Biden Admin Threatens to Seize Publicly Funded Drug Patents

The Biden administration took steps Thursday that could clear the way for the federal government to seize the patents of high-priced pharmaceuticals that were developed using public funds.

The move comes as the White House searches for ways to reduce the cost of prescription drugs. Under guidelines published by the Commerce Department, federal agencies could exercise “march-in rights” — the power to claim patents for public use — against pharmaceutical companies that developed a given drug using federally subsidized research.

The new guidelines allow officials to consider high prices as a contributing factor in the decision to exercise march-in rights. The availability of a drug is another key variable. Companies producing a drug that is both high-priced and has limited availability could have their patents seized and licensed to another producer, with the goal of creating competition and lowering prices.

“Taxpayers have spent hundreds of billions of dollars on research catalyzing the discovery and development of new prescription drugs,” the White House said in a statement. “The Biden-Harris Administration believes taxpayer-funded drugs and other taxpayer-funded inventions should be available and affordable to the public.”

White House National Economic Advisor Lael Brainard on Thursday highlighted the importance of pricing. "When drug companies won't sell taxpayer-funded drugs at reasonable prices, we will be prepared to allow other companies to provide those drugs for less," she said. "If American taxpayers paid to help invent a prescription drug, the drug companies should sell it to the American public for a reasonable price."

Unused potential: The federal government has never exercised march-in rights for drugs, but the potential authority to do so comes from the Bayh-Dole Act of 1980, which established rules for organizations to commercialize inventions that were created using federal funds.

The Trump administration had proposed a rule that would have prevented the federal government from exercising march-in rights solely on the basis of price. But the Biden administration did not approve the rule and instead is proposing to make price a key factor in determining whether to seize a patent.

Drug manufacturers will likely challenge any effort to exercise march-in rights, and the pharmaceutical lobby criticized Thursday’s announcement, claiming that patent seizures would limit the development of new drugs. “This would be yet another loss for American patients who rely on public-private sector collaboration to advance new treatments and cures,” said a spokesperson for the Pharmaceutical Research and Manufacturers of America, or PhRMA.

Proponents, however, say that seizures would provide another tool for the federal government to restrain prices. Peter Maybarduk of the consumer advocacy group Public Citizen told The Washington Post that the use of march-in rights could serve as “a check on profiteering” by pharmaceutical firms. “Drugmakers should be on notice that unreasonable pricing could cost them their monopoly,” he said.

And just the threat to use federal power to seize drug patents could have an immediate effect. “If I was a drug company that was trying to license a product that had benefited heavily from taxpayer money, I’d be very careful about how to price that product,” Jing Luo, a professor of medicine at the University of Pittsburgh, told the Associated Press. “I wouldn’t want anyone to take my product away from me.”