HHS Denies Appeal of Xtandi March-In Petition as Comments Close on Proposed Framework

One day before comments closed on the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights, published by the National Institute of Standards & Technology (NIST) and the Department of Commerce last month, the Department of Health and Human Services (HHS) denied an appeal of a decision not to march in on the blockbuster prostate cancer drug, Xtandi®.

In March 2023, the National Institutes of Health (NIH) first denied the petition, which was brought by Knowledge Ecology International (KEI), explaining that:

“NIH’s analyses in response to the petition request have found Xtandi to be widely available to the public on the market. In addition, given the remaining patent life and the lengthy administrative process involved for a march-in proceeding, NIH does not believe that use of the march-in authority would be an effective means of lowering the price of the drug. For these reasons, NIH has determined that initiation of a march-in proceeding is not warranted in this case.”

The petitioners appealed the decision, but the HHS wrote in affirming NIH’s view that “In the case of Xtandi, NIH thoroughly reviewed your petition in a manner consistent with the policy and objectives of the Bayh-Dole Act, including an assessment of the relevant intellectual property and applicability of the four statutory criteria” and ultimately said that HHS concurs with the NIH decision.

However, in a seeming effort to soften the blow, the HHS letter told the petitioners that “[w]e know more must be done as too many Americans, particularly the uninsured, find these therapies to be out of reach.”

The letter went on to reference the recently proposed march-in framework and said “there is a need to evaluate how pricing may be a contributing factor when weighing the use of the march-in authority” and said that HHS has “committed to working with the Department of Commerce to review the use of march-in authority as laid out in the Bayh-Dole Act.”

FTC Chimes in on March-In

Yesterday, the Federal Trade Commission (FTC) filed a comment in response to the NIST Federal Register Notice supporting the proposal to expand the criteria for exercising march-in rights, “including on the basis of price.” The FTC comments claims that the proposed framework would make “operational previously unutilized statutory provisions” of the Bayh-Dole Act and that a more flexible approach supports “the reasonableness inquiry required by the statute” because “it is deeply fact-intensive.” The comments added: “Agencies should be wary of imposing categorical limitations on the factors that can be considered for march in, such as price.”

While Bayh-Dole currently contemplates march-in rights, the law strictly limits the situations in which they can be exercised and does not make any reference to pricing as a criterion for marching in. But under the proposed framework, an agency may consider “[a]t what price and on what terms has the product utilizing the subject invention been sold or offered for sale in the U.S.” and whether “the contractor or licensee [has] made the product available only to a narrow set of consumers or customers because of high pricing or other extenuating factors”.

The agency may also consider whether “the contractor or licensee has provided any justification for the product’s price or background on any extenuating factors which might be unreasonably limiting availability of the subject invention to consumers or customers”.

Critics of the proposal have called it an “unprecedented decision to seize certain drug patents” that will do almost nothing to lower prices and “casts a shadow of uncertainty over America’s innovation system.” The U.S. Chamber of Commerce and Innovation Alliance both submitted comments today urging the Biden Administration to withdraw the proposed framework.

International Center for Law & Economics Director of Innovation Policy, Kristian Stout, said “The proposed changes are clearly unnecessary, given the history of success that characterizes the post-Bayh-Dole era.”

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