Former US Patent Chief: Drug 'March-in Rights' Would Be a 'Devastating' Mistake

As U.S. President Joe Biden seeks to fulfill his promise tolower drug prices, his administration is taking a multi-pronged approach to help patients pay less at the pharmacy. From Medicare'sprice negotiationsto the $35 insulin copay cap, many measures are already underway.

The administration has also proposed a"march-in" proposal, targeting patents on technologies stemming from taxpayer-funded research grants, seeking to seize the patents and let nationalized generic or biosimilar competition drive down prices. Under the 1980 Bayh-Dole Act, inventors retain ownership of federally funded technologies, but the Biden administration is seeking to exercise these march-in rights to seize patents on drugs and other technologies on the grounds of "unreasonable pricing."

According to afact sheetreleased by the White House on December 7, 2023, "the Administration believes that taxpayer-funded drugs should be reasonably available and affordable."

The proposal has gained support from federal agencies, including theU.S. Patent and Trademark Office, the U.S. Food and Drug Administration (FDA)and theFederal Trade Commission (FTC)。

In a joint 2022 blog post, FDA Commissioner Robert Califf and Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, wrote: "While it is critical to grant strong and reliable patents to incentivize drug innovation, our patent system must not be used to unreasonably delay generic and biosimilar competition beyond what the law reasonably anticipates."

However, the most recent march-in attempt ended in failure. Last March, the governmentabandonedan attempt to seize patents on Pfizer and Astellas Pharma's prostate cancer drug Xtandi, with the National Institutes of Health (NIH) stating it believed march-in rights were "not an effective means" of lowering the drug's price.

Despite official support andindividual lawmakers' backing, a group of opponents, including industry leaders,lobbying groups、think tanks, and others, want patents to remain with technology inventors, even when the technology is linked to government funding.

One of the opponents is Andrei Iancu, former Director of the USPTO, appointed by former President Donald Trump. Below are Iancu's (who also serves as co-chair of the Council for Innovation Promotion) views on the proposal, its impact on the industry, and the future of U.S. drug innovation.

This interview has been edited for brevity and clarity.

Pharma Voice: Could you first describe, from your perspective, what President Biden's march-in proposal aims to achieve?

Andrei Iancu:The President's proposal to march in and seize patents stemming from federally funded research (or at least partially federally funded research) is being touted by the administration as an attempt to lower drug prices. Whether that is its true intent or not, that is their public statement. But the reality is that the march-in proposal does nothing to actually lower drug prices. Instead, it would only reduce innovation across all industries in the United States.

Let's explore that further. What impact do you think the proposal would have on innovation in the pharmaceutical and biotech sectors?

It would be devastating to innovation that comes out of university labs, federal labs, and any research lab that relies at least in part on federal funding. If an inventor or researcher receives a federal grant and uses that grant to fund their research, supplementing it with private funds, then any resulting patent could be at risk of march-in and seizure because the government deems it necessary for various reasons.

The effect is that industry will shy away from any innovation originating from such labs that have used federal funds—any resulting innovation could be "tainted," meaning there is a risk of government march-in and seizure. Therefore, industry will not invest the millions or even billions of dollars needed to bring an innovation from the lab to market.

One issue in the current system is that taxpayers fund drug research and development, but once the drug hits the market, taxpayers have to pay again to access it. How do you view this "double burden"?

The reality is: if the government threatens to take away these patents, and industry does not bring them to market, consumers will have no access to the technology at all. The price of a technology that is not on the market is infinite—no matter how much you pay, you cannot buy a product that does not exist.

The answer to any pricing problem is more free markets, not less, and that has historically been the case in America. What has made this country so great economically? It is competition and free markets. Whenever we have gotten into trouble, from an economic standpoint, America's answer has been more free enterprise. So, if we want to lower prices, we need to increase free-market competition, not have the government step in, seize technology, nationalize industries, and thereby reduce competition. In the long run, that will reduce the number of products on the market and actually make products more expensive.

Should the federal government completely exit drug research to avoid conflicts of interest?

That is one possible answer. If the President's march-in proposal were implemented, many research institutions would "vote with their feet" and avoid accepting federal funds unless absolutely necessary. But that would be devastating for America—we need to increase public funding for R&D to maintain our technological leadership.

Over the past 50 years, the federal R&D budget as a share of GDP has remained largely flat, while our competitors have significantly increased their R&D budgets. Look at China as an example. The answer is not to reduce public funding—it is to increase public funding to encourage private competition. These two things can and should happen simultaneously.

What would be the main change for pharmaceutical companies under the proposal?

The reality is that drug development is extremely risky. Many attempts fail. Even when successful, bringing a drug to market takes a long time—from basic science research, clinical trials, to meeting FDA requirements—it takes years. And on top of that, once a drug is on the market, it is easily copied. Because of this, you absolutely need the patent system; without it, investors would be deterred and shift to less risky technology areas.

Do you have alternatives to march-in rights that would be more effective at lowering drug prices?

In the short term, there are issues with pharmacy benefit managers (PBMs) that significantly increase what consumers pay for drugs, as well as international trade issues. Overseas price reductions are ultimately paid for by U.S. consumers. Frankly, more should be done in trade agreements with global partners and friends to have them bear a fair share of bringing life-saving drugs to market.

I fully sympathize with the view that U.S. consumers should pay less for healthcare. But the patent system is not the culprit. The answer is not to weaken the patent system—it needs to be strengthened to encourage more investment and competition, thereby bringing treatments to patients. In the long run, competition drives prices down.