As President Joe Biden seeks to make good on promises to bring down drug prices, his administration is pulling multiple levers to help patients pay less at the pharmacy. From Medicare price negotiations to a $35 cap on insulin, many of these changes are already in motion.
The administration is also floating a proposal to “march in” on technology patents that originated with taxpayer-funded research grants to seize patents and let nationalized generic or biosimilar competition draw down prices. Under the 1980’s Bayh-Dole Act, inventors retain ownership of technology that comes from federal funding, but the Biden administration is looking to assert these march-in rights to claim patents for drugs and other technology deemed unreasonably priced.
“The administration believes taxpayer-funded medications should be reasonably available and affordable,” according to a White House fact sheet from Dec. 7, 2023.
The proposed move has gained support from federal agencies like the U.S. Patent and Trademark Office, FDA and the FTC.
In a joint blog in 2022, FDA Commissioner Robert Califf and Under Secretary of Commerce for Intellectual Property and Director of the PTO Kathi Vidal wrote that “while the issuance of robust and reliable patents to incentivize pharmaceutical innovations is critical, our patent system must not be used to unjustifiably delay generic drugs and biosimilar competition beyond that reasonably contemplated by law.”
One of the most recent attempts at march-in rights failed, however. In March last year, the government backed away from an attempt to secure patents to Pfizer and Astellas Pharma’s prostate cancer drug Xtandi, finding that the authority would not “be an effective means of lowering the price of the drug,” according to the NIH.
And despite official backing and support from individual lawmakers, a vocal cadre of detractors, including leaders from the industry, lobbying groups, think tanks and others, want patents to remain in the hands of those who invented a technology, even if it is tied to government funding.
One of those detractors is former head of the PTO, Andrei Iancu, appointed to the position under former President Donald Trump. Here’s what Iancu, who is also co-chair of the Council for Innovation Promotion, had to say about the proposal and the implications for the industry, as well as the future of drug innovation in the U.S.
This interview has been edited for brevity and style.
PHARMAVOICE: Can you start by characterizing President Biden’s march-in proposal from your perspective in terms of what it’s trying to accomplish?
ANDREI IANCU: The president's proposal to march in and seize patents that were derived from federally funded research, or at least in parts from federally funded research, is being touted by the administration as an attempt to reduce drug prices. And whether or not that is the actual intent, that is what they are saying publicly. The reality though, is the march-in proposal would do nothing to actually reduce drug pricing. Instead, it would simply just reduce innovation in all industries in the United States.
Let’s explore that last part more. What effect do you believe the proposal would have on innovation in the pharma and biotech space?
It would be devastating to innovation that comes out of university laboratories or federal laboratories and any other research lab that depends at least in part on federal funds. If an inventor or a researcher obtains a federal grant, and uses that grant to fund their research and supplements that grant with private funds, then any patents that are generated from that research will be subject to the administration marching in and seizing that patent if the administration determines for a whole host of reasons that it needs to do so.
The impact is that industry will shy away from any innovations that are derived from such laboratories that have used federal funds — any innovation that comes out of that would be tainted, so to speak, with the potential for the government to march in and seize it. As a result of that, the industry is not going to invest the millions and sometimes billions of dollars it takes to bring that innovation from that laboratory to the market.
One of the issues in the current system is that taxpayers are contributing to the development of medications that then come to the market, and taxpayers have to pay again to access them. How do you address that sort of double jeopardy?
Here’s the reality: If the government threatens to take away these patents, the consumers will have zero access to that technology if the industry doesn't bring it to market. The price of no technology on the market is infinite, and there is no amount of money you can give to buy a product that doesn't exist.
The answer to any pricing issues is more free market, not less free market in the United States, from the beginning of time. What has made this country great from an economic perspective? Competition and the free markets. And anytime we get stuck, the answer for America is more free enterprise from an economics perspective. So if we want to reduce pricing, we need to increase competition in the free market, not have the government step in, seize technology, nationalize industries and therefore reduce competition. In the long run that will reduce the amount of product on the market and actually make it more expensive.
Should the federal government step out of drug research outright to avoid the conflict of interest?
That is a potential answer. And if the president’s march-in proposal goes through, many research institutions will vote with their feet, and they will shy away from taking federal funds if they don’t absolutely need them. But that would be devastating to the United States — the U.S. needs to increase its dedication of public funds to R&D to maintain our technological lead.
The R&D budget for the federal government as a percentage of GDP has stayed relatively constant for the last 50 years, whereas our competitors have dramatically increased their R&D budgets. Take a look at China, for example. The answer to this is not less public funding — the answer is more public funding to encourage private competition. Both of these things can and should happen at the same time.
What are the main changes for pharma companies under this proposal?
The reality is that pharmaceutical development is extraordinarily risky. Many attempts fail. Even if successful, it takes a long time to bring a drug to market between the basic science research, clinical trials and FDA requirements — it takes years. And then on top of that, once it is out on the market, it’s easy to replicate. And because of that, you absolutely need the patent system, without which investors will shy away from it and go where technology is less risky.
Do you have an alternative proposal to reduce drug prices that would work better than march-in rights?
In the short run, there are issues with PBMs that add dramatically to the costs consumers pay for drugs, and there are international trade issues. Reduced prices overseas fall on the back of the American consumer, and frankly, more attempts should be made in trade agreements with our partners and friends around the world to bear their fair share in bringing life-saving medications to market.
I am definitely sympathetic with the concept that American consumers should pay less for medical care. But the patent system is not at fault for that. The answer is not in weakening the patent system — it needs to be strengthened to encourage more investment and competition so that treatments are brought to patients. In the long run, competition drives prices lower.
