Following years of discussion and pressure being applied by certain policymakers (including Senate HELP Committee Chair Bernie Sanders), the Biden Administration announced that a framework is being put forward by HHS and the Department of Commerce to allow federal agencies to consider the price of a drug product when evaluating whether the federal government should use march-in rights under the Bayh-Dole Act to license other manufacturers to make a product whose R&D was supported by taxpayer funds. Although the Bayh-Dole Act has been on the books for a long time in which we have seen significant public-private partnerships developing beneficial therapies and prophylactics, the federal government has never considered price to be a factor when determining whether a federally-funded product is sufficiently accessible to the public. Now, it appears that the Biden Administration is ready to use march-in rights to tackle rising drug costs.

The public can now comment as this proposal is being finalized, but many questions still remain. For example, when will a product be considered to have an unreasonably high price such that HHS will consider exercising its march-in rights? If it does exercise such rights, which company or companies will be eligible to receive a license and under what terms? Often, many generic companies are simultaneously developing their products and challenging the relevant patents, and it remains to be seen how HHS will decide which companies will receive the license.

In addition, many products are covered by different types of patents. Although there are often patents directed to the active ingredient, there can also be patents on various methods of use, pharmacokinetics, polymorph forms, drug formulations or devices, and many more. But, government research funding is typically directed at the very beginning stages of the R&D process. There will certainly be disputes – and likely litigation – about how far the march-in rights extend under these circumstances, not to mention the litigation that is likely to challenge whether the Bayh-Dole Act can even be extended to cover situations where price is the only driving factor leading the government to exercise its march-in rights.

This new proposal will certainly be hotly contested from both sides of the drug pricing debate. And, many companies are likely going to rethink the extent to which they will partner with the government on R&D if march-in rights will be aggressively used. In any event, look out when HHS comes a march-in'.

“Today, the Department of Commerce (DOC) and HHS released a proposed framework for agencies on the exercise of march-in rights that specifies for the first time that price can be a factor in determining that a drug or other taxpayer-funded invention is not accessible to the public.

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