Today the Federal Trade Commission issued a comment in response to the National Institute of Standards and Technology’s (NIST) request for information on its Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights under the Bayh-Dole Act.
Under the Bayh-Dole Act, the federal government has the right to “march in” on patents on inventions created using taxpayer funds—to require the patent holder to license the federally funded patent to other applicants. The draft interagency framework provides guidance outlining when the government should exercise its march-in rights, which have never before been utilized. The draft framework makes clear that high price is an appropriate basis for exercising march-in rights.
In the comment, the FTC applauds NIST, which is part of the U.S. Department of Commerce, and the Interagency Working Group for Bayh-Dole, which includes the U.S. Department of Health and Human Services, for their efforts to reactivate march-in rights as an important check on companies charging Americans inflated prices for drugs developed with taxpayer-funded research. In the comment, the FTC expressed support for an expansive and flexible approach to march-in rights, including providing that agencies can march in on the basis of high prices.
The FTC’s comment draws on its experience in promoting competition and combatting anticompetitive practices in the pharmaceuticals industry. Lack of competition in pharmaceutical markets can lead to inflated pricing, rendering some lifesaving treatments out of reach for many Americans. Nearly three in 10 Americans report rationing or skipping their medications due to high costs. Contrary to industry claims that high drug prices are necessary to fund research and development (R&D), drug prices often depend more on whether the drug faces competition than the drug’s R&D costs. At the same time, pharmaceutical firms enjoy hundreds of billions of dollars of taxpayer investment in R&D. March-in rights are an essential check to ensure that taxpayer-funded inventions are affordable and accessible to the public.
The FTC’s comment further explains that although march-in rights can be a valuable tool to address potential harms in the pharmaceutical industry, broader challenges requiring government-wide solutions remain. For example, dense “patent thickets” result from pharmaceutical companies using increasingly large patent portfolios to protect a single treatment. This may weaken the utility of march-in rights to provide affordable public access to drugs because some pharmaceuticals may be protected by patent thickets that include privately funded blocking patents in addition to government-funded patents subject to march-in rights. In its comment, the FTC urges agencies to work collaboratively to also address such patent thickets.
The Commission voted 3-0 to approve filing of the comment.