NPC Comments Regarding the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights

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NPC’s comments and recommendations expressed concern that using price as a factor when determining whether to exercise march-in rights runs counter to the Bayh-Dole Act policy objectives of incentivizing and promoting innovation. We expect using price as a factor to have an overarching chilling effect on private and public partnership across the industry, reducing drug research and development and the industry’s willingness to partner with the National Institutes of Health (NIH). This will ultimately reduce patient access to innovative new drugs and negatively impact competition in the marketplace by disincentivizing the development of new drugs. We ask that NIST consider these research findings, as outlined below, and remove price as a factor in determining whether to exercise march-in rights from the draft guidance framework.

The Bayh-Dole Act authorizes four circumstances under which march-in rights may be applied. NIST’s draft guidance framework provides guidance on the prerequisites for exercising march-in and the factors to consider when determining whether to march-in. In this draft guidance, for the first time, NIST specifies that price can be a factor. NPC opposes the use of price as a factor in determining whether to exercise march-in rights and asks that NIST remove price as a factor in determining whether to exercise march-in rights from the draft guidance framework. Our comments and recommendations, which we provide more detail on below, are as follows:

1. Using price as factor in determining whether to exercise march-in rights would create additional uncertainty and risk for investors, which we expect to meaningfully decrease investment into research and development for new drugs.
2. We expect the number of partnerships between the pharmaceutical industry and NIH will be reduced if price is used as a factor in determining whether to exercise march-in rights, leading to a decrease in innovation.
3. NIH’s investment into new therapies focuses on basic and applied research, rather than clinical development funding needed to bring a new drug to market. It already requires a licensing fee, meaning it is additionally funded by industry.
4. As march-in rights apply to patents rather than products, march-in rights would not serve their intended purpose unless every invention and every patent covering a drug is subject to Bayh-Dole. As these types of drugs are rare, exercising march-in rights to control costs would be ineffective and has the potential to chill innovation with minimal gain.
5. Price should not be used as a factor in determining whether to exercise march-in rights because of the challenge posed by the inability of this guidance to adequately articulate a framework for evaluating how value impacts prices and associate a specific patent with the full value of a drug, including its treatment costs, the cost offsets it may produce, and its benefits to patients.