March-in Rights

Section 203 of the Bayh-Dole legislation allowed the government to assert “march-in rights” to the inventions that it financed if the private holder of the patent fails to make the invention widely available. Under this provision, the federal agency can “march-in”, rescind the previous licensing arrangement, and grant a license to a responsible new applicant, if the current licensee failed to make the product available to the public on reasonable terms; or if action is necessary to alleviate health or safety needs not reasonably satisfied by the current licensee. This provision was necessary to allay concern that the exclusive patent rights granted would allow private interests to engage in abusive practices. Adding march-in rights made it possible to broker a deal and broaden support for the legislation. To date, the government has yet to assert its march-in rights, although the NIH, the principal federal agency funding medical research, has thus far received three petitions to do so: In the Case of CellPro, Inc. (rejected in August 1987); In the Case of Norvir (rejected in July 2004); and In the Case of Xalatan (rejected September 2004). The NIIH specifically rejected the claim in the Norvir action that march-in rights should be asserted in order to control prices. Instead, the NIH emphasized that such an action might not, after all, lead to lower drug prices “because the market dynamics for all products developed pursuant to licensing rights under the Bayh-Dole Act could be altered if prices on such products were directed in any way by NIH.” The NIH stated it “agrees with the public testimony that suggested that the extraordinary remedy of march-in is not an appropriate means of controlling prices. The issue of drug pricing has global implications and, thus, is appropriately left for Congress to address legislatively.”