FTC calls for 'expansive and flexible' use of march-in rights to rein in drug prices

As the U.S. Department of Commerce works to finalize draft guidance around the government's so-called “march-in” rights to step on drug patents, the Federal Trade Commission (FTC) has offered its support in the name of promoting competition in the biopharma market.

The FTC supports an “expansive and flexible” approach to march-in rights, the antitrust watchdog said in a comment on the Commerce Department’s draft guidance.

The draft guidance, published in December, aims to provide a framework to help federal agencies decide when to seize patents developed with the help of federal funding under what’s commonly known as the Bayh-Dole Act. The public comment period ends Tuesday.

The proposed framework considers various aspects of the supply chain plus patient access, consumers and the public at large, according to the FTC. These factors satisfy the agency's “expansive” aim for the march-in measure.

As for the “flexible” quality that the FTC seeks, the antitrust enforcer says U.S. agencies “should be wary of imposing categorical limitations on the factors that can be considered for march in, such as price.” Pricing may be one of a myriad of factors for consideration, the agency contends.

The language of the Bayh-Dole Act deems march-in action necessary to achieve “practical application” of an invention, according to the framework. That means making the invention “available to the public on reasonable terms,” including pricing, the FTC argues.

Critics of the draft guidance have argued that such a determination exceeds the scope of the law. The National Association of Manufacturers (NAM), for example, called the framework an “unlawful expansion” and “price control.”

If implemented, the provision would “cause significant market uncertainty as to current and future patent licenses that are derived in any part from federal funds—directly contradicting the intent and purpose of Bayh-Dole” NAM said in its comment on the proposal.

In a separate commentary (PDF), large academic groups and medical schools expressed concerns that the march-in proposal may “have a detrimental and destabilizing effect on university and medical school technology transfer efforts and planning.”

While march-in rights could be used “as a check on inflated pharmaceutical prices,” the FTC sees additional opportunity for regulating the industry's ”patent thickets.” Under this well-known tactic, companies use large patent portfolios to protect lucrative drugs. To the FTC, such practices could weaken the leverage of march-in rights because the government framework only covers government-funded patents.

“Accordingly, the FTC urges agencies to work collaboratively to address patent thickets in the pharmaceutical industry,” the agency said.

The FTC is already taking aim at improper patent listings in the FDA’s Orange Book, which it said can be misused to block cheaper generics. The FTC initially challenged more than 100 patents in the FDA database, leading to withdrawals by at least three companies.