Warren, Doggett, King, 75 Lawmakers Urge Biden Administration to Lower Prescription Drug Prices

Letter

Dear Secretary Raimondo, Secretary Becerra, and Under Secretary Locascio:
We write to express our support for strengthening and finalizing the “Interagency Guidance
Framework for Considering the Exercise of March-In Rights” to protect the public’s health and
safety by ensuring reasonable prices on taxpayer-funded inventions.

We appreciate that the Administration has, for the first time, specified that price is a factor in
determining whether a taxpayer-funded invention is accessible to the public. Reining in out-ofcontrol prescription drug prices is one of the most pressing challenges facing the United States,
and taxpayers are investing more than ever in biomedical research, sometimes funding 80 to 100
percent of the cost of developing a new medical product. As the angel investors underwriting the
risk of development, taxpayers deserve access to these products on reasonable terms, including
fair pricing that accounts for the investment made.

While we recognize the important role of the private sector in research and development and
support the ability to make a reasonable profit, industry interests should not outweigh meeting
health and safety needs for all consumers and providing accountability to taxpayers. To ensure
the Interagency Guidance appropriately balances these interests and offers robust due process
protections, we offer the following comments to strengthen the final framework.

1. Considerations for exercising march-in rights
The draft framework offers a lengthy list of considerations for agencies to weigh before
exercising march-in rights. We strongly support and welcome the Administration’s
acknowledgement that price is an important consideration for the use of march-in. Price gouging
is never justified, and it is agencies’ responsibility to protect consumers from monopoly abuse.
An unaffordable product is the equivalent of an unavailable product.
There is considerable debate concerning what is an appropriate price. We encourage you to
include additional considerations to assist agencies in determining when a product’s price is
unjustified. Such considerations may include the impact of price on an individual’s ability to
afford a product as well as the cost to develop, produce, and deliver the product. Further
considerations may include a comparison of prices charged to federal purchasers versus
commercial purchasers, a comparison of prices charged in other comparable countries, a
comparison of prices between similar products, and a comparison of prices for alternative
methods to meet the same health or safety need. For example, a product’s price could be
unjustified if the price in the U.S. exceeded the median price charged in comparable wealthy
countries. These considerations must be accompanied by a clear directive that price gouging on a
taxpayer-funded product is never justified, and the availability of alternatives should not be a
factor in declining to exercise march-in rights.

Many taxpayer-funded products are developed for the purpose of alleviating a health or safety
need. We appreciate the framework’s commitment to assisting agencies in weighing whether
such a need is being met, but we are concerned that it inappropriately imposes some new
conditions beyond statutory requirements that will deter agencies from exercising march-in
rights. For example, the framework encourages agencies to consider the scope of the health or
safety need, thereby implying that a need impacting a smaller population is less important. Such
a condition is not included in the statutory requirements for exercising march-in rights and the
inclusion of this new condition would likely deter agency action on critical products that may be
life-changing or lifesaving. Similarly, the framework refers to “an emergency or urgent public
health or safety issue.” Such limiting language is not included in the statute and may dissuade
agencies from exercising march-in rights outside of extreme conditions such as when there is an
existing public health emergency declaration. Any unmet health or safety need is a reason to use
march-in rights and the framework should not impose additional conditions on this criterion.
The draft framework frequently encourages agencies to examine the “totality of circumstances.”
A robust fact-finding is necessary, but the framework must strike the correct balance between
industry interests and the obligation of agencies to protect taxpayer interests and consumers’
health and safety. We are concerned by the draft framework’s imbalance in weighing these
interests, most notably apparent in encouraging agencies to consider “the potential chilling effect
on the agencies’ existing relationships with industry.” While we support federal-private
partnerships to advance shared priorities, this should never interfere with agencies’ responsibility
to enforce federal law and protect consumers and taxpayers. Just as the Department of Health
and Human Services (HHS) would hopefully not consider “the potential chilling effect on…
relationships with industry” in negotiating fair Medicare drug prices under the Inflation
Reduction Act, HHS should not be considering how unhappy it makes the pharmaceutical
industry to comply with federal law in its enforcement of march-in rights. We strongly
encourage you to remove this consideration and ensure the final framework strikes an
appropriate balance and does not overly emphasize one party’s concerns.

2. Procedures for exercising march-in rights
The draft framework details robust procedural steps before exercising march-in rights. To ensure
full due process for all parties involved, we strongly urge you to ensure transparent proceedings,
provide equal opportunity for petitioners to present evidence and witnesses, and provide an
independent appeals process and timeliness standards.
Inexplicably, the framework states “all portions of the march-in proceeding are closed to the
public and are held confidential.” March-in proceedings should be open to the public, who have
the most at stake as the financiers of the subject invention. Only very narrow exceptions to
transparent proceedings should be permitted when commercially confidential information or
other statutorily protected information is disclosed. Private investors receive transparency and
regular reports on the status of their investments. When the taxpayer is the investor, the same
transparency is owed, especially when potential misuse or abuse is being discussed.
Notably, the secret proceedings outlined in the draft framework offer contractors the right to
counsel and ability to present evidence and witnesses during a march-in proceeding, yet
petitioners are not mentioned once in the “Regulatory Procedures for March-In” section.
Petitioners should be afforded equal opportunity to be represented by counsel and fully
participate in a march-in proceeding. Taxpayers and affected consumers have a right to be heard
by agencies to ensure their interests are fairly represented and considered.
To ensure due process, march-in proceedings must also include a right to appeal by petitioners
and all appeals should be considered by someone not involved in the initial decision. In a recent
appeal to a denied march-in petition, petitioners wrote that review by the same office “would be
tantamount to no review at all.” We agree with this assertion and urge you to specify that all
appeals should receive independent and fair review by a new, impartial party.
Finally, march-in petitions and proceedings should be subject to timeliness requirements. Prior
march-in petitions have gone unanswered for several months, and sometimes years. These delays
resulted in continued price gouging on Xtandi, a prostate cancer drug, which in a single year cost
taxpayers over $2 billion to provide to Medicare beneficiaries. A primary reason that the
National Institutes of Health (NIH) gave for its recent rejection of a march-in petition on Xtandi
was “the remaining patent life and the lengthy administrative process involved for a march-in
proceeding.” Such concerns may not have been present if NIH had responded to the initial
petition in a timely manner, when it was first filed in 2021.
The draft guidance encourages agencies to consider patent life and market circumstances when
determining whether the time involved in a march-in proceeding is worth undertaking. While we
are concerned that the guidance may permit the continued price gouging of taxpayer-funded
inventions, at a minimum, the final framework must include guidance on the timely
consideration of a petition to ensure bureaucratic red tape does not interfere with the final
outcome.

3. Implementation of march-in rights
While we welcome the Administration’s acknowledgment of one of its most important
authorities to prevent price gouging and provide taxpayer accountability, this framework is only
as meaningful as the resulting action you take. The fact that agencies have failed to use march-in
rights is not due to issues with implementation of the authority, but rather an indication of how
industry narratives have negatively impacted agency behavior. We are concerned by
accompanying statements with the release of this draft guidance that asserted the Administration
“is not expected to [exercise march-in rights] against any individual medicines.”
Taxpayers invest approximately $115 billion annually in research and development, over $54
billion of which is spent on biomedical research, yet they are too often denied access to the
resulting inventions because of astronomical monopoly prices. It is imperative that the
Administration protect these investments and access to critical innovations by exercising its clear
statutory authority, which also includes licensing authority on all patents using Section 1498 and
the use of royalty-free rights. Not only does the framework fail to mention separate authorities, it
dismisses their use by encouraging agencies not to exercise march-in rights “if only one of
several patents necessary to produce a product is subject to march-in.” We are deeply concerned
this framework may only reaffirm past inaction. When issuing the final framework, we strongly
urge you to include a directive to agencies to review all federally funded inventions under their
purview within six months and determine whether to use march-in rights, either solely or in
conjunction with Section 1498 and/or royalty-free rights.
We appreciate your timely attention to these comments and urge you to strengthen and finalize
the draft framework without delay. We look forward to working with you and all agency partners
in implementing a strengthened final framework to deliver long overdue relief to American
taxpayers and consumers.

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