Patients and innovators lose if the government pursues ‘march-in’

The Biden Administration this summer issued an executive order that seems to endorse the use of “march-in” – when the government seizes patent rights from an innovator to let competitors use that patented invention – in an effort to address medicine affordability. This policy could have a grave impact on the pipeline of new treatments and cures, while ignoring the reality that today more than 90% of prescriptions for drugs are filled with generics – up from 19% 35 years ago thanks to our competitive system that includes intellectual property (IP) protections, including patents.  

Allowing for the use of march-in rights to address pricing of medicines would have a chilling effect on American innovation. The government would be asking innovators to risk decades of research and billions of dollars – not to mention the chance of failing – to then have those inventions stolen after they succeed and given to third parties who put nothing on the line. The truth is, without reliable and reasonable protections for inventions, innovators simply won’t be able to develop the next lifesaving treatment or vaccine. Not to mention that removing those protections would also reduce incentives for innovators to collaborate with government or universities moving forward.

Earlier this year, the National Institute of Standards and Technology's (NIST) proposed rulemaking that would have amended the regulations it follows to carry out the Bayh-Dole Act to emphasize the critical role IP protections play in continued innovation. PhRMA and experts agree, preserving the American IP system is essential.

Utilizing march-in rights as proposed by the Biden Administration would chill innovation and undermine collaboration between the public and private sectors, and is not the right solution for increasing competition or improving affordability. As you hear more discussion of this policy proposal, keep these basic facts in mind:

• March-in rights were designed more than 40 years ago as part of the Bayh-Dole Act, a bipartisan policy that has been widely acknowledged to be hugely successful in its aims to encourage the development of products that contain inventions researched, in part, with federal funding. They are intended to be used only if it appeared that a private company would not bring federally funded inventions to market or if a company could not meet public health demand. Given the unprecedented collaboration taking place between biopharmaceutical companies, government and research institutions today, we could not be further from that hypothetical situation.
  
  
• Biopharmaceutical companies are not filing patents for things that the government invented. Provisions in Bayh-Dole allow for companies to patent their own inventions, even the ones that received a small portion of government funding or was developed from initial government research.
  
  
• The primary architects of the Bayh-Dole Act, Senators Bayh and Dole, have confirmed that Bayh-Dole does "not intend that government set prices on resulting products" and "makes no reference to a reasonable price that should be dictated by the government.”
  
  
• The government seizing patent rights from one company and then compelling that company to license the rights to a competitor seriously jeopardizes the future of new innovative medicines.

Misuse of the Bayh-Dole Act’s march-in provisions could significantly slow the pace of innovation not just in biopharmaceuticals, but across many different sectors. If America abandons our commitment to policies that have created the most collaborative and productive research ecosystem in the world patients will undoubtedly end up with access to fewer medicines, including generics. The biopharmaceutical sector supports common sense solutions that would lower out-of-pocket costs for patients that don’t risk the health and safety of patients or undermine future innovation. We are eager to work with the Biden Administration to pursue policies that protect access, choice and innovation.