Trump moves to limit powerful tool to contain drug costs
Industry alarms push White House to eye weakening little-known power
As drug prices have soared, lawmakers and patient advocates have pushed the federal government to deploy for the first time a powerful deterrent: a legal provision that allows it to suspend a drugmaker’s patent and license someone else to produce the drug.
Now, responding to industry alarm over those demands, the Trump administration is proposing to strictly limit the littleknown power.
The move by the Department of Commerce is supported by drug manufacturers and research universities but could undermine President Donald Trump’s populist message of attacking drug prices. He declared in his first news conference after his inauguration that drug companies are “getting away with murder” and has called lowering prices one of his “greatest priorities.”
Critics say the Commerce Department move is a triumph for industry.
“If tough talk and tweets could stop price gouging, consumers could celebrate,” said Rep. Lloyd Doggett, D-Austin, who said the administration is being swayed by drug company influence.
Undefined term
The Commerce draft plan would prohibit the government from suspending a drugmaker’s exclusive patent over excessive pricing. It targets an obscure, never-used provision of a 40-year-old law called Bayh-Dole that is supposed to protect taxpayer interests in government-funded inventions, such as drugs discovered using federal grant money.
The law gives the government “march-in rights” to circumvent a patent (and license someone else to market a drug) if the original therapy is not made available to the public “on reasonable terms.” But the phrase “reasonable terms’’ is not defined in the law and for years has been the subject of competing interpretations.
The Trump administration plan, which was published as a “summary of intended actions” in December but received little attention, would come down clearly in favor of drug companies and major research universities.
‘Getting ripped off ’
March-in rights have never been used by the government, which historically has encouraged the flow of discoveries to private business for development. The National Institutes of Health, the leading drug research agency, has declined multiple times to use march-in rights to control prices — including under Democratic President Barack Obama.
But in today’s hypercharged debates over the costs of U.S. prescription drugs, especially with the advent of biotechnology and gene therapies that cost hundreds of thousands of dollars a year, the government’s powers are getting a closer look.
Consumer advocates argue the threat of government action is one of the few checks on drug prices and could give drug companies second thoughts about gouging consumers on drugs that were invented with public funding.
“The pharmaceutical manufacturer takes taxpayers’ money that was invested, and takes the government monopoly that is granted, and charges monopoly prices without any countervailing force,” Doggett, chairman of the House Ways and Means subcommittee on health, said in an interview.
Constituents in his Central Texas district, he said, “think they are getting ripped off by the same company that used their tax money.”
Proposal coming soon
Doggett led 50 Democrats who wrote to Trump in 2017 urging the president to order NIH to create guidelines on when excessive pricing would trigger government action. The letter cited Trump’s own declaration after his 2017 inauguration that drug companies were on the White House target list.
The nation’s research universities, where federally sponsored research is conducted, have pushed the Trump administration to head off these initiatives. Universities reap millions of dollars a year from royalties on inventions they license to private companies. The industry and academic institutions argue that march-in rights, or even the threat of march-in rights, raise the specter of price controls and will discourage private investors from backing new discoveries.
The department’s National Institute of Standards and Technology is scheduled to issue a final draft this month of its proposal, which it is calling a “discussion document.” The draft plan would block any government agency from exercising march-in rights based on the price of a product. Exclusivity rights could still be suspended in times of national emergency — such as an epidemic.