In an attempt to rein in rising drug prices, the Biden administration unveiled a proposed framework of factors that federal agencies should consider when choosing whether to exercise so-called “march-in rights.” March-in rights allow the federal government to force patent-holding institutions to license patents for drugs (and other products) that were developed with taxpayer dollars.

March-in rights originated in the 1980 Bayh-Dole Act, which permits academic institutions to patent and grant exclusive licenses to inventions made using funding from federal grants. However, the law allows the federal government to “march in” and force the patent-holding institution to license its invention to others if the invention is not being commercialized or otherwise being made accessible to the public. To date, no federal agency has exercised its march-in right despite seven petitions to the National Institutes of Health asking them to do so.

Although march-in rights are not new, the Biden administration’s proposed guidelines would, for the first time, allow federal agencies to consider “the reasonableness of the [product’s] price” in deciding whether to march in. The guidelines provide that 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.” The guidelines further provide that an agency may march in if “the product [is] available only to a narrow set of consumers or customers because of high pricing.” What constitutes a reasonable price is not defined by the new guidelines and appears to be left to the discretion of agency officials.

It is unlikely that the new guidelines, if implemented, will have any real impact on drug prices. A recent study of Food and Drug Administration (FDA)-approved drugs introduced from 2011–2020, 92% of the therapies analyzed were not governmentally funded. Moreover, over 98% of the analyzed therapies cannot effectively be marched in on because they are covered by multiple patents, not all of which were not supported by government funding.

The proposed guidelines will likely affect small businesses disproportionately. Small start-ups are most-likely to have their inventions funded by the federal government as 70% of academic patent licenses are given to small companies.

The proposed guidelines are open for a 60-day comment period which ends on February 6, 2024. Directions for submitting comments can be found here.