What Are March-in Rights? (+ the Controversial Xtandi Petition)

As a patent holder or someone looking to register a patent, there's a good chance you've heard of march-in rights. The government uses these rights to either grant licenses for themselves or give licenses to other parties. This could extend to a competitor of the patent-holding business if the government determines it necessary.

Let's discuss this in more detail, starting with the Bayh Dole Act.

What you need to know about the Bayh Dole Act

In summary: The Bayh Dole Act of 1980 (also known as the Patent and Trademark Law Amendments Act) is US legislation that deals with intellectual property (IP) associated with federally funded research.

Businesses, non-profits, and universities that have federally funded inventions can pursue independent ownership rather than offering up ownership to the government.

(But what does this have to do with march-in rights?)

Well:

Section 203 in the Act speaks to march-in rights. 

In particular, it covers when and how the government can use march-in rights.

How the government can use march-in rights

The government can enforce march-in rights in four different circumstances:

(1) The patent owner has taken no actions to apply their invention practically.

(2) Action is vital for alleviating health or safety needs and is not being taken by the patent owner.

(3) The license is essential so the invention can be put to public use, and the patent holder has neglected to take the required actions. 

(4) When agreement as per Section 204 of the Act has not been obtained or where it’s been breached. According to this section, patented products must substantially be produced in the US unless not commercially viable. 

In addition:

The licenses granted to other responsible applicants, as decided by national institutes, can be (1) non-exclusive, (2) partially exclusive, or (3) exclusive.

Why march-in rights for pharmaceuticals are being rejected

If you have yet to hear of this, this is a massive debate in the US today.

Due to the often very “high-seeming prices” of life-saving drugs, many different organizations and individuals have requested the government grant patent licenses to other parties to make cheaper generics.

Unfortunately, the government has rejected all of these requests. 

Let's look at one pertinent case:

In the case of prostate cancer drug Xtandi, Astellas Pharma charges US patients a whopping $156,000 for treatment. This is significantly higher than in other countries.

The National Institutes of Health (NIH) and the US Army provided grants for the discovery of the drug at UCLA.

The requests to enforce march-in rights from Knowledge Ecology International (KEI) and the Union for Affordable Cancer Treatment (UACT) were rejected in 2016, twice.

This NIH rejected it the first time. And the US Army opted to reject it the second time. 

The proposal was merely for federal institutions to exercise their march-in rights to get a generic production of the drug.

On appeal in 2017, the request was once again rejected.

Then there was the potentially precedence-setting march-in petition. 

This time it was at the request of two prostate cancer patients, David Reed, and Clare Melvin Love, in 2019. This was followed by further support from Robert Sachs and another cancer patient, Eric Sawyer, in 2021.

Further support was accrued:

• From other prostate cancer patients,
• From the Universities Allied for Essential Medicines,
• From Harvard academics in the form of a letter of support,
• And from many other parties.

Despite this, on March 21, 2023, the NIH declined the petition to exercise march-in rights.

So, why was the Xtandi petition rejected?

The reason why the federal agencies rejected the Xtandi petition, and the reason why they've rejected others is this:

The US government is concerned about misusing march-in rights to control drug prices. 

The Bayh-Dole Act keeps the US ahead of its competitors, and lackluster granting of the march-in provision could damage important alliances between federal agencies, academic institutions, and entrepreneurs.

Will march-in rights ever be used?

The question of whether march-in rights will be used is a complex one. It’s difficult to determine its effective use, and so far in the 43 years of its existence, there’s yet to be a valid case.