FreedomWorks Issues Letter Opposing the Use of “March-In-Rights”
Dear Secretary Becerra:
We write to oppose the use of “march-in rights” under the Bayh-Dole Act to license generic drug manufacturers to produce Xtandi/enzalutamide. Proponents argue that the federal government may assert such rights when a drug, developed in part with federal funds, is priced “too high.” Simply put, the federal government does not have the statutory authority to exercise march-in rights on the basis of price. Moreover, taking intellectual property from its legitimate owner raises serious constitutional questions: the Framers understood that intellectual property rights were so critical to innovation that they enshrined patent protection in the Constitution.
By providing patent protection to incentivize investment, the 1980 Bayh-Dole Act aimed to ensure that innovations developed with federal funds would be brought to market. The Act authorized the government to “march in” and license patents to others in four specific circumstances, none of which is the price of the product. Senators Bayh and Dole publicly stated that the law authorizes march-in only when the patent holder has not commercialized the invention–and that price should not be dictated by the government. This makes sense, as the capital needed to commercialize a product is both risky and generally many times greater than the amount of federal funds invested. If private investors fear that risk-taking will not be rewarded, they will invest their capital elsewhere.
Democratic and Republican administrations alike have agreed that price alone does not justify takings of private property. From 1997 to 2016, the National Institutes of Health (NIH) received six petitions to exercise march-in rights on particular pharmaceuticals. Each petition was denied: NIH took the view that high prices alone were not a sufficient justification to exercise march-in rights.
The Constitution gives the legislative branch exclusive power to write laws. While the executive branch is charged with implementing these statutes, the executive has no power to rewrite the law as it sees fit–no matter how compelling the public policy may be. Only the Congress–the people’s representatives–are in a position to decide if price controls are worth the harm to innovation that will result if the government can take away the rewards for risky investments. If Congress wants to expand the Bayh-Dole Act to allow considerations of price, it can do so.
Thank you for consideration of our views.
Director, Regulatory Action Center