Tillis Doubles Down on Calls for Biden to Scrap March-In Plan

Senator Thom Tillis (R-NC) sent a letter yesterday to President Joe Biden again condemning the Administration’s December 2023 proposal to allow agencies to consider pricing in deciding whether and when to “march in” on patent rights.

Under the proposed framework, which sources have told IPWatchdog is close to being finalized, 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”.

This language has been criticized by industry groups, as well as members of congress.

Tillis first sent a letter to Biden shortly after the proposal was announced, asking him to explain what the Administration done “to ensure that stakeholders will continue to invest and commercialize government funded research under this new framework”; “what benchmarks should investors and innovators rely on in determining pricing that will ‘pass muster’ for your Administration”; and “how will the Administration enforce its pricing factor in complicated pricing markets like the biopharmaceutical industry?”

Then, in February, a bipartisan group of 28 members of congress, including Tillis, Senate IP Subcommittee Chair Chris Coons (D-DE) and House IP Subcommittee Chair Darrell Issa (R-CA), sent a letter to Biden urging the administration to reconsider the proposal.

Yesterday’s letter reiterates the points made in those letters and calls the proposed framework an “attack” on the U.S. patent system that “would do great harm to our innovation ecosystem and have little discernible effect on drug prices.”

Other groups and experts have similarly weighed in to say that the framework would be ineffective for reducing drug costs. “Those seeking to misuse Bayh-Dole for imposing government price controls on drugs know that it alone will have little impact,” wrote Bayh-Dole Coalition Executive Director Joseph Allen in February. “That’s because the vast majority of patents needed to copy most drugs are created by the private sector and are not susceptible to march in rights, which only cover inventions made with federal support,” he added.

Tillis’ letter notes that, in addition to the march-in provision of the statute not authorizing the government to disregard patents, “using section 1498 would not significantly reduce drug costs because, as courts have repeatedly recognized, the law requires the government to provide ‘reasonable and entire compensation’ for any infringement conducted ‘by or for’ the government.” The language is clear that marching in is limited to “government use, not merely purchase or manufacturing by the government for use by the American public,” adds the letter.

IPWatchdog Founder and CEO Gene Quinn said that “march-in rights were always conceived as a way to ensure society benefits from innovations that received government funding. It was never conceived as a price control mechanism— just a way to make sure government funded innovations are actually commercialized.”

The U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) also recently filed an appeal with the U.S. Department of Commerce of the denial of a request to expedite the GIPC’s January 2024 Freedom of Information Act (FOIA) request seeking more detail about the working group behind the draft framework.

Image Source: Deposit Photos
Author: DmitriyDemidovich
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