Feds Have Tools to Cut Drug Prices: Report
Harvard Medical School and Engelberg Foundation researchers say it is time for drug manufacturers to offer the U.S. government reasonable prices for drugs discovered using federal funding. Writing in the New England Journal of Medicine (registration or subscription required), the researchers say the alternative is for the government to fully exercise its existing patent immunity and license rights to cut costs.
“The government cannot afford to both pay for the discovery of new medicines and pay the high prices that manufacturers charge for them,” the report says. “The balance between the right of private parties to profit from the development of federally funded discoveries and the right of the federal government to use these discoveries for the common good should be restored.”
The article says existing laws provide two paths that could make medicines discovered at public expense more affordable. First, the Bayh-Dole Act of 1980 gave the government a royalty-free license to use patented inventions that were discovered using federal funding. The authors say the government has never exercised its license even though many drugs discovered at public expense have high prices and generate enormous revenues for manufacturers. Second, a 1910 law gives the government immunity from being sued for patent infringement in federal courts, while giving patent owners the right to receive reasonable compensation when the government makes or uses a patent-protected product.
The paper reviews the history of both provisions and says a decision by the government to fully implement its existing patent immunity through either or both of the pathways would require clarification. “An executive order expressing the Biden administration’s intention to take advantage of existing laws could pave the way for lowering the government’s prescription drug costs,” the authors write. “It could compel government agencies and their potential suppliers to assert patent immunity and licenses to the full extent allowed. It could also push FDA to recognize that the government’s patent immunity extends to its suppliers and justifies the approval of generic drugs solely for sales to government programs. Such a step would enable generic drug manufacturers to supply, at reasonable prices, drugs discovered under federal funding to government programs….”