LSHC Horizons Brochure 2024 - Flipbook - Page 91
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | United States
91
Drug pricing as potential basis for Bayh-Dole march-in
In December 2023, the Biden Administration
announced its “Draft Interagency Guidance
Framework for Considering the Exercise
of March-in Rights”. The U.S. Government
generally retains “march-in” rights in “subject
inventions” under federally funded agreements.
Under this construct, the Government may,
in limited circumstances, license federally
funded intellectual property to third parties to
ensure that an invention is made available to
the public. Notably, to date the Government
has never exercised it march-in rights. The
announcement signals renewed interest and
potentially a more aggressive stance by the U.S.
Government in exercising these rights going
forward. We expect additional agency action
on this draft framework in 2024, after the
administration considers comments due
in February.
The “march-in” construct stems from the BayhDole Act, a cornerstone of the Government's
management of federally funded inventions
since 1980. Bayh-Dole preserves the rights of
contractors and grantees to own their “subject
inventions” but also provides the government
with the extraordinary—and to date, never
exercised—right to grant a license to third
parties under specific circumstances. The
circumstances for “march-in” set forth in the
statute include when (1) subject inventions are
not developed in a reasonable time; (2) health
or safety needs are not reasonably satisfied;
(3) federal regulations deem requirements for
public use are not satisfied; and (4) contractors
are in breach of the obligation to substantially
manufacture in the U.S.
Joy E. Sturm
Partner
Washington, D.C.
The draft framework would impose a threestep analysis for agencies to apply that focuses
on whether a funded technology has been
offered to the public in a way that does not
“unreasonably limit availability”. It introduces
the consideration of excessive pricing as
a potential factor to be considered in the
reasonableness analysis.
The Biden Administration has been explicit in
pointing out its intention to use the new draft
framework as a tool to address drug pricing.
Indeed, there has been increased attention to
march-in rights in recent years as a means to
increase access to federally funded medical
technologies created in response to the
COVID-19 pandemic.
Given the renewed focus on march-in and the
linkage with drug pricing, it is clear that the
possibility of march-in will continue to be a
point of contention, and we are monitoring
developments in this area. Any government
exercise of march-in rights on the basis of
drug pricing is almost sure to be the subject
of litigation.
William F. Ferreira
Partner
Washington, D.C.
Allison D. Pugsley
Partner
Washington, D.C.
