Issue Date: December 17, 2012
Protest Over U.S. Price Of AIDS Drug
The National Institutes of Health plans to respond before the end of the month to another petition asking the agency to use a little-known provision in a federal law to override patents held by Abbott Laboratories and allow generic production of Norvir (ritonavir), a protease inhibitor that helps suppress HIV, the virus that causes AIDS. NIH rejected a similar request in 2004. Norvir received federal funding in the early stages of its development. The drug now costs much more in the U.S. than in Canada, Europe, and other countries with comparable income levels. A survey conducted this past August found that prices charged in eight high-income countries for a single 100-mg tablet or capsule of Norvir ranged from $1.02 to $2.16, compared with the average wholesale price of $10.29 in the U.S.
Consequently, a coalition of consumer and medical groups has petitioned NIH to exercise a legal option known as a “march-in right” under the Bayh-Dole Act of 1980 and take the unprecedented step of allowing other companies to make generic copies of Norvir before its patents begin to expire in 2014.
Bayh-Dole aims to promote the commercialization of federally funded research by allowing universities and other nonprofits that receive government grants to own any resulting patents. Prior to the enactment of the statute, the U.S. government owned 28,000 academic patents, but fewer than 5% were commercially licensed.
The law gave rise to the practice of technology transfer, whereby universities conduct sponsored research, patent the results, and then license the use of the patented inventions to private companies.
To ensure that the patent owners use their government-sponsored inventions for the benefit of the public, Bayh-Dole allows the federal funding agency, on its own initiative or at the request of a third party, to effectively ignore the exclusivity of a patent awarded under the act—or march in—and grant additional licenses to other “reasonable applicants.” The march-in provision of the law can be exercised only if the agency determines, among other things, that the current manufacturer has failed to make the product available to the public or has failed to satisfy the “health and safety needs” of consumers.
Despite several formal requests over the years, no march-in petition has ever been granted by a government agency. The latest petition echoes the march-in request made to NIH in 2004 after Abbott raised the price of Norvir by 400%, but only for AIDS patients in the U.S.
The increase triggered a furor, including protests at Abbott headquarters in Illinois, a doctors’ boycott of the company’s medicines, and antitrust lawsuits. Nevertheless, NIH denied that petition, saying it “believes that the issue of drug pricing is one that would be more appropriately addressed by Congress.”
The current march-in petition again asks NIH to use its authority to increase access to the widely used Abbott AIDS drug, arguing that pricing should be reexamined in the current context, taking into account the medical needs of patients and the challenge of high health care costs for private-sector employers. The petition also asks NIH to set a standard for determining when a drug price is not reasonable.
In addition, NIH is being urged to adopt a clear policy on the conditions that would warrant use of the march-in mechanism. “The failure to grant a single march-in request in more than 30 years has sent a signal to the patent holder that the NIH will permit almost anything, no matter how abusive that action is to the public that paid for the research,” the petition states.
Abbott is charging U.S. residents the highest prices in the world for an NIH-funded invention, says James Love, director of Knowledge Ecology International, one of the organizations behind the petition. “Allowing government-funded drugs to be priced four to 10 times higher in the U.S. than anywhere else is self-inflicted damage to the competitiveness of U.S. employers,” he remarks. “The U.S. economy is no longer so dominant that we can afford to ignore the negative consequences of higher U.S. drug prices.”
Laura Etherton, a health care policy analyst at the U.S. Public Interest Research Group (U.S. PIRG), another petitioner, says her organization supports NIH in its efforts to advance medical science and enable the development of new treatments. “But it’s not acceptable for entities receiving NIH research funds to charge U.S. residents more than everyone else for those products,” Etherton says. “NIH should use the Bayh-Dole Act safeguards to ensure Americans aren’t stuck paying the highest prices in the world for taxpayer-funded medical inventions.”
For its part, Abbott says the price of Norvir has remained unchanged for nearly a decade and the company has “significant patient assistance programs that provide access to Norvir for U.S. patients who need this medicine.”
This financial assistance includes making the drug available free to patients without health insurance, according to Abbott. And the North Chicago-based drugmaker says the price increase of 2003 did not apply to government-run programs, such as Medicaid health insurance for the poor. Abbott says it spent $300 million of its own funds to develop Norvir and only $3.5 million came from an NIH grant for the firm’s early HIV medicine research, which included two drug failures.
NIH says it does not comment on pending litigation. But the agency states, “We expect to respond to the letter we received by the end of the year about whether there is sufficient information that would warrant the exercise of march-in rights.”
Legal analysts say it appears unlikely that NIH will grant the petition. “There is no reason to believe that NIH will be more receptive to this march-in request than to any of the previous filings,” says Eileen M. Kane, a professor at Pennsylvania State University’s Dickinson School of Law.
The petition, she notes, asks NIH to formulate a policy that establishes what reasonable implementation of a patented invention entails. “To date, there has been no development of a march-in standard from NIH, and this statutory authority has little definition,” Kane says.
However, as the agency did in 2004, “NIH is likely to suggest that Congress is the appropriate venue to address any drug price standardization—federally funded research or not—and that the Federal Trade Commission is the appropriate venue for focusing on anticompetitive behavior,” Kane says.
John M. Conley, a professor of law at the University of North Carolina, also predicts that NIH will reject the latest march-in request “based solely on the fact that it has always said no—including on this drug—fearing market distortions. Why would it be different this time?”
The exercise of march-in rights is “an extreme measure with a very high threshold,” points out Kendrew H. Colton, a partner at intellectual property law firm Fitch, Even, Tabin & Flannery. “It may be mentioned as a possibility. But its actual use by an agency is a rarity—none to my recollection.”
Because of this lack of precedent and the fact that if the government acted on the request it would effectively be regulating drug prices, Colton says he too would be surprised if NIH agrees to grant the petition. “Do you really want NIH, or any government agency, in the drug price-setting business?”
In addition, Colton says, if NIH were to grant open licenses on a patent-protected drug that the Food & Drug Administration has cleared for marketing, the pharmaceutical industry would be reluctant to make the significant financial investment required to obtain regulatory approval to commercialize a licensed technology. “Any march-in would likely vitiate market incentives,” says Colton, a former chair of the American Chemical Society Division of Chemistry & the Law. “Where’s the return on investment? Without it, those technologies—new drugs, new treatments for disease—wouldn’t come to market.”
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