Breaking Precedence — Biden's New March-in Guidelines

For over 40 years, the Bayh-Dole Act has stimulated innovation in the United States. Through federally funded research, companies have been able to step up and provide timely life-saving and altering technologies.

Take the COVID-19 vaccine, for example. The development of the vaccination is all thanks to the assistance of federal funding and the protection that the march-in rights provide.

The Biden Administration seeks to amend these rights slightly through its "Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights."

What's soon to come for march-in rights?

According to the draft guidelines, if a company “has commercialized the product, but the price or other terms at which the product is currently offered to the public are not reasonable, agencies may need to further assess whether march-in is warranted.”

However, critics of march-in rights change hold reservations about what constitutes "reasonable pricing." For example, former Senator Birch Bath had previously told the National Institutes of Health (NIH): “If Congress does decide to amend Bay-Dole, someone must clearly define what is a 'reasonable price.'”

Despite these early concerns, the amendment is still unclear. The former senator went on to say: "Congress must keep in mind that the vast majority of technologies development under the law are commercialized by small companies that 'bet the farm' on one or two patents. Copycat companies are always waiting until an entrepreneur has shown the path ahead. They can always make things cheaper since they have no significant development costs to recover."

The origin of march-in rights

The Bayh-Dole Act, previously known as the Patent and Trademark Act Amendments, was enacted in 1980. It allowed research institutions, universities, and businesses to patent and commercialize inventions developed under federal agency funding.

Under this Act, the government may "march in" and invoke its rights to request relicensing of a patent should reasonable effort not be made to commercialize the research being conducted. 

The Biden Administration seeks to amend this provision to give the federal government authority to dictate the prices of products — mainly federally funded inventions such as green technologies and medicine.

Xtandi & other high-priced drugs

According to the Biden Administration, it aims to use march-in-rights for particular prescription drugs to help lower their prices. Interestingly, today, although march-in-rights have been in place since 1980, they've never been utilized.

President Biden posted on Twitter that “my Administration is proposing that if a drug made using taxpayer funds is not reasonably available to Americans, the government reserves the right to 'march in' and license that drug to another manufacturer who could sell it for less.”

He also stated:

"This is an important step toward ending Big Pharma price gouging.

It's good for competition.

It's good for our economy."

He further stated the benefit of the draft guidance for millions of Americans. The Administration is focusing on drugs like Xtandi and other life-saving medications and making them more affordable for the general public.

Concerns about the efficacy of the new Framework

A recent study of FDA-approved drugs between 2011 and 2020 found that 92% of the therapeutic drugs studied weren't federally funded. It also discovered that 99% of the studied drugs can't be marched upon as the patents evaluated don't cover the entirety of the asset's intellectual property.

In fact, according to the study, "There are only 5 out of 361 pharmaceutical products in which all available MoA (mechanism of action) and CoM (composition of matter) patents include a government interest statement and could be subject to march-in rights." 

President of Joseph Allen & Associates and the executive director of the Bayh-Dole Coalition, Joseph Allen, concludes from this that startup companies are most likely to have their key inventions funded by the government, as these receive about 70% of all academic patent licenses.

He speculates that the Amendments are going to be a threat to innovation. He states, “ Anyone coming up with a revolutionary breakthrough in energy, environmental protection, agriculture, or working under the SBIR program has a new sword dangling over their heads.”

And Joseph Allen isn't the only concerned party. The Pharmaceutical Research and Manufacturers of America trade group noted that companies provide most of the funding for drug development and stated that the new Framework is "a road map for seizing patents" and is "another loss for American patients and inventors."

The future of federally funded research

The National Institute of Standards and Technology has created a 60-day comment period, which will close on February 6th, 2024. Following this, the NIST will “review and make publicly available all comments received, before finalizing the guidance.”

The amendments could have a significant impact on federal march-in authority. But whether they'll meet their intention, many still speculate.

One thing is for sure, based on public outcry, the NIST will have no shortage of comments to review.