February 25, 2019

Tyson Benson Comments on Drug Pricing & March-in Rights in Law360 Article

Metro Detroit patent attorney Tyson Benson spoke to Matt Bultman at Law360 about the ongoing calls from local governments and activists to lower the cost of some prescription drugs, and the federal government’s continued reluctance to use two of the tools in its arsenal to make that happen.

The first tool is known as “march-in” rights. As part of the Bayh-Dole act of 1980 that allows the government to step in and grant licenses for patented inventions that were developed with help from federal funding, march-in rights are an obvious choice to bring down drug prices.

Also known as “patent braking” or “patent busting,” march-in rights can theoretically be used by the government  when health or safety needs are not being “reasonably met.” Every request for the government to do this has been denied, however, and arguments based on price have been particularly unpersuasive.

The other tool is known as Section 1498, which allows the government to make or use a patented invention without the patent owner’s permission. The patent owner must be given “reasonable” compensation,” and the invention does not have to be government funded.

Unlike march-in rights, the government has used Section 1498 in the past, although not since the 1970s. The possibility of using it was raised during an anthrax scare in 2001, but the owner of the anthrax medicine decided to cut its costs instead. The sticking point could be the need to require “reasonable” compensation. “You’re taking it out of the hands of the marketplace and putting it into a court or an agency that would be determining what ‘reasonable’ means,” says Benson. “Reasonable to one person could be totally different than what it means to another person.”

Activists are hoping that a cancer treatment drug will change the tide. An Army veteran and a computer scientist — both prostate cancer patients — recently asked the government to break the patent on Astellas Pharma Inc.’s Xtandi, which was developed with funding from the Department of Defense. This fact is spurring optimism as the Armed Services Committee had allegedly instructed the DOD to “exercise its rights” in cases where drugs developed with DOD funding reached a certain threshold. A response from the Army on the matter is expected, although a timeline has not been given.

Even if the fight for Xandi succeeds, experts agree that there is a minimal likelihood that prescription drug costs will be significantly lowered. Drugs are particularly hard to break, as they are often covered by multiple patents, some of which may not have been funded by the government. FDA exclusivity regulations further complicate matters.

For now, march-in rights and Section 1498 can still be viewed as a highly unlikely and temporary solution for lowering individual drug prices. Patent owners can count on patent rights to be upheld in courts across the country, although the court of public opinion may continue to grow noisier and noisier.