Bayh-Dole Coalition: Activist Groups’ Bid for Medicare to Make Generic Xtandi is a ‘Desperate Ploy’

“Apparently, the critics who have tried so long to misuse the march in rights provision of the Bayh-Dole Act to impose price controls have given up on that ill-fated gambit only to try an even more desperate ploy.”

XtandiOn April 9, Knowledge Ecology International (KEI), the Union for Affordable Cancer Treatment (UACT) and Universities Allied for Essential Medicines (UAEM) sent a letter to Chiquita Brooks-LaSure, Administrator for the Centers for Medicare and Medicaid Services, requesting that CMS use alleged statutory authority to allow companies to make and sell generic versions of Astellas and Pfizer’s blockbuster prostate cancer drug, Xtandi®.

The letter comes two months after the Department of Health and Human Services (HHS) denied an appeal of a decision not to march in on the drug under 35 USC §203. The National Institutes of Health (NIH) first denied the petition, which was brought by KEI, in March 2023, and said its analyses “have found Xtandi to be widely available to the public on the market” and “NIH does not believe that use of the march-in authority would be an effective means of lowering the price of the drug.” HHS ultimately concurred with the NIH decision on appeal.

This week’s letter seeks to circumvent that denial by invoking a different provision of Bayh-Dole, 35 U.S.C. § 202(c)(4), which the groups say grants the U.S. government a “world wide nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.” The letter also asks CMS to exercise “the right of the government to use patents under 28 U.S.C. § 1498,” which the letter says gives the government the ability “to use or give third parties the right to use any U.S. granted patent on an invention” for inventions it funds under the Bayh-Dole Act, subject to “reasonable and entire compensation” to the patent owner. The letter claims:

“In this case, since the government has the Bayh-Dole Section 202 license to the three patents required to make and sell enzalutamide, the required compensation for a use by or for the government will be zero.”

But Joseph P. Allen, Executive Director of the Bayh-Dole Coalition, said in a statement released yesterday that the groups “fundamentally misrepresent, and grossly exaggerate, the government’s powers under” these provisions. Allen explained:

“This is a flawed interpretation of how both laws actually work. 28 U.S.C. § 1498 is functionally an eminent domain statute, which gives the government the ability to disregard patent protections in order to directly manufacture, or contract for, certain urgently needed products — traditionally, military equipment for national security purposes — and then retroactively compensate the patent holders for the infringement. The statute has been invoked only a handful of times in its more than 100-year history — and in every single instance, the products in question were physically acquired by, and directly used by, the Department of Defense or other federal employees. And when this has been done, Sec. 1498 requires the government to compensate the patent owner for the full market value of the invention being used.

Similarly, the government license under the Bayh-Dole Act is only for meeting mission needs of the agency funding the invention, normally funding additional research or meeting its own procurement requirements. Medicare and Medicaid clearly do not fall under this category.”

Allen further characterized the letter as a misguided attempt to skirt the government’s recent march-in rights denial for Xtandi. “Apparently, the critics who have tried so long to misuse the march in rights provision of the Bayh-Dole Act to impose price controls have given up on that ill-fated gambit only to try an even more desperate ploy.”

Separately, the Biden Administration is currently considering a proposal that would significantly broaden the criteria for marching in on patented technology developed with federal funding. The “Framework for Considering the Exercise of March-In Rights” has drawn sharp criticism on a bipartisan basis.

The groups’ interpretation of these provisions could have much broader consequences, concluded Allen:

“It should also be kept in mind that this argument could be applied to virtually any product, not just drugs. That’s how banana republics function. It’s a model which would have the same devastating impact if ever adopted in the United States.”


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3 comments so far. Add my comment.

  • [Avatar for Robert Sachs]
    Robert Sachs
    April 12, 2024 07:49 pm

    IPWatchDog’s April 11 article incorrectly reports that the March 2023 appeal of NIH’s rejection of the November 2021 Xtandi march-in petition filed by three prostate cancer patients including myself was filed by Knowledge Ecology International {KEI) It was in fact filed by the November 2021 prostate cancer patient petitioners. (A 2016 Xtandi petition filed by KEI and the Union for Affordable cancer Treatment (UACT) was rejected by NIH in 2017) . As men contending with prostate cancer we greatly appreciate the support of nonprofits like KEI, UACT and Universities Allied for for Essential Medicines (UAEM) but not to be overlooked in the reporting of this issue is the fact that patient lives are at stake as a consequence of drug companies Astellas and Pfizer setting a U.S. Average Wholesale Price of nearly $200,000 annually for Xtandi, three to six times more than Astellas sells this U.S. taxpayer funded drug for in other wealthy countries. In 2023 alone, the American Cancer Society has estimated that 34,700 American men lost their lives to prostate cancer. Pharmaceutical industry backed Bayh-Dole coalition lobbyist Joseph Allen dismisses cancer patient petitioners and nonprofit supporters as “critics who have so long tried to misuse the march-in provisions of the Bayh-Dole Act” when in fact we are cancer patients and U.S. taxpayers seeking to get HHS and other federal agencies to enforce Bayh-Dole provisions requiring that inventions paid for by U.S. taxpayers be made “available to the public on reasonable terms.” This past December, in announcing a “Draft Framework for Exercise of March-In Rights by Federal Agencies,” National Economic Advisor Lael Brainard declared,” when drug companies won’t sell taxpayer funded drugs at reasonable prices, we will be prepared to let other companies provide those drugs for less.” As cancer patients, we hope to see The White House’s position reflected in the final inter-agency agency march-in guidance.

    While narrower in applicability than our Xtandi march-in-request, the April 9, 2024 KEI, UACT and UAEM request asking CMS to exercise other government patent rights would nonetheless go a long way towards providing Xtandi at reasonable cost to many thousands of prostate cancer patients covered by Medicare, Medicaid, the VA and other federal programs. No wonder Mr. Allen is again claiming that the Bayh-Dole Act does not mean what the statute explicitly states.

    Too often reporting about the US taxpayer funded prostate cancer drug Xtandi has focused on the “inside the beltway” debate

  • [Avatar for Eileen McDermott]
    Eileen McDermott
    April 12, 2024 11:46 am

    Hi Jamie – thanks for commenting. I was simply quoting the Bayh-Dole Coalition’s statement. I’d welcome an op-ed from KEI responding to the IP community’s criticisms.

  • [Avatar for James Packard Love]
    James Packard Love
    April 11, 2024 05:27 pm

    Eileen, persistent might be a better term than desperate. As you know,the federal government used 28 USC 1498 in dozens of contracts for COVID 19 countermeasures, including the Moderna vaccine, and for many different medical technologies, including for products used outside the U.S. by non-government patients. Here is a database with links to 350 contracts that have a 1498 authorization and consent.

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