Democrats call on administration to enforce ‘march-in rights’ to counter high drug prices

A trio of lawmakers who caucus as Democrats are calling on the Biden administration to bolster and finalize a federal rule utilizing the government’s legal authority to seize taxpayer-funded patents in order to combat the high price of drugs, despite Republicans arguing recent Supreme Court rulings supersede such powers.

Rep. Lloyd Doggett (D-Texas) and Sens. Angus King (I-Maine) and Elizabeth Warren (D-Mass.) signed a letter to Health and Human Services (HHS) Secretary Xavier Becerra and Commerce Secretary Gina Raimondo urging them to quickly finalize guidance on exercising federal “march-in rights.”

The Biden administration last year rolled out a framework for wielding its march-in rights granted by the the Bayh-Dole Act of 1980. March-in rights have never been exercised before, but the administration warned last year that it would make use of these authorities if drug companies don’t sell their products at a reasonable price.

“We write to urge you to carry out Congress’ will as specified in the Bayh-Dole Act by strengthening and quickly finalizing the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights,” the lawmakers wrote. “Specifically, we urge you to follow the text and the legislative history of the statute, which clearly authorize expert federal agencies to consider price as a factor in determining whether a subject invention is available to the public on reasonable terms.

Under Bayh-Dole, the federal government has certain rights on any products produced through a public-private partnership using federal funding. The corresponding federal agency that provided the funding for such a product has the right to compel companies to provide a “nonexclusive, partially exclusive, or exclusive” license to a “responsible applicant.”

If the company refuses, then the government can grant the license itself.

After the Supreme Court struck down the Chevron doctrine in June, however, Republicans have argued for the authority of federal agencies to be reexamined and reapportioned. Chevron was established by a Supreme Court ruling in 1984, providing federal agencies with the latitude to interpret ambiguous legislation and holding that federal courts should defer to these agency interpretations.

Sen. Bill Cassidy (R-La.), ranking member of the Senate Committee on Health, Education, Labor and Pensions, wrote to Becerra shortly after this ruling to challenge some of HHS’s interpretations, including its approach to march-in rights.

“HHS has been an active participant in an interagency working group led by the National Institute of Standards and Technology that seeks to reinterpret the Bayh-Dole Act’s criteria for the use of march-in rights to apply to drug prices,” Cassidy wrote, citing this as “another egregious example” of “unfettered agency power.”

Warren, King and Doggett argued Republicans are attempting to “radically and incorrectly broaden the scope” of the Supreme Court ruling. They noted the court’s ruling acknowledged that a statute’s unambiguous “meaning may well be that the agency is authorized to exercise a degree of discretion.”

“The Bayh-Dole Act is replete with clear and lawful delegations of regulatory authority. Specifically, this statute delegates discretionary authority to your agencies to ‘march in’ and reclaim a patent covered by the Act, to set reclamation procedures through regulation, and to determine whether the statutory criteria apply to a specific scenario,” they wrote.

According to the Bayh-Dole Act, a federal agency can issue its own license of a taxpayer-funded product if four criteria are met: the current exclusive licensee has not or is not expected to make “practical application” of the invention, it’s necessary in order to “alleviate health or safety needs,” doing so is needed to meet “requirements for public use” under federal regulations and the product is not being “manufactured substantially” in the U.S.

The Democratic lawmakers wrote to Becerra and Raimondo that their agencies retained the authority to relicense a drug patent if the drug is “not available to the public on reasonable terms.”

“We urge you not to be deterred by congressional Republicans who are seeking to hamstring your authority to lower drug costs for Americans and we are reiterating the need for your agencies to immediately strengthen and finalize the proposed guidance issued under this statute so that Americans may receive the benefits that Congress intended,” they wrote.

The Hill has reached out to HHS and the Commerce Department for a response.