Trump gave drug companies win on prices, but Biden may roll it back

The government has never used the extraordinary power, regardless of which party has held the White House. But it has remained a battleground in Washington debates over the high prices of prescription drugs.

Under industry pressure and to the dismay of patient advocates, the Trump administration on Jan. 4 set in motion a plan to end the debate. Its proposed rule, which could become final in as little as a few months, would narrow the circumstances under which march-in rights could be deployed. The definition of “reasonable terms” would never apply to the price of a drug, no matter how high, under the Trump rule.

Democrats in Congress and health advocates say the proposed rule would eliminate one of the few impediments to sky-high drug prices in the United States. The nonprofit groups Knowledge Ecology International and Public Citizen, as well as several activist organizations with big email lists of grass-roots supporters, are demanding that President Biden’s administration reverse the Trump move.

The Pharmaceutical Research and Manufacturers of America, an industry trade group, has not yet submitted a comment on the proposed rule. The comment period closes April 5. In 2019, urging the Commerce Department to take this step, it said the move is needed to clarify the intent of the 1980 law.

Commerce Secretary Gina Raimondo will have to decide whether to overturn the Trump action or make it final. Groups against the rule have used the official comment period to organize submissions of thousands of cookie-cutter messages from individual citizens denouncing the proposed restriction and calling on Raimondo to reverse the plan.

The Commerce Department declined to say how Raimondo views the issue.

Health and Human Services Secretary Xavier Becerra has forcefully supported march-in rights. Last year — as California attorney general, and as the coronavirus raged in his state — Becerra called on the government to seize production rights for Gilead’s remdesivir, the first authorized treatment for covid-19, citing high prices and limited production.

That position put Becerra at odds with the leader of the National Institutes of Health, Francis Collins, who has said NIH lawyers have advised him that the price of a drug cannot be used as a justification for a march-in action.

In 2016, Becerra, then a member of the U.S. House of Representatives, also signed a letter by 50 congressional Democrats urging Collins to set up guidelines for when price could be used to justify marching in.

The Department of Health and Human Services, which will have an opportunity to provide input on the final rule, declined to comment.

Topher Spiro, associate director of health at the White House Office of Management and Budget, which reviews rules proposed by government agencies before they are finalized, has also argued previously for the use of march-in rights to incentivize lower drug prices, as lead author of a plan from the liberal Center for American Progress, where he was vice president for health policy. Asked whether Spiro would play a role in the review, the OMB did not respond.

Liberal Democrats in Congress are pushing the Biden administration to reject the Trump rule.

“It concerns me greatly that the Biden administration has not questioned this approach already,” said Rep. Lloyd Doggett (D-Tex.), the organizer of a letter this week signed by House and Senate Democrats denouncing the Commerce Department proposal and urging that it be scrapped. “We have so few tools to combat prescription price gouging. Why remove one of the only ones we have?”

In their letter, the three dozen lawmakers pointed out that the invention of drugs often relies heavily on government.

“As the angel investors underwriting the risk of development, taxpayers deserve access to these products on reasonable terms, including fair pricing that accounts for the investment made,” said the letter, signed by Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), among others.

The Bayh-Dole law dictates how technologies supported by NIH — through direct government scientific work or at research universities that receive billions in NIH research grants — are adopted and transformed into marketed products by private industry.

The Trump rule would apply to all government-backed inventions, but the focus of the public debate generally has been over drugs.

By creating a licensing system that relied on the private sector to carry on the work started by taxpayer investment, Bayh-Dole is credited with helping fuel the boom in pharmaceutical research and investment over the past four decades.

But the law does not spell out what is meant by requiring drugs be made available to the public on “reasonable terms.”

The law’s co-authors, then-Sens. Birch Bayh (D-Ind.) and Bob Dole (R-Kan.), wrote an op-ed in The Washington Post in 2002 that said controlling prices was never their intent. Critics of the law, however, have been quick to note that Dole and Bayh were no longer senators when they wrote that article. Dole, who left the Senate in 1996 during his campaign for president, became a Pfizer TV pitch man for Viagra in 1998; Bayh, who died in 2019, represented the Washington interests of numerous corporate clients after he left the Senate in 1981.

The current fight is being played out in a division of the Commerce Department called the National Institute of Standards and Technology. NIST’s mission is to encourage the transfer of government-sponsored inventions into the private sector.

Among backers of the Trump administration’s proposed rule is AUTM, formerly known as the Association of University Technology Managers. The association maintains that advocates of lower drug prices concocted “hidden meaning” in the Bayh-Dole march-in rights that needs to be definitively ruled out.

Permanently barring price from consideration is crucial to bolstering industry confidence that its licensing deals for taxpayer-supported inventions will not be undermined by government officials, the association maintains.

“We have brilliant researchers who are developing life-changing inventions across the country, and we need to get them into the hands of companies to develop them further. Anything that would perturb that delicate balance is concerning,” said Stephen Susalka, AUTM’s chief executive. “Pricing is outside the scope of Bayh-Dole. That’s the opposite of why Bayh-Dole was initially implemented.”

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