price controls.

The Bayh-Dole Act’s limited, enumerated statutory grounds for the exercise of march-in exclude product price.

The plain statutory language hasn’t dissuaded those who regard inventions, especially the practical applications of federally funded basic research, as public goods or humankind’s common property. Reps. Peter DeFazio (D-Ore.) and Lloyd Doggett (D-Tex.) and Senators Elizabeth Warren (D-Mass.) and Angus King (I-Me.) support march-in misuse, including KEI’s request, specifically over pricing.

The maker of Xtandi, Astellas, has rebutted the foundation of sand on which KEI’s and Leftist lawmakers’ demands for march-in abuse are built. “While the U.S. government contributed approximately $500,000 to the initial discovery of the molecule that eventually became XTANDI, Astellas has invested more than $1.4 billion to date in research and development efforts for XTANDI on behalf of the patients we serve in the U.S. and around the world.”

Astellas cites the medicine’s broad availability, its affordability—“71% of US patients paid less than $100 in out-of-pocket costs for their XTANDI prescription regardless of insurance type”—and the National Institutes of Health’s proper rejection of an earlier price-based march-in demand aimed at the same medicine in 2016.

Senators Thom Tillis (R-N.C.) and Marsha Blackburn (R-Tenn.) have also weighed in with Becerra, in opposition to march-in qua price controls. “Stripping intellectual property rights for private actors simply because they are commercializing their applied research on terms opponents dislike contradicts the very purpose and function of the Bayh Dole Act,” Tillis and Blackburn write. “March-in rights were never intended to function as price controls nor does the statute allow it.”

The CPR-led letter recounts how the law’s namesakes, Senators Birch Bayh (D-Ind.) and Robert Dole (R-Kan.), intentionally omitted product pricing as a basis for march-in.

Dire Consequences

The conservatives’ letter to Becerra states, “Using march-in rights to regulate prices would have a chilling effect on drug development and on other innovative sectors.”

This letter warns of the dire consequences the illegitimate usage of march-in would bring. “If the government can revoke firms’ intellectual property rights outside of what the statute allows, private companies will never be able to raise the funding for the extensive research required to create new drugs and other technologies. Significant lines of scientific and technological innovation would grind to a halt. Far from getting a better price on products, American taxpayers would instead see their grant dollars wasted, as initial promising insights languish in labs without any private-sector partners willing to commercialize them—as was the case prior to Bayh-Dole.”

The letter to Becerra asks that he take signers’ views into account. It urges him to abide by statutory limits on march-in, just as all his predecessors and other officials of both Democratic and Republican administrations who have received similar petitions have done.

A total of 29 organizations signed the letter. The full list is available here.

 

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4 comments so far.

  • [Avatar for xtian]
    xtian
    March 14, 2022 09:59 am

    James – You are advocating for a position that is expressly contrary to the intent of the law, which, unlike your position (reasonable terms = reasonable price) does not have to be inferred or implied.

    “The CPR-led letter recounts how the law’s namesakes, Senators Birch Bayh (D-Ind.) and Robert Dole (R-Kan.), intentionally omitted product pricing as a basis for march-in.”

    Pricing may be high, but B-D is not the appropriate mechanism to address the issue.

  • [Avatar for James Love]
    James Love
    March 12, 2022 11:05 am

    So many things omitted from this blog by James Edwards. He says “The Bayh-Dole Act’s limited, enumerated statutory grounds for the exercise of march-in exclude product price.” okay, but “available to the public on reasonable terms” ( § 201.f) includes prices, and § 203(a)(2) and § 203(a)(3) both can include prices as well. Edwards does not mention the facts that are at the heart of the march in case: that the $189,800 annual cost is 3 to 6 times higher than other high income countries, or that co-payments can exceed $11k, or that the high price has pushed Xtandi onto Tier 5 or step therapy in insurance formularies.

    More on the case here: https://www.keionline.org/xtandi2021

  • [Avatar for James Love]
    James Love
    March 11, 2022 07:46 pm

    It is a petition from four prostate cancer patients, not from KEI.

  • [Avatar for xtian]
    xtian
    March 11, 2022 09:20 am

    If price march in rights would ever happen, the consequence would be that anyone who is considering or collaborating with a university (the researchers who typically get the NIH grants which implicates Bayh-Dole) will not do so unless the potential asset is free and clear of NIH grants. The result would be that university tech transfer out-licensing activities would dry-up.