White House asserts power to seize drug patents if prices are too high

December 7, 2023

The Biden Administration on Thursday asserted authority to seize patents of medications if the price of those drugs is too high. 

It’s part of a new framework in which the White House said the Administration is “cracking down on price gouging and taking on special interests to lower costs for consumers and ensure every American has access to high-quality, affordable health care.”

Under the Bayh–Dole Act of 1980, the government retains certain rights on any products produced through a public-private partnership using federal funding. This legislation allows the federal agencies that provided the funding to compel companies that make such products in order to provide a “nonexclusive, partially exclusive, or exclusive” license to a “responsible applicant.”

If a company refuses to grant a license for its product, the federal government has the authority to grant the license itself via a policy known as march-in rights. In the case of drug pricing, the government has the right to take patents for drugs developed with taxpayer funds and share them with other pharmaceutical companies if the public cannot “reasonably” access the medications.

Though the government has never before exercised these decades-old rights, for the first time officials can now factor in a medication’s price in deciding to break a patent.

“The Administration believes taxpayer-funded medications should be reasonably available and affordable,” the White House said in a statement.

The statement goes on to say that the Administration’s actions build on earlier steps to lower health care, including capping the cost of insulin at $35 per month for seniors, allowing Medicare to negotiate lower prescription drug prices, requiring drug companies to pay rebates to Medicare if they raise prices faster than inflation, and locking in $800 per year in health insurance savings.

The new drug pricing framework will be open to public comment for 60 days.

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