Could the United States Invoke the Bayh-Dole Act to Curb Drug Prices?

The pressure to make US healthcare more affordable has never been higher. As patients, policy makers, and providers alike wait to learn the fate of the contentious new Senate healthcare bill scored today by the Congressional Budget Office, some stakeholders suggest that existing legislation—dating back to the 1980s—could potentially play a role in driving down prescription drug costs.

At the 8th annual Summit on Biosimilars, Donald Ware, partner and chair of the intellectual property department at Foley Hoag LLP, discussed the potential for the US government to make use of the Bayh-Dole Act of 1980 in its quest to bring drug costs under control.

Named after then-Senators Birch Bayh of Indiana and Robert Dole of Kansas, the Bayh-Dole Act (also known as the Patent and Trademark Law Amendments Act) gives the US government rights concerning patented inventions that are conceived of or produced in the performance of work that has been funded with federal dollars. The act grants federal agencies “march-in rights,” which allow the government to require a patent holder who has received federal funds to grant a license to a third party. If the patent owner refuses to grant a license upon federal request, the government itself may make such a grant in order to, among other possible reasons, “alleviate health or safety needs” that the patent holder has not reasonably addressed in its own use of the invention.

Some advocates of lower drug prices suggest that the Bayh-Dole Act be should invoked against drug manufactures in order force those companies to license their patents to developers of biosimilar and generic drugs. Making drugs cheaper and more accessible to patients, these advocates argue, falls within the meaning of alleviating the health and safety needs of the American public—a public that has funded drug development with its tax dollars. Ware explained that, because many expensive oncology treatments have been developed with help from cancer-specific research grants from the National Institutes of Health (NIH), and because any amount of federal funding can trigger the applicability of the Bayh-Dole Act, some groups view march-in proceedings as a viable means to reduce drug prices and, therefore, overall health costs.

Among those advocating for march-in proceedings are 51 congressional Democrats, led by Congressman Lloyd Doggett of Texas, who issued a letter asking the Trump administration to use the Bayh-Dole Act to drive down drug prices. Last year, 11 public interest groups lobbied the Obama administration to take similar action. Some have even suggested—in a request that Ware termed “breathtaking” in its scope—extending the Bayh-Dole Act to all FDA-approved drugs, vaccines, and medical tests.

As tempting as it may be to seek additional control over drug pricing by invoking Bayh-Dole’s provisions, however, there have been only 5 march-in petitions since 1997, all of which were denied by the NIH. These denials were perhaps unsurprising, as such invocations of the law could be construed as undermining the act’s statutory purpose. The policy was designed, Ware said, to encourage the use of federally funded inventions, to promote collaboration between commercial and not-for-profit entities, and to facilitate licensing of federally funded inventions as a means of ensuring that such inventions would be practically applied.

Other statutory requirements could also make such proceedings impractical; even if the government compelled the licensing of patents, the FDA would still have to approve a biosimilar or generic product as well as its manufacturing facility before such a product could be made available for patient use, and biosimilar manufacturers would still be required to demonstrate the similarity of their products to their references.

In light of these roadblocks to a government march-in, the Bayh-Dole Act is unlikely to become a major vehicle for bringing down drug prices. Yet, Ware said, many consider the simple threat of march-in proceedings to be a means to begin a much longer process of curbing the growth of drug costs. As the nation continues to seek meaningful healthcare reform, such proceedings could signal a first step toward greater government oversight of drug pricing.