Yet another chapter in the saga related to patent rights, and specifically, march-in rights, came to a close on Wednesday as NIH officially turned down the requests of certain Congressmen and AIDS advocacy groups to exercise march-in rights to Norvir, Abbott Labs’ blockbuster AIDS drug.
In December, 2003, Abbott Laboratories raised the price of Norvir, by 400%. Various AIDS advocacy groups held vigils and protested to the government about the financial drain that will be imposed on those who most needed the medication just to line the pockets of Abbott (to paraphrase the activists). It was also unsure how Medicaid might react to the price increase and if it would continue to be able to offer coverage for Norvir. Abbott has offered assistance to those who find themselves unable to pay for Norvir (as an interesting aside, the link on the Abbott site to information on the expanded assistance program goes to a .pdf file that says only it’s being updated and to check back soon).
Among various legal channels followed to combat the price increase, many of the advocates called upon the government to exercise its rights under the Bayh-Dole Act to "march-in" and receive a license to Norvir to distribute through Medicaid and other channels at a lower price.
Thus, we see the delicate wranglings of the government stuck among several interests – pharmaceutical companies, a need to encourage innovation, and a need to provide decent health care at decent prices.
The Bayh-Dole was enacted in 1981 with the intent to help innovation flourish and encourage more research funded with federal government money. Prior to the Bayh-Dole act, if the federal government funded the research, then none of the scientists or universities who conducted that research would have ownership rights to the technology developed. The theory was that if the public paid for it, the technology should be owned by the public. That is all well and good, but the tension between that and scientists and universities receiving adequate incentive to innovate is obvious – with no rights to the intellectual property, they would not be eligible to receive any royalties or other profits from technology that they help bring to the marketplace. Federal funding was then and remains one of the primary sources of money for research into new technology.
Under the act, the entity receiving the government funds for research may elect to retain title to the technology, but the funding agency also retains a nonexclusive, nontransferable, irrevocable, fully paid-up worldwide license to that technology and may use it as it pleases. The government also has “march-in” rights that it may exercise to require the funded party to grant licenses to the funded technology to third parties under certain circumstances. These circumstances are usually when the funded party has not taken adequate steps to “achieve practical application” for the technology, when “necessary to alleviate health or safety needs,” or “to meet requirements for public use” under certain regulations (which are not specified). (35 U.S.C. Sec. 203).
To date, the government has not exercised any march-in rights. This is for a variety of reasons, and usually that the manufacturer is chomping at the bit to get the technology out the door so it’s rare for a petitioner to claim that the company has not taken the steps needed for practical application.
In the response, NIH looked at the reasons it could march-in (noted above, though the public use regulation provision wasn’t applicable). Abbott was clearly using the technology and had manufactured and had been distributing its practical applications, so the petitioners likely would not and cannot win for the “non-use” provision.
The NIH also noted that the petitioners were never claiming a health or safety need, only that the prices demanded by Abbott were ridiculously high and were motivated by Abbott’s business goal of having those with HIV use its new drug, Kaletra (which included Norvir as a component but whose price was not similarly raised). The NIH has a good point that it’s mission is not the governance of price control of drugs, and that the opponents’ antitrust and false advertising suits against Abbott were better venues for achieving their sought-after remedy.
But what if the opponents can’t meet the burden of proof in the antitrust and false advertising suits? Economists would likely argue that the high price won’t be able to be sustained if there really is no possible market for the drug at that price. And the pharmaceutical companies would argue that the prices are an unfortunate necessity to help foot the bill for undertaking the research and manufacture of the medication. But when you’re dealing with a disease where even just a few days or weeks of not having the drug can mean the difference between life and death (or maybe even just between steady-state and getting sick enough where other infections and complications arise and make one’s health much worse), waiting for the company to decide to cut the high price to “market” price isn’t always an option. The patients are forced to look at other medications that may or may not meet their needs or go without.
Generally, I’m for the NIH staying out of pricing issues, but wonder if at some point “price” will be found to overlap with “health or safety need.” There is a reason, after all, that Congress approved of that provision and so far, no situation has been shown to meet its call, so it makes one wonder when it will actually be used. When will NIH say “yup, this is what Congress meant by that?”
A problem, too, is that bad facts make bad law and it’s easy to let one’s emotions take over when faced with patients who suffer from a deadly disease, have limited resources for treatment and who still face prejudice because of their condition. The dilemma the affected patients face will likely have to be taken up in the next rounds of discussions for overhauling the health care and prescription drug policies of whichever administration is sitting in the White House next January 21.
As a coda, the antitrust suit really will not be a remedy as the antitrust suit filed against Abbott by the AIDS Healthcare Foundation was settled a couple weeks ago without affecting the price of Norvir
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