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Biden Executive Order Could Finally Lower Drug Prices

A mostly overlooked provision in President Biden’s executive order on economic competition breathes new life into a powerful tool to lower the cost of individual prescription drugs. If it follows through, the Biden administration would be the first to commandeer patents of excessively priced drugs, ensuring they are offered to patients at an affordable price. 

The overall executive order could tip the scales on a roiling debate within the Democratic Party over drug prices. The threat of executive action could finally spur legislative initiatives on an issue that perennially sits at the top of voter concerns.

In the waning days of the Trump administration, the National Institute of Standards and Technology (NIST) proposed a rule to weaken so-called “march-in rights,” whereby the government can seize patents from drugmakers if the product was developed with government funding, and if it isn’t made “available to the public under reasonable terms.” Those patents could then be distributed to third parties. 

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The language was passed under the Bayh-Dole Act of 1980, but it’s never been used since then. There’s been over four decades of controversy over whether unaffordably high prices violate the “reasonable terms” clause, meaning that the government could seize patents on high-cost drugs and give them to companies who would offer them to the public at cheaper rates. Even the namesakes, former Sens. Birch Bayh (D-IN) and Bob Dole (R-KS), weighed in, arguing in 2002 that their own legislation does not cover unreasonable prices, a contention critics say is at odds with the statutory language and colored by Bayh and Dole’s service at the time as lobbyists for the pharmaceutical industry.

The idea would be that just using march-in rights once would give pharmaceutical companies pause over setting prices unreasonably high.

Bayh and Dole notwithstanding, several 2020 Democratic presidential candidates, including now-Vice President Kamala Harris, highlighted march-in rights in their platforms as an executive action they would take on drug prices. But the NIST rule, conceived just two weeks before Trump left office, would have removed price as a consideration for march-in rights, a long-held wish of the pharmaceutical lobby. 

Despite it being a Trump rule, the Biden administration failed to stop its progress during the public comment period, which yielded an extraordinarily large 81,000 comments for such an obscure rulemaking, most of them in opposition. The rule then appeared in the “unified agenda,” a handbook for upcoming regulatory action, in June. “We were a little shaken when we saw it in the unified agenda,” said Steve Knievel, an advocate at Public Citizen’s Access to Medicines program. “After that we have conversations [with the White House] and received indications that it shouldn’t be read too deeply read into.”

Indeed, deep in the executive order released on July 9, Biden directed NIST to “consider not finalizing any provisions on march-in rights and product pricing” in its proposed rule. (Stat News was the first to report the development.) While NIST could theoretically go ahead and finalize the rule, a directive from the president almost certainly alters that scenario. 

With march-in rights still operative and the Biden administration seemingly tipping in their favor, advocates see some daylight for a ruling on an outstanding march-in request dating back to 2018 over the advanced prostate cancer drug Xtandi, which sells in the United States at over $150,000 for an annual course of treatment, the highest in the world. The price is more than double what it sells for in a survey of 15 high-income countries, four times the price in Canada, and more…

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