The Biden Administration recently proposed new regulatory guidelines that would permit agencies to impose price controls on products based on inventions derived from upstream federally funded research. The new regulations would affect such price controls by expanding the “march-in” power of the Bayh-Dole Act.

In addition to its core function allowing universities and other contractors to retain ownership of inventions created with federal funds, this law authorizes, under very specific circumstances, the funding agency (e.g., the National Institutes of Health (NIH) or the Department of Energy) to grant licenses, without authorization of the patent owner, to any inventions made with funding provided by the agency. The proposed new guidelines would add the price of the end-product derived from those early-stage inventions to the list of specific circumstances.

Since its enactment in 1980, the march-in power of the Bayh-Dole Act has never been used. When asked about using the price of the end product as one of the circumstances, the law’s namesake Senators, Birch Bayh and Bob Dole, stated the text of their law did not authorize price-based march-in. Importantly, the NIH has rejected numerous petitions over the past several decades to use the march-in power to lower the prices of patented drugs or medical devices. Proponents of the new regulatory guidelines, however, argue that the statute does authorize an agency to consider price as a march-in trigger and the Biden Administration argues that march-in is a key tool to lower drug prices.

This panel discussed the regulatory proposal for price controls under the Bayh-Dole Act and other vehicles (e.g., the IRA and reasonable/reference pricing clauses in licenses or collaborative research agreements), whether they represent regulatory overreach by the Executive Branch, and whether it is wise policy to implement price controls on drugs and other products or services in the U.S. innovation economy.

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Published in: General