Tillis Demands Answers from Biden on March-In Proposal

Senator Thom Tillis sent a letter today to President Joe Biden asking him to answer three broad questions related to his proposal earlier this month that would allow government agencies considerable discretion in deciding whether and when to “march in” on patents.

As we previously reported, the National Institute of Standards & Technology (NIST) and the Department of Commerce published a Federal Register Notice on December 8 seeking comments on a proposed framework for exercising march-in rights under the Bayh-Dole Act that would significantly broaden the criteria for compulsory licensing of patented technology developed with federal funding, particularly with respect to drug pricing.

As Tillis noted in his letter, the Bayh-Dole Act strictly limits the situations in which march-in rights can be exercised and does not make any reference to pricing as a criterion for marching in. “[M]arch-in” was never intended to serve as a mechanism for regulating the pricing of any products,” wrote Tillis. “The law makes no reference to a ‘reasonable price’ that should be dictated by the government, and this omission was intentional.”

Tillis went on to call the proposal “misguided” and likely to chill private sector investment “to the detriment of the American public.”

The senator has asked Biden to respond to three questions:

• “What analysis has your Administration done to ensure that stakeholders will continue to invest and commercialize government funded research under this new framework?
• Because certainty is so important for long-term investments, what benchmarks should investors and innovators rely on in determining pricing that will “pass muster” for your Administration?
• How will the Administration enforce its pricing factor in complicated pricing markets like the biopharmaceutical industry?”

As part of question one, Tillis asked whether the administration had consulted with the National Institutes of Health (NIH) during the decision-making process, considering NIH has itself rejected every attempt to exercise march-in to date and has admitted publicly that such measures would not be an effective means of lowering the price in any case.

As part of question two, Tillis asked for examples of “reasonable pricing” and whether Biden can provide assurances that the concept “will not be weaponized and used to pursue political agendas .”

Biden’s proposal has been met by sharp criticism, with organizations such as the U.S. Chamber of Commerce saying it will result in fewer medical breakthroughs and characterizing it as the seizure of patents. “If patents for medicine are seized today, what property will the government seize tomorrow?” said the Chamber’s Executive Vice President and Chief Policy Officer Neil Bradley at the time of the announcement.

Joseph Allen, who was integral to passage of the Bayh-Dole Act as a staffer for Senator Birch Bayh (D-IN) at the time, and now Executive Director of the Bayh-Dole Coalition and a regular contributor to IPWatchdog, said the Coalition was “saddened by the Biden administration’s proposed framework” and that “it casts a shadow of uncertainty over America’s innovation system.”

Allen also wrote earlier this month that “the place where march in rights are least likely to make an impact is with drug prices.” Allen cited a study of Food and Drug Administration (FDA)-approved drugs introduced between 2011- 2020 that found 92% of the drugs studied had “no mechanism of action or composition of matter patents with a government interest statement or federally funded co-development program in connection to them” and 99% “cannot be marched-in upon, as the key patents studied do not cover the entire asset’s intellectual property.”

Allen continued:

“So, who are those most likely to have their key inventions funded by the government? Startup companies. Small companies receive about 70% of academic patent licenses. They depend on attracting high risk investment to survive. That’s hard enough in the best of times. But what responsible venture capitalist will want to back them now that the government has signaled that it welcomes march in petitions?”

Tillis requested Biden’s “prompt attention” to his questions. Comments can be submitted through February 6, 2024 and instructions are in the December 8 Federal Register notice.

This article was updated on 12-21-23 to clarify that the cited study was not an FDA-conducted study.