November 5, 2012

NIH Asked to Exercise March-In Rights for Patented AIDS Drug

Can the federal government expand the use of a patented invention that was developed using federal research grants? The Bayh-Dole Act of 1980 sought to accelerate the transfer of federally funded research into practice, real world use; toward that end, the law allows federal grantees (such as a university) to pursue patent rights for the fruits of the federally funded work. A little-known provision in the Bayh-Dole Act gave authority to any federal agency that funds research, such as the National Institutes of Health (NIH), to order a “march-in” of patent rights where the funding agency determines such action is necessary to achieve the goals of the statute. This authority is held by any federal granting agency/department (e.g., NASA, DOE, DOD). Effectively, then, NIH can compel a patent owner to allow third parties to make and use the patented invention. The patent owner would be reasonably compensated for the use. March-in authority is justified when "action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees" or "action is necessary to meet requirements for public use." The march-in provision of the law has never been used by NIH, despite several formal requests over the years, citing the unaffordability of an AIDS drug, unavailability of a federally-funded stem cell technology, or drug (Fabrazyme) inaccessibility due to manufacturing shortages. In all of these instances, NIH has conducted a review of the request, but declined to exercise its authority.  A 2009 GAO study found that most federal granting agencies considered the march-in authority to be useful, but expressed concerns about a "chilling effect" on commercialization and technology transfer from any actual exercise of the right.

A new march-in petition to NIH has been filed by a coalition, including Knowledge Ecology International (KEI) and Public Interest Research Group (PIRG), asking the NIH to exercise march-in authority to increase access to the widely used Abbott AIDS drug, ritonavir (Norvir) (citing comparative per pill prices of $12.63/U.S. vs. e.g., $1.54/Italy, $1.46/France). This latest petition echoes a march-in request made to NIH in 2004, where a sudden increase in the price of Norvir immediately threatened access for AIDS patients. In its response to that petition, stating that “NIH believes that the issue of drug pricing is one that would be more appropriately addressed by Congress,” the agency denied the request. Here, the petition argues the necessity for a march-in for a number of reasons, primary focusing on an excessive price in the U.S. relative to similarly economically situated countries, but it further invokes an ADA-related argument on behalf of AIDS patients and cites adverse consequences for U.S. businesses seeking to be globally competitive. The current petition attempts to provide a metric for ascertaining when a cost would not be “reasonable” – suggesting a comparative study of U.S. prices vs. those in other income-equivalent countries. In addition to the specific relief requested, the petition asks NIH to formulate a policy that would include conditions warranting a use of the march-in mechanism, specifically where the U.S. price is higher than that charged in countries with similar income levels, and where the patent rights are frustrating the use of a dependent technology, e.g., a combination drug product. There is no reason to believe that NIH will be more receptive to this march-in request than to any of the previous filings, but the petition does attempt to quantify when the activities of a patent owner who controls a patented invention derived from federally funded research do not result in a “reasonable” satisfaction of health needs. As the agency did in 2004, NIH is likely to suggest that Congress is the appropriate venue to address any drug price standardization (federally funded research or not) and that the Federal Trade Commission is the appropriate venue for focusing on anticompetitive behavior. Notwithstanding the confounding variable of dissimilar national health care systems, this effort does prod the NIH to provide some definition for what reasonable implementation of a patented invention entails; to date, there has been no development of a march-in standard from NIH, and this dormant statutory authority has little definition.

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