House Bill Would Allow HHS Secretary to Authorize Competitive Licenses for Drug Patents

By Donald Zuhn –-

A bill introduced in the House last July by Rep. Lloyd Doggett (D-TX) (at right), which could adversely impact pharmaceutical manufacturers holding drug patents, is starting to draw the attention of those outside the patent community.  Last week, National Public Radio reported on the bill (H.R. 6505), entitled the "Medicare Negotiation and Competitive Licensing Act of 2018," which would "require the Secretary of Health and Human Services to negotiate prices of prescription drugs furnished under part D of the Medicare program."  In particular, the Secretary would negotiate with pharmaceutical manufacturers the prices (including discounts, rebates, and other price concessions) of prescription drugs during a negotiated price period.  In conducting such negotiations, the bill sets out six factors that the Secretary shall take into account when negotiating such drug prices:

• The comparative clinical effectiveness and cost effectiveness, when available from an impartial source, of such drug.
• The budgetary impact of providing coverage of such drug.
• The number of similarly effective drugs or alternative treatment regimens for each approved use of such drug.
• The associated financial burden on patients that utilize such drug.
• The associated unmet patient need for such drug.
• The total revenues from global sales obtained by the manufacturer for such drug.

One provision of the bill on which pharmaceutical manufacturers have likely focused states that:

[I]n the case that the Secretary is unable to successfully negotiate an appropriate price for a covered part D drug for a negotiated price period, the Secretary shall authorize the use of any patent, clinical trial data, or other exclusivity granted by the Federal government with respect to such drug as the Secretary determines appropriate for purposes of manufacturing such drug for sale under a prescription drug plan or MA–PD plan.

The bill requires "[a]ny entity making use of a competitive license to use patent, clinical trial data, or other exclusivity [to] provide to the manufacturer holding such exclusivity reasonable compensation," and sets forth the following factors for use by the Secretary in determining such "reasonable compensation":

• The risk-adjusted value of any Federal government subsidies and investments in research and development used to support the development of such drug.
• The risk-adjusted value of any investment made by such manufacturer in the research and development of such drug.
• The impact of the price, including license compensation payments, on meeting the medical need of all patients.
• The relationship between the price of such drug, including compensation payments, and the health benefits of such drug.
• Other relevant factors determined appropriate by the Secretary to provide reasonable compensation.

The bills, which currently has 104 co-sponsors (all of whom are Democrats), was referred to both the House Energy and Commerce Subcommittee on Health and House Ways and Means Subcommittee on Health.  NPR reported that a related bill would soon be introduced in the Senate by Sen. Sherrod Brown (D-OH).

Comments

[Paul Cole]

I am reminded that under the UK Patents Act, 1949 there was provision for compulsory licensing of pharmaceuticals. Intensive legal discussions for each licence application took place before the UN Patent Office, and in relation to two particular drugs I had experience as a trainee in our profession in the years 1970-1972.

Eventually and wisely, the provision was omitted from the subsequent 1977 Act.