President Joe Biden speaks about protecting Social Security, Medicare and reducing prescription drug costs during a visit to the OB Johnson Park and Community Center in Hallandale Beach, Florida, Nov. 1, 2022.

Kevin Lamarque | Reuters

The Biden administration on Thursday opened the door to seizing the patents of certain expensive drugs from drugmakers in an effort to reduce high drug prices and encourage more drug competition.

The administration unveiled a framework outlining the factors federal agencies should consider when deciding whether to use a controversial policy known as “march-in rights” to take over patents on drugs developed with taxpayer money and sharing them with other pharmaceutical companies when the public “reasonably cannot” access the drugs. This could lead to the development of cheaper generic alternatives, which could reduce profits for major pharmaceutical companies and reduce costs for patients.

For the first time, officials can now consider the price of a drug when deciding whether to break a patent.

“We will make it clear that if pharmaceutical companies do not sell taxpayer-funded drugs at reasonable prices, we will be willing to allow other companies to offer these drugs at a cheaper price,” White House national economic adviser Lael Brainard said on a call with reporters on Wednesday.

It is unclear whether and how federal agencies will use the right of march under the new framework. Notably, “to date, no agency” has implemented the policy, which was established as part of the 1980 Bayh-Dole Act, a senior administration official told reporters Wednesday.

The framework is available for public comment for 60 days.

The government’s announcement follows a nearly nine-month review of the federal government’s march-in powers, which aimed to update the framework for applying the policy.

This also comes as President Joe Biden makes lowering drug prices in the US a key pillar of his healthcare agenda and his 2024 re-election platform.

Political pressure has prompted healthcare companies to make their own efforts to reduce drug prices. CVS unveiled a new prescription drug pricing model Tuesday that could potentially lower costs for patients at the pharmacy counter.

Nearly three in 10 Americans have difficulty paying for the medications they need, according to a July survey by health research organization KFF. And some research suggests that patients in the United States spend about $1,200 more per person on prescription drugs than patients in any other country.

Still, taxpayers have spent tens of billions of dollars to fund hundreds of drugs over the past decade — which the Biden administration says could justify further government action to lower prices.

The administration’s new push to use march-in power could ultimately have a significant impact on the pharmaceutical industry, which has long argued that the policy hinders research and development of new drugs.

Activists protest the cost of prescription drugs in front of the US Department of Health and Human Services (HHS) building on October 6, 2022 in Washington, DC.

Anna Moneymaker | Getty Images

Drugmakers have argued that seizing a drug’s patent leaves that treatment vulnerable to competition, which can reduce a company’s sales and limit reinvestment opportunities in drug development.

This resistance has made the federal government reluctant to use marching powers in the past, which has frustrated progressives on Capitol Hill.

On Thursday, Sen. Elizabeth Warren told CNBC that the Biden administration’s new framework “takes the right approach overall, which is to use every tool available to drive down drug prices.”

“When there is no competition in a market, it hits hard the people who need this drug,” said the Massachusetts Democrat. “It also hits taxpayers hard, who ultimately have to pay for it through other government programs.”

She added that the right to march has long been enshrined in law. But that power hasn’t been “taken up and used very aggressively,” so she’s glad the government is “moving in that direction.”

Meanwhile, the pharmaceutical industry’s largest lobbying group criticized the Biden administration’s move to exercise the right to march in a statement.

“This would be another loss for American patients who rely on collaboration between the public and private sectors to advance new treatments and cures,” said a spokesman for the Pharmaceutical Research and Manufacturers of America, which makes drugmakers including Pfizer, Eli Lilly and represents Johnson & Johnson. Johnson. “The government is sending us back to a time when government research was on hold and did no one any good.”

Both the Obama and Trump administrations had rejected invasion requests from lawmakers and patient advocates. The Trump administration even proposed a rule that would prevent the government from implementing policy based solely on a drug’s high price.

The Biden administration decided not to finalize that proposal earlier this year, according to a statement from the White House on Thursday.

But the Biden administration has also so far shied away from using invasion rights. In March, the government refused to break the patent on Astellas Pharma and Pfizer’s expensive prostate cancer drug Xtandi.

Drugmakers charge more than $150,000 a year for Xtandi in the U.S. before insurance and other discounts, but in other developed countries they charge only a fraction of that price.

The Biden administration has tried to lower drug prices in other ways, such as giving Medicare the power to negotiate drug prices for the first time in the federal program’s 60-year history under the Inflation Reduction Act.

However, Xtandi was excluded from the first 10 drugs the government selected for negotiations, prompting Astellas Pharma to drop a lawsuit seeking to stop price negotiations.

Also on Thursday, the Biden administration unveiled measures aimed at countering alleged anti-competitive practices by large healthcare companies.

Some have targeted private equity firms that have bought doctors’ offices, nursing homes and other health care providers. According to a report from the American Antitrust Institute, private equity holdings in the healthcare industry have surged, totaling around $750 billion in deals between 2010 and 2020.

The government is concerned that business owners are “maximizing their profits at the expense of patient health and safety while increasing costs for patients and taxpayers alike,” a White House fact sheet said.

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