Calls to Undermine Patent Protections Must Be Rejected, Innovation Depends On It

It’s often said that patent protections are the bedrock of innovation—and that couldn’t be any truer for the industry that has brought lifesaving drugs and vaccines to people around the world.

From start to finish, developing and bringing a single approved drug to market typically takes several years and requires billions of dollars. On top of the significant time and financial investments required, manufacturers take on immense risk knowing that the Food and Drug Administration (FDA) only approves a small percentage of drugs entering the clinical development phase. Strong intellectual property rights are critical to ensuring that drug manufacturers can recoup the costs from successful treatment development and offset any failed previous attempts. These recovered costs can also then be used to fund future research for lifesaving treatments. The money necessary to develop new drugs would not be risked if others can just wait and immediately steal the technology when the drugs are successful.

Yet, progressive advocacy groups have repeatedly petitioned the federal government to undermine America’s patent system and institute dangerous price-setting policies. The latest such attempt was the newly launched Make Meds Affordable campaign’s letter to the U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra.

The first proposed “solution” outlined in the letter would allow the federal government to force generic competition on patented drugs under 28 U.S.C. §1498, known as Section 1498. Under this remedy statute, enacted in 1910, the federal government is granted permission to use patented products without the rights of the patent holder in exchange for “reasonable and entire compensation.” A century later, progressives now argue that the federal government should use Section 1498 to regulate the costs of complex medications. If the federal government were to take on such an unprecedented interpretation and implementation of Section 1498, the consequences would be chilling for consumers and vulnerable patients.

Progressives’ “solution” would set a precedent that the federal government could force drug manufacturers to relinquish their exclusive patent rights no matter how much they spend on research and development. Consequentially, it would destroy drug companies’ incentive to pursue research for high-risk illnesses, impacting the most vulnerable citizens.

The letter’s demands for HHS to misuse the Bayh-Dole Act’s “march-in” rights to control prescription drug costs are simply egregious. The Bayh-Dole Act is a 42-year-old piece of legislation that establishes a structure for universities, nonprofit research institutions, and small businesses to patent and license inventions based on federally funded research. These private firms could then transform these breakthroughs into commercial inventions. This law ushered in a new era of innovation that facilitated the development of hundreds of new drugs and vaccines through public-private partnerships, including the COVID-19 vaccines that have saved millions of lives worldwide.

A condition included in the Bayh-Dole Act gives the federal government permission to “march-in” and force patent holders to grant a license to a third party under a strict set of circumstances, including when the patent holder either refuses or lacks the means to commercialize the product. Notably, the legislation’s authors intentionally omitted pricing as a justification for the march-in mechanism to be exercised. Under both Republican and Democrat administrations, the National Institutes of Health has denied several march-in petitions based on prescription drug pricing.

If the Biden Administration were to reverse this precedent and allow the HHS to misuse Bayh-Dole’s “march-in” rights to impose prescription drug price controls, they would discourage drug manufacturers from entering into future public-private partnerships. Driving a wedge between the world’s leading research organizations and the only companies capable of turning a potential medical breakthrough into a lifesaving cure is not a recipe for success.

Pursuing these poorly conceived proposals would irreversibly stunt future innovation. Instead, the federal government should investigate the real suspects behind high prescription drug costs: Pharmacy Benefit Managers.

Reforming the broken rebate system to force these corporate middlemen to pass discounts and savings to consumers is a far more viable solution to lowering prescription drug costs than mistakenly invoking Section 1498 and misusing march-in rights. The future of protecting intellectual property and the development of life-saving drugs is at stake.