A Move Toward More Aggressive Use of March-in Rights: Revoking Patent Protections for Pharmaceutical Products

Recently, the Biden Administration announced a framework under which the Department of Commerce could more aggressively use “march-in rights” to effectively revoke patent protections granted to certain pharmaceutical products. The move, expected to be litigated, is a significant shift in the drug pricing environment.

What happened

March-in rights are a legal tool of the US government that would allow multiple manufacturers to make a patent-protected product under certain circumstances. They can only be used if federal funding was involved in the development of a technology.

The announced framework specifies that the Commerce Department can consider the price of a medicine when assessing whether the government should allow multiple manufacturers to commercialize that medicine.

What it means

Now that direct Medicare negotiation of drug prices has passed, policymakers continue to seek new tools to force lower prices.

Broader use of march-in rights has been a subject of significant discussion for several years. However, the government has always declined to use them. This announcement signals a changing approach. Life science companies should:

• Know the extent to which National Institutes of Health (NIH) or other federally funded research was involved in the early stages of research into their drug(s). Begin scenario planning for the possibility of march-in rights being considered or invoked.
• Pay close attention to signals of drugs or categories that are most likely to be targeted, and to investor reactions to the likelihood of prices being forced down by the use or threat of march-in rights.
• Expect more maneuvers such as this during the next year. The political environment is incentivizing calls for more reforms, including expanded direct Medicare negotiations, and transparency laws.

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