Mintz IRA Update — Opposition to the Use of March-In Rights to Lower Drug Prices
In our previous Mintz IRA Update, we covered the Biden administration’s proposal exploring the use of “march-in rights” granted under the Bayh-Doyle Act (the “Act”) to seize pharmaceutical patents if the administration believes that a pharmaceutical product is not available to the public at a reasonable price. As a quick recap, the Act grants the government authority to exercise “march-in rights,” allowing federal agencies to require patent licenses be given to third parties if a product was developed with the assistance of federal funding and one of four statutory criteria under the Act is satisfied. On December 8, 2023, the Biden administration released the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights (the “Draft Guidance”), providing a framework with specific factors and hypothetical examples to assist agencies in their determination of whether to exercise “march-in rights.” The administration’s suggestions include having agencies conduct an evaluation of whether the “march-in” would alleviate health or safety concerns, meet public use and access requirements, and for the first time in the Act’s history, agencies may consider reasonableness of pricing in considering whether a “march-in” is warranted.
A number of Republican lawmakers oppose the proposal to utilize “march-in rights” to curb rising prescription drug costs, citing concerns over whether the use of “march-in rights” could stifle pharmaceutical innovation and undermine intellectual property rights. On March 4, 2024, U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee requested that the Government Accountability Office (GAO) issue a determination as to whether the Draft Guidance meets the definition of a “rule” under the Congressional Review Act (CRA), rendering the Draft Guidance subject to challenge under the CRA. The CRA adopts the APA’s definition of a “rule,” which states that a rule is “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedures, or practice requirements of an agency...”. 5 U.S.C. § 551(4). However, the CRA excludes three categories of rules from coverage under the CRA: (1) rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. § 804(3). On May 28, 2024, the GAO issued its decision, concluding that the Draft Guidance is not a rule. The Draft Guidance does not impose any requirements on agencies or alter the rights or obligations of regulated parties. Additionally, the NIST received over 52,000 comments in response to the Draft Guidance, which it is analyzing and incorporating into its final guidance document. Because there are additional steps NIST must take before the Draft Guidance is finalized, the GAO concludes that the Draft Guidance is not “certain and final, and therefore does not implement, interpret, or prescribe law and policy.”
Criticism of the proposal to use “march-in rights” to lower prescription drug prices is not limited to the Republican party. Senator Chris Coons (D-Del.) and nine other Democrats signed onto a letter to President Biden signaling their concern over the exercise of “march-in rights” with respect to pharmaceutical products. The authors point out that fewer than 2% of products approved by the Food and Drug Administration (FDA) are eligible to be subject to full “march-in rights,” and thus exercising “march-in rights” would have a negligible impact on tackling drug costs. Additionally, the authors argue that the benefits would be outweighed by the threat to public-private partnerships and private-sector investment in federally funded research for all types of technologies and products, not just pharmaceuticals.
We will continue to monitor developments surrounding the Biden administration’s attempts to “march-in” on pharmaceutical patents and drug prices, including Congressional response to the GAO’s ruling and will provide updates in future editions.
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