John F. Kennedy introduced himself to the American electorate through his book Profiles in Courage presenting stories of public officials daring to confront ill conceived movements that sweep the country from time to time. They did so while being vilified by the press and many had their careers destroyed. While history shows they were correct, that was little solace at the time. Here’s how the publisher summarized Kennedy’s theme: “Courage, the courage to do what a person rightfully should do, despite the personal consequences, was a trait of character shared by them all.”
That certainly applies to NIH Director Francis Collins and his staff who are taking a pounding after refusing to bow to political pressures to misuse the march in provision of the Bayh-Dole Act for compulsory licensing of drugs deemed too expensive. If implemented, this effort would have crippled the drug development pipeline and undermined all industry/university partnerships that bolster our economy. Who would invest the time and treasure needed to transform early stage inventions into products if the rules could be arbitrarily changed to take them away? But you would have no idea Dr. Collins made the right call from the media coverage.
If there was a single article which even implied that Dr. Collins had correctly interpreted the law, I didn’t see it. Rather, the stories reflected the perspective of Knowledge Ecology International (KEI), the sponsor of the failed effort to march in against Xtandi, a prostate cancer drug derived from NIH and Dept. of Defense grants to the University of California. KEI’s release NIH to Taxpayers- we don’t care about high prices in US for Xtandi alleging that NIH refused to use its authority to control drug costs became the basis for the reporting.
Those learning of the decision through the press can be forgiven for concluding that NIH was too stupid— or perhaps too corrupt— to follow the law. Here’s how the Associated Press framed the issue:
The federal government has declined a petition to lower the price of a drug for advanced prostate cancer developed with taxpayer money.
And how it summarized the law:
Knowledge Ecology had asked the NIH to use its “march-in rights” to break the companies’ monopoly before the patent on Xtandi expires. According to the group, a rarely used law called the Bayh-Dole Act would allow the NIH to both give any generic manufacturer a non-exclusive license to make Xtandi and to use its own royalty-free license to have Xtandi manufactured for use by the federal government. The law was enacted in 1980.
The reporter for Bloomberg News sneered: “The U.S. government is evidently waiting for the right case to exercise its rights to help expand the availability of drugs that are not reaching people they are meant to reach.”
NIH and other parts of the Department of Health and Human Services have received six petitions to use their “march-in” rights since Bayh-Dole was enacted in 1980 and have denied them all.
Evidently not the right case. Still waiting. KEI said it will appeal the ruling to the HHS.
The problem with this theory is that the Bayh-Dole Act does not provide agencies the authority to regulate product prices. The law allows universities and contractors to own inventions made with federal funding so that they can be effectively commercialized. Congress included safeguards in case a dominant company licensed a breakthrough technology with the deliberate purpose of suppressing it, perhaps because it threatened an existing product. If good faith efforts are not being made to bring the invention to “practical application” so it is available on “reasonable terms” the funding agency can march in requiring that another company be licensed “upon terms that are reasonable under the circumstances.” Agencies can also march in if the developer is not able to produce enough product to meet public health or safety needs. In none of these situations is the government empowered to march in just because it doesn’t like a price.
Twenty years after Bayh-Dole passed, two professors declared the reasonable terms language means the government can march-in if the product isn’t being sold for what it considers a reasonable price. Senators Bayh and Dole immediately replied that is not how their law works. Nevertheless, KEI seized on the theory launching a series of petitions asking NIH to march in to control prices of various drugs.
Senator Bayh testified at the meeting NIH held for a prior march in petition against the drug Norvir. He stated that product availability, not price, was the test for the march in trigger. He added that changing the formula requires an amendment to the law, and warned that if Congress attempted to do so it must define “reasonable pricing” in the statute. NIH agreed and dismissed the petition since Norvir, though expensive, was available in the market.
After a series of rejections KEI added a new twist to their latest effort. They enlisted prominent Congressional supporters of the Obama Administration including Sen. Bernie Sanders, who called on the Department of Health and Human Services, which houses NIH, to aggressively march in against expensive drugs. KEI then filed a petition to NIH and the Department of Defense whose research supported the university invention which was licensed and commercialized as Xtandi, a breakthrough prostate cancer treatment. KEI said because Xtandi is more expensive in the U.S. than abroad, the government should march in so generic companies could copy it. KEI’s allies urged NIH to hold a public meeting so supporters could publicize the case . The issue was ideal for a heated election year. Dr. Collins was pressed to jump on the bandwagon whenever he testified on Capitol Hill.
So KEI was stunned to learn last week that despite the full court press HHS Secretary Burwell declined to hold a public meeting and NIH denied their petition. The letter from Director Collins to KEI announcing the decision spells out precisely why they did not meet the requirements of the law. Ironically, KEI’s own data fatally undermined their petition. Of course, that was completely lost on the media even though the letter clearly points it out:
More specifically, a federal agency that funded an invention has the right, consistent with 35 U.S.C. §203(a)(1), to grant a license to a third party if “action is necessary because the contractor or licensee had not taken, or is not expected to take within a reasonable time effective steps to achieve practical application of the subject invention in such field of use.” Practical application as defined in 35 U.S.C. §201 is “… to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.”
… Xtandi is broadly available as a prescription drug. Your letter states that sales of enzalutamide increased 77% from Fiscal Year 2013 to Fiscal Year 2014…, however, it provides no information and no information was identified from public sources that enzalutamide is currently or will be in short supply.
In view of the above information presented in your letter and your follow-up correspondence and public information identified by the NIH, we decline to proceed with the government’s march-in authorities at this time or utilize the government’s license to the patents. (emphasis added)
KEI proclaimed it will refile the same petition when a new administration takes office next year.
Let’s hope that whoever succeeds Dr. Collins comes to NIH with a strong backbone. They’re going to need it. They should thank Francis Collins for leaving them intact the world’s best system for commercializing government funded R&D, the Bayh-Dole Act, which created hundreds of life saving therapies while securing the U.S. lead in the life sciences.
And in case he hasn’t heard it from anyone else: thank you Dr. Collins for a real profile in courage. While it was lost on the media, the nation benefitted from your stance.
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