FTC supports government ‘march in’ power to bring down prescription drug costs

If the administration of President Joe Biden wants to use federal “march-in authority” to tackle high prices for prescription drugs, the Federal Trade Commission (FTC) won’t stop it.

On Feb. 6, the FTC published a 17-page letter explaining why it supports federal authority – and potential action – to bring down “inflated pharmaceutical prices.”

The provision is in the Bayh-Dole Act, which allows the federal government to “march in” on patents on inventions that were created using taxpayer money. Government regulators may require patent holders to license the federally funded patent to other applicants.

That has never happened before, but FTC’s announcement said “high price is an appropriate basis for exercising march-in rights,” and the march-in rights “are an essential check to ensure that taxpayer-funded inventions are affordable and accessible to the public.”

FTC said it aims to promote competition and combat anticompetitive business practices by pharmaceutical makers who benefit from taxpayer-funded research, then price medicines out of financial reach of patients. “Nearly three in 10 Americans report rationing or skipping their medications due to high costs,” the FTC news release said.

Spending and spending

The 17-page commentary also includes facts and figures relating to contemporary drug development. From 2010 to 2019, the National Institutes of Health contributed $187 million and published research related to 354 of 356 new drugs approved by the U.S. Food and Drug Administration in that time.

FTC cited its own actions against some of the most eye-popping examples of drug prices:

• In FTC v. Lundbeck Inc., the pharmaceutical company raised the price from $77.77 to $1,614.14 for the Indocin IV treatment for patent ductus ateriosus (PDA), a heart condition in premature babies. The company did so after acquiring U.S. rights to the only other PDA treatment, which it priced at $1,522.50.
• In FTC v. Mallinckrodt, the pharmaceutical company “raised the price overnight by 1,300%,” to more than $100,000, for H.P. Acthar Gel used to treat infant diseases.
• In FTC v. Shkreli, Vyera Pharmaceuticals jacked up the price by 4,000%, from $17.60 to $700 per tablet, for Daraprim, a drug used to treat toxoplasmosis.

Meanwhile, pharmaceutical companies develop increasingly large patent portfolios, known as “patent thickets,” to protect one drug. Some claim those reflect the complexity of medical innovations. FTC countered the patent thickets do not reflect true innovation and advancement, but do discourage competition, chill investments, and weaken the government’s ability to use march-in rights.

Public comment period

Feb. 6 was the end of the public comment period opened by the National Institute of Standards and Technology (NIST) within the U.S. Department of Commerce. NIST requested information from the public on using the march-in authority. It was unclear when the next NIST action would take place.

While FTC Chair Lina M. Khan and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya at times issue their own statements about FTC issues and actions, the march-in letter and news release did not include individual comments.