On October 25, 2012, the American Medical Students Association (AMSA), Knowledge Ecology International (KEI), U.S. Public Interest Research Group (PIRG) and the Universities Allied for Essential Medicines (UAEM) filed a petition (attached here) requesting that the National Institutes of Health (NIH) grant Bayh-Dole Act march-in rights for the patents held by Abbott Laboratories relevant to the manufacture and sale of ritonavir, a federally funded invention that is much more expensive in the United States than in Canada, Europe or other high-income countries.
As noted in the cover letter, in the more than 31 years of the history of the Bayh-Dole Act, the NIH has never granted a march-in request. This means either that there have been zero abuses involving NIH funded patent rights in more than three decades, or that the NIH has been unwilling to curb abuses.
The organizations have asked the NIH to grant open licenses on patents held by Abbott for the manufacture and sale of the HIV drug ritonavir. The petition also requests the NIH adapt two rules that will create standards for future march-in requests, making NIH policy more predictable as well as effective in protecting the public’s interest in federally funded inventions.
At the center of the petition is an important policy issue for the NIH. Can an NIH funded medical invention maintain its patent monopoly when U.S. residents are paying more than anyone else? The petitioners are asking the NIH to set a policy that would grant march-in requests when U.S. residents face substantially higher prices than the patent owners charge in other countries with comparable incomes. The petition also asks the NIH to adopt a clear policy on march-in petitions in cases where patents on medical inventions are “necessary to effect significant health benefits” of a second product “used or is potentially useful to prevent, treat or diagnose medical conditions or diseases involving humans.”
While the petition focuses on one drug, ritonavir, which is priced 4 to 10 times higher in the USA than in other high income countries, the policies would influence the pricing of many other federally financed drug inventions, such as the drugs highlighted in Tedmund Wan’s survey (attached here), which looked at 14 NIH funded drugs, 13 of which were priced higher in the United States than in foreign markets, often significantly so. The two rules the petition proposes to the NIH are as follows:
Rule 1: Ceiling on prices to U.S. residents
The Secretary shall normally grant open licenses to third parties to use patented inventions that have benefited from federal funding, subject to the payment of a reasonable royalty and an appropriate field of use, if a product or products based upon those inventions are sold in the United States at prices higher than in other high income countries. In implementing this rule, we suggest the following standard for a ceiling on prices to U.S. residents.
Proposed standard for ceiling on prices to U.S. residents
The Government should consider the high, mean and median prices charged in the ten largest foreign economies, as measured by GNP, among the countries determined by the World Bank to be high income. U.S. prices will presumptively not be considered reasonable, and contracts will be given or licenses granted to competitors to supply the products to U.S. consumers, if any of the following are true for either public or private sector prices:
(1) U.S. prices are higher than seven of the comparison countries, or
(2) U.S. prices are 10 percent higher than the median price of the reference countries.
A licensee may rebut the presumption of unreasonable pricing by providing evidence that its actual risk adjusted R&D costs would not be recovered, but for the charging of higher prices in the U.S. market, or other evidence specific to the risk adjusted costs for the licensed invention.
Rule 2: Use of invention for a dependent technology
The Secretary shall grant licenses to third parties to use patented inventions that have benefited from federal funding, subject to the payment of a reasonable royalty and an appropriate field of use, if a product based on those patented inventions:
(a) is a drug, drug formulation, delivery mechanism, medical device, diagnostic or similar invention, and
(b) is used or is potentially useful to prevent, treat or diagnose medical conditions or diseases involving humans, and
(c) its co-formulation, co-administration or concomitant use with a second product is necessary to effect significant health benefits from the second product, and
(d) the patent holder has refused a reasonable offer for a license.
The two proposed rules are without prejudice to the exercise of march-in to remedy other anticompetitive, abusive or unfair practices by a patent holder or licensee. We note that examples of other abuses may include, but are not limited to, tying arrangements, sudden and arbitrary price increases, or price setting disproportionate to drugs in the same class.
Statements from NGOs filing the petition
Reshma Ramachandran, PharmFree Fellow, American Medical Students Association
“As future physicians, we firmly believe it is unacceptable to deny our patients access to ritonavir, a life-saving essential medicine, or its formulations based on its exorbitant price in the United States compared to other high-income countries. As the largest and oldest independent association of physicians-in-training in the United States with a rich history of advocating for quality, affordable access to medicines, the American Medical Student Association stands behind this petition to ask the Secretary of Health and Human Services to implement the policy rules detailed in order to allow for the generic production and sale of ritonavir. In doing so, we can assure our patients, the U.S. citizens, that the American healthcare system intends to put patient lives ahead of pharmaceutical profits.”
Krista L. Cox, Staff Attorney, Knowledge Ecology International
“Abbott’s has abused its patents over ritonavir, a federally funded invention, by charging excessively high prices that far exceed the price charged in other high income countries, such as those in Europe. It is appalling that U.S. residents pay much higher prices for the very inventions funded through their taxpayer dollars. This abusive behavior by Abbott not only impacts access to medicine, but also has negative consequences for our economy as employers are forced to pay more for health care costs to cover these outrageous prices. The NIH should seize this opportunity to use its march-in power granted to it by Congress through the Bayh-Dole Act.”
James Love, Director, Knowledge Ecology International.
“The largest challenge is not to make a case that Abbott has abused its patent rights. Abbott is charging US residents the highest prices in the world for an NIH funded invention. But does the NIH even care about the facts in the petition? Is there any abuse of rights that will motivate the NIH to use its march-in rights? The U.S. economy is no longer so dominant we can afford to ignore the negative consequences of higher U.S. drug prices. Allowing government funded drugs to be priced 4 to 10 times higher in the U.S. than anywhere else is self-inflicted damage to the competitiveness of U.S. employers.”
Bryan Collinsworth, Executive Director, Universities Allied for Essential Medicines
“After more than 30 years, the NIH needs to show the Bayh-Dole safeguards actually mean something. No one thinks it’s fair for U.S. residents to pay the highest prices on earth for US government funded inventions.”
Laura Etherton, U.S. PIRG health care policy analyst
“As a public interest consumer organization, we support the NIH in its efforts to advance medical science and enable the development of new treatments. However, it’s not acceptable for entities receiving NIH research funds to charge U.S. residents more than everyone else for those products. NIH should use the Bayh-Dole Act safeguards to ensure Americans aren’t stuck paying the highest prices in the world for taxpayer-funded medical inventions.”
What others say
Robert Weissman, President, Public Citizen
“American consumers should not have to pay exorbitant prices for medicines our tax dollars helped invent. We have rights enshrined in law (known as “march-in rights”) to ensure that taxpayer-funded medicines are available in a competitive market, and thereby affordable. In one particularly egregious example, Abbott Laboratories abused the monopoly granted to it by the National Institutes of Health for the HIV/AIDS drug ritonavir, arbitrarily raising the price of this taxpayer-funded drug by 400 percent and slowing innovation in the market for HIV/AIDS drugs. We should not permit such abuse, least of all in cases of medicines we paid for. And the law says we don’t have to. The Secretary of Health and Human Services should respond affirmatively to the NGO march-in request, and exercise her authority to protect American consumers from drug companies that would gouge us for pharmaceuticals developed with taxpayer dollars.”
Related KEI Blogs
- October 30, 2012. How common is Federal Funding of patented inventions?
- October 25, 2012. Ed Silverman, Advocates Seek License To Make Abbott Drug, Pharmalot.
- October 28, 2012. Dennis Crouch, Should a patentee with market power be allowed to charge monopoly prices?: March-In Rights and the NIH, Patently-O.
- October 31, 2012. Kevin E. Noonan, Groups Petition for NIH Exercise of March-in Rights over Abbott Laboratories’ Norvir®, PatentDocs.
- November 2, 2012. Meredith Wadman, NIH asked to grant open licence on HIV drug, Nature News Blog.