GIPC Letter to Senators Pushes Back on ‘False Narrative’ Exaggerating Public Role in Private Drug Development

On March 22, the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) sent a letter addressed to Senators Bernie Sanders (I-VT) and Bill Cassidy (R-LA), respectively the Chair and Ranking Member of the U.S. Senate Committee on Health, Education, Labor, and Pensions, regarding a Health Committee hearing held that same day on the pricing of Moderna’s COVID-19 vaccine. The GIPC’s letter sought to push back on false narratives regarding the role of public funding in private pharmaceutical research & development (R&D,) and also doubled down on the Center’s criticisms of drug pricing controls in the recently enacted Inflation Reduction Act.

NIH Ruling Against March-In Rights on Xtandi Impacts Moderna Vaccine Hearing

The Senate Health Committee’s hearing, entitled “Taxpayers Paid Billions For It: So Why Should Moderna Consider Quadrupling the Price of the COVID Vaccine?”, featured testimony from Moderna CEO Stéphane Bancel defending his company’s decision to increase the per dose cost of its COVID-19 vaccine from $26 up to as much as $130. It was expected that committee members, especially Democrats, would threaten Moderna with the government’s potential exercise of march-in rights under the Bayh-Dole Act to prevent Moderna from increasing the consumer pricing for its vaccine.

However, the hearing followed soon after a decision of the National Institutes of Health (NIH) to decline exercising march-in rights under the Bayh-Dole Act to set consumer prices for the prostate cancer drug Xtandi. That decision has since been appealed to U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra by a series of petitioners, and both the HHS and U.S. Department of Commerce recently announced that they would review their own potential march-in rights under Bayh-Dole.

As the GIPC’s letter to Sanders and Cassidy indicates, the Center’s concerns are focused upon the potential that false narratives could influence policy decisions “that would upend the successful legal frameworks that facilitate public-private partnerships and commercialization.” Throughout the letter, the GIPC establishes not only the negative impacts of price controls on patient access, raising arguments similar to its recent 2023 Patient Access Report, but also the significant amount of private investment in drug development belying claims that public taxpayer funding should give the federal government the right to interfere with private licensing negotiations.

Policymakers Shouldn’t Want Less Innovative Medicines and Longer Wait Times

The “failed premise” that government intervention can improve patient access to life-saving treatments has already been embodied in the Inflation Reduction Act (IRA), the GIPC notes, which has several provisions enabling the federal government to set arbitrary price controls on pharmaceuticals. In tracing the impacts of similar price controls in other countries, the 2023 Patient Access Report concluded that the IRA’s drug pricing provisions would lead to fewer new treatments available to patients in the United States. “Surely this outcome—less innovative medicines and longer wait times—isn’t what any policymaker or advocate wants,” the GIPC’s letter to Sens. Sanders and Cassidy asserted.

Not only are private entities contributing more money to drug development in terms of absolute dollars, they also support a much higher percentage of R&D costs in the pharmaceutical sector than the federal government. Citing a 2019 Congressional Budget Office (CBO) report on private expenditures into pharmaceutical R&D expenditures, which reported private investments of $83 billion, the GIPC notes that this total is 10 times greater than similar private expenditures in drug development during the 1980s. Further, when looking at public and private investments into 18 market-approved treatments funded with NIH grants, the combined public sector funding total of $670 million was dwarfed by private investments into those same treatments, which reached $44.3 billion.

Public Taxpayers Only Contributed 0.023% of Xtandi’s R&D Costs

This disparity in public and private R&D expenditures in pharmaceuticals is extremely pronounced in the case of Xtandi, which is at the center of the Bayh-Dole action recently appealed from the NIH.

“UCLA, as the patentee, received less than $500,000 in taxpayer funding to support early-stage research that directly contributed to the initial discovery of Xtandi. In contrast, Astellas and its partners contributed almost $2.2 billion in pre-clinical studies and clinical trials to bring Xtandi to market. As a result of this collaborative public-private partnership, which proportionally cost taxpayers less than 0.023 percent of Xtandi’s overall development cost, hundreds of thousands of patients have received a life-saving treatment that otherwise would not exist.”

March-in rights under the Bayh-Dole Act were intended to be limited, the GIPC asserts, and do not function as a price control mechanism by which the U.S. federal government can revoke exclusive patent licenses between private entities. Such a conclusion was reinforced both by statements from Senators Birch Bayh and Robert Dole, the Senators for whom the 1980 law is named, as well as a letter to Secretary Becerra last February penned by current Senators Thom Tillis (R-NC) and Marsha Blackburn (R-TN) acknowledging that the use of march-in rights to control drug prices contradicts the Act’s very purpose.

“The Bayh-Dole Act works well and provides countless benefits to the American public,” the GIPC’s letter told the Senate Health Committee’s leadership. The Act enabled a technology transfer system by which publicly-funded R&D could be commercialized by private entities and while that system has benefited consumers in many industries, the GIPC points out that the life sciences and biopharmaceutical sectors in particular have thrived upon the Act’s legal framework. While zero pharmaceutical products were commercialized from publicly funded R&D prior to the Act’s passage, more than 200 such products have been commercialized since its passage, including several blockbuster life-saving treatments for cancer. The GIPC’s letter implores the Senate Health Committee’s leadership to recognize that all available evidence points to the fact that it is the private sector, and not public taxpayers, who bear the enormous brunt of the cost and risk in drug development, and that such private entities should be allowed to operate under current legal frameworks without the threat of government pricing controls.

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Author: auriso