High Drug Prices: Meet Bayh-Dole

Imagine this: you have just been diagnosed with cancer. The diagnosis is serious, and if untreated, will end your life. But good news – there is a lifesaving treatment available! It will just cost you $150,000 a year. Not only are you left with the emotional stress of a serious diagnosis, but now have the added financial stress of the unaffordable price tag that comes with the treatment. Is there anything that can be done to make the treatment more affordable?

In theory, the answer is yes. One potential solution would be for the government to exercise its “march-in” rights. March-in rights are an exception to US patent rights, but we’ll get to that later. However, the government’s ability to utilize this right is hindered by how and when such rights should be used. One such issue is that the high prices of drugs are not considered when determining to use march-in rights. To solve this problem, the Biden Administration needs to allow high drug prices to be considered when determining whether or not to exercise its march-in rights. Considering high drug prices would help to promote access to medicine by enabling the US government to “march in” on the rights of patent owners when they set too high of prices for life-saving drugs. As a result, the drugs at issue could then be produced at a lower price point, making them more affordable.

What Are “March-In” Rights?

As previously stated, march-in rights are an exception to US patent rights. In the US, an inventor is given certain rights when they are granted a patent for their invention. One such right is the right to exclude others from making their invention, such as a drug. A federally-funded invention, however, gives the government the right to “march-in” on those exclusionary rights.  The process for asserting march-in rights typically begins with a petition to a federal agency, such as the National Institutes of Health (NIH). The relevant federal agency then issues a determination as to whether or not the exercise of march-in rights is appropriate. Public hearings can be a part of the process but are not considered to be an end of said process.

The situations in which the US government can “march-in” have been laid out in two different categories by the Bayh-Dole Act of 1980. The Bayh-Dole Act was created to “promote the commercialization and public availability of government-funded inventions.” It is also important to note that Bayh-Dole allows any adversely affected party to appeal a march-in rights petition. If it chooses to exercise its march-in rights, the government could authorize a third party to make a patented invention – but only in certain situations. The first situation is when the patent holder does not commercialize the invention within a reasonable time. The second situation is when health and safety needs are not satisfied by the patent owner and can be alleviated by government intervention.

You’d think the Government exercising its march-in rights would be a solution to unaffordable drug prices. Unfortunately, that has not been the case.

A History of Failures

To date, the NIH has never granted a petition for the government to exercise its march-in rights on any drug. The only time a public hearing was held was when Abbott increased the price of its HIV drug by 400%, but to no avail. In response to the COVID-19 pandemic, 32 state attorney generals had requested NIH exercise its march-in rights for the drug remdesivir, the only known treatment at the time. The request was declined.

Another recent example is the petition for march-in rights concerning the cancer drug Xtandi. Here, the situation we asked you to imagine earlier meets reality. Xtandi costs Medicaid more than $150,000 per patient per year. Back in November of 2021, a petition was referred to the NIH to permit march-in rights in order to lower the price of the cancer drug. Again, the request was denied. One of the reasons for the denial given by the NIH was that Xtandi had been used to treat 200,000 patients from 2012 to 2021. They reasoned that this statistic showed that the patent holder was successful in satisfying health and safety needs, as required by the Bayh-Dole Act. However, the NIH’s reasoning fails to address not only the financial burden on those 200,000 patients, but also the fact that most people can’t find the resources to meet that price tag.

What’s Holding Back the NIH?

Although it might be clear to some that unaffordable prices are important to consider for march-in petitions, not all agree. Pharmaceutical companies argue that high prices are necessary to promote innovation, and therefore should not be relevant to the use of march-in rights. Bob Dole, a United States Senator involved in drafting the Bayh-Dole Act has been adamant that the legislative intent was not to extend march-in rights to overpriced drugs. Even the last presidential administration proposed a rule specifically stating that high drug prices are not a permissible basis using march-in rights.  However, opponents like the Biden Administration clearly disagree and put a “pause” on the rule.

These disagreements are largely a consequence of the ambiguity in the language of the Bayh-Dole Act. Although the Act lays out two situations in which the exercise of march-in rights are permissible, it does not provide specific examples or bases that meet these situations. Given that the language of the Act is unclear as to whether march-in rights should be used to combat high drug prices, the provisions are open to varying interpretations. So far, the previous interpretations served the benefit of the pharmaceutical companies instead of the general public.

The Potential Hero: The Biden Administration

You might be thinking the situation is hopeless, but that is not the case! The ambiguity of the Bayh-Dole Act leaves us with some room for interpretation. It is important that the Biden Administration take advantage of this ambiguity.

Specifically, the Biden Administration needs to clarify that high drug prices need to be considered when analyzing the provision that permits march-in rights when “necessary to alleviate health or safety needs which are not reasonably satisfied.” After all, how are health and safety needs met when the prices are too high for any average American to reasonably afford?

If the Biden Administration took this route, the answer to the question as to whether treatments could be made to be more affordable would no longer be theoretical. Consideration of high drug prices would likely result in the use of march-in rights, resulting in increased access to life-saving medicines if made by another company at lower cost. The Biden Administration announced in March of 2023 a review of the Bayh-Dole Act’s provision on march-in authority.  Senators Warren, King, and Doggett sent a letter to HHS in June of 2023, pushing for an answer to whether high drug prices can authorize the use of march-in rights.  You can help encourage the Biden Administration to increase access to medicine by submitting a petition to Good.Guidance@hhs.gov.

Hannah Dawson
Associate Blogger
Loyola University Chicago School of Law, JD 2025

Matt O’Boyle
Associate Blogger
Loyola University Chicago School of Law, JD 2025