Evan Vucci/AP Photo
President Joe Biden speaks during an event on prescription drug costs, in the East Room of the White House, August 29, 2023, in Washington.
Four years ago, the Prospect proposed that the next Democratic president could take executive action to dramatically lower the cost of prescription drugs. Two years ago, reformers tried to get Joe Biden to follow through. Earlier this year, they were disappointed when Biden’s National Institutes of Health (NIH) said no. This week, the administration announced that, after careful study, they could in fact take executive action to lower the cost of prescription drugs. But they wouldn’t be doing so just yet.
I continue to marvel at the belief that anything wrong in America can be solved by more and better PR. There aren’t many high-profile opportunities available to actually lower prices, something people say they want. If the White House actually has an option at their fingertips, the situation demands more than a statement of principles or a promise of future action.
The situation involves a portion of the Bayh-Dole Act of 1980 that has never before been invoked. If a prescription drug was developed with public funding—which includes almost all of them—and it isn’t being distributed on “reasonable terms,” the government has the authority to “march in” and give the patent they granted for the treatment to third parties. The meaning of “reasonable terms” has been endlessly debated, but one plausible interpretation is affordability, which can determine access. Third-party manufacturers could add competition and drive down the price.
Nobody expects march-in rights to be used with every drug. But just one intervention would put it in the heads of pharmaceutical companies that they could face consequences for price-gouging. Instead of just affecting one medication, it could ripple through the entire industry.
Advocates thought they found the perfect test case in a prostate cancer drug called enzalutamide, marketed as Xtandi. It was invented due to grants from the U.S. Army and the NIH, yet it sells for three to five times higher in America than it does abroad. The average annual price for a full course is $189,900 per year; even with insurance, co-pays can be as much as $10,000. Meanwhile, there are two generic versions of Xtandi ready to go, with Food and Drug Administration approval.
In November 2021, four cancer patients petitioned the NIH to march in. After 16 months, the NIH, which has resisted using its power in this arena for decades, rejected the petition, claiming that Xtandi is “widely available to the public on the market,” and that march-in would not be “an effective means of lowering the price of the drug.”
It was a bitter pill, so to speak. But as a sort of consolation prize, the Departments of Commerce and Health and Human Services (HHS) announced a plan to review march-in authority. Late in the Trump administration, the National Institute of Standards and Technology (NIST) sought to update Bayh-Dole regulations in a way that would close the door on using march-in rights for unaffordable drugs. The Biden executive order on competition requested that NIST take that out of the rule, which they did. This Commerce/HHS interagency process would clarify march-in procedures once and for all.
That review was released in the Federal Register on Thursday, and the short version is that the two agencies decided that price could be a determinant. “If the contractor or licensee has commercialized the product, but the price or other terms at which the product is currently offered to the public are not reasonable, agencies may need to further assess whether march-in is warranted,” the guidance states.
If the White House actually has an option at their fingertips, the situation demands more than a statement of principles or a promise of future action.
Elsewhere, the guidance says that regulators must ask themselves whether a product price is “extreme, unjustified, and exploitative of a health or safety need,” or “egregious within the U.S. market.” In one illustrative scenario, a product whose price rises 400 percent in a month or 1,000 percent in three months is seen as appropriate for march-in.
That might limit the use of march-in rights. “If the bar for dealing with high prices is ‘extreme, unjustified, and exploitative of a health or safety need,’ that is going to lead to some unnecessary arguments about what is ‘extreme’ or ‘exploitative,’” said James Love of Knowledge Ecology International, who has been at the forefront of advocating to use march-in rights. If a drug price has to be extreme relative to the already high prices in the U.S. market, that could narrow what would be eligible for march-in.
With Xtandi, Love points out, the issue was a price that was much higher than in other industrialized nations, a dynamic unmentioned in the guidance. “Federal agencies have shown themselves reluctant to act against unreasonable prices, and this new proposal may give them permission to continue to do nothing,” said Peter Maybarduk of Public Citizen’s Access to Medicines program.
But the bigger issue is that this is just a statement of when regulators may consider march-in rights. It does not say they will actually do it. Indeed, the Politico article previewing the release of the guidance explained, “The administration will not endorse the widespread use of march-in rights, and is not expected to take action against any individual medicines.” Senior officials reinforced that the guidance was not related to any individual drug.
Settling the matter of whether march-in rights are an available remedy is useful. It puts government on the side of patients, at least in theory. But those burdened by high drug costs are looking for quick action. Robert Sachs, one of the cancer patients who petitioned for march-in on Xtandi, noted in his response to the guidance that NIH’s rejection on Xtandi was appealed back in March. HHS Secretary Xavier Becerra could have simply shown that march-in was available by actually marching in on Xtandi.
“Today’s announcement by the White House merely kicks the can further down the road,” Sachs said, “offering only faint hope that NIH might someday take action.” Sen. Bernie Sanders (I-VT), chair of the Senate Health, Education, Labor and Pensions Committee, also urged the president to immediately use the march-in guidance for Xtandi.
This failure to act, however, didn’t stop President Biden from loudly claiming that he was “doing something about” high drug prices and lack of competition. “This is an important step toward ending Big Pharma price gouging,” Biden said. National Economic Council director Lael Brainard added on Thursday, “We’ll make clear that when drug companies won’t sell taxpayer funded drugs at reasonable prices, we will be prepared to allow other companies to provide those drugs for less.” But they could do more than just make things clear.
“If only the administration’s actions matched their rhetoric,” Sachs said.
The guidance, meanwhile, carries with it a 60-day comment period, where the public—including drug companies that have already announced their opposition to the rule—would get to weigh in. The rule could improve, or get worse, based on under-the-radar lobbying. Finalizing the guidance will take an indeterminate period. And the rules for march-in involve informal consultation with the drug company, then a formal opportunity for the company to respond, a fact-finding determination, and an appeals process.
There is less than a year until the election. Under this process, there’s little chance of any march-in decision being completed in that time frame.
A related announcement to launch a “public inquiry into corporate greed in health care” seems more promising, particularly the commitment to share data to identify and block private equity rollups that often escape antitrust scrutiny because each individual acquisition is too small. But any informational inquiry will also take time.
The charitable interpretation is that the White House is establishing a bulletproof process to make any march-in decision hold up in court, and with that done, they will get to marching. We’ll know how serious they are after the comment period. But the clock is ticking.
