White House Threatens Patents of High-Priced Drugs

The Biden administration is putting pharmaceutical companies on notice, warning them that if the price of certain drugs is too high, the government might cancel their patent protection and allow rivals to make their own versions.

Under a plan announced Thursday, the government would consider overriding the patent for high-priced drugs that have been developed with the help of taxpayer money and letting competitors make them in hopes of driving down the cost.

In a 15-second video released to YouTube on Wednesday night, President Joe Biden promised the move would lower prices.

“Today, we're taking a very important step toward ending price gouging so you don't have to pay more for the medicine you need,” he said.

The administration did not immediately release details about how the process will work and how it will deem a drug costly enough to act. White House officials would not name drugs that might potentially be targeted.

There will be a 60-day public comment period. If the plan is enacted, drugmakers are almost certain to challenge it in court.

It's the latest health policy pitch from a White House gearing up to make its efforts to tackle drug prices a central theme in next year’s reelection campaign. Biden frequently talks about the $35 cap on insulin for Medicare enrollees that went into effect this year, as well as a plan for government officials to negotiate some drug prices paid by Medicare for the first time in history.

The federal government, however, has never taken such a move against patents, a step called “march-in rights." But some Democratic lawmakers, including Sens. Elizabeth Warren of Massachusetts and Amy Klobuchar of Minnesota, have in recent years lobbied the Health and Human Services agency to do so with certain drugs.

The conditions for how those “march-in rights" would be used have long been debated. Pharmaceutical companies have pushed back on the idea that prices alone are enough for Washington to act against a drug's patent. The process proposed by the administration would clarify that the drug's patent could be in jeopardy if its price is out of reach for Americans, White House officials said.

“For the first time, ever, the high price of that taxpayer-funded drug is a factor in determining that the drug is not accessible to the public on reasonable terms,” said Biden domestic policy adviser Neera Tanden.

The plan could threaten future drugs, according to the pharmaceutical lobbying firm Pharmaceutical Research and Manufacturers of America, or PhRMA.

“This would be yet another loss for American patients who rely on public-private sector collaboration to advance new treatments and cures," PhRMA spokesperson Megan Van Etten said.

Pharmaceutical companies have long relied on government research to develop new drugs. The most recent major breakthrough was the development of COVID-19 vaccines. U.S. taxpayers invested billions of dollars in the effort and were able, until recently, to access treatments and preventions for the virus without paying out-of-pocket for them.

When the public invests heavily in a private company's drug, it's fair to question whether they should have to pay high prices for it, said William Pierce, a former HHS official during President George W. Bush's administration.

“The question becomes – what reward should there be for the taxpayers who help fund this product?” Pierce said.