The pharmaceutical lobby scored a major win earlier this month when it stopped House Democrats from adding language to the emergency coronavirus funding bill that would have pressured drug companies to make coronavirus vaccines affordable. Instead, the industry secured language in the bill that prevents the government from taking any action to address vaccine prices that could delay their development.
There are, however, existing executive powers that could be used to keep coronavirus vaccine prices low. In 1980, when Congress passed the Bayh-Dole Act establishing procedures for private companies to patent inventions built upon government-funded research, it created a safety valve allowing the government to break such patents when companies fail to satisfy the health and safety needs of consumers. The authority, known as “march-in rights,” lets the government seize patents in these cases and license the rights to responsible third parties. The authority could likely be used for vaccines like the one currently being developed by Moderna in partnership with the National Institute of Allergy and Infectious Diseases (NIAID).
It will be at least a year until a vaccine is ready, according to NIAID Director Dr. Anthony Fauci, and the question is whether whoever is president then will be willing to use this power against the drug companies.
Unlike many of the leading Democrats who ran in the presidential primary, former Vice President Joe Biden has not embraced the use of march-in rights against pharmaceutical companies. In October, The Hill surveyed Democratic presidential candidates on their willingness to use march-in rights and found that Sen Bernie Sanders (D-Vt.), Sen. Elizabeth Warren (D-Mass.), Sen. Kamala Harris (D-Calif.) and South Bend, Indiana Mayor Pete Buttigieg either included the idea in their pharmaceutical policy platforms or told the reporters that they were supportive of it. Joe Biden does not call for using march-in rights in his campaign materials and he did not respond to The Hill’s questions on the matter. Sludge asked the Biden campaign on March 16 if Biden would be open to invoking march-in rights for coronavirus drugs built upon NIH research, but, like The Hill, did not receive a response.
In not embracing march-in rights, Biden is aligned with the pharmaceutical industry, which launched a coalition led by two of its top lobbying groups, Pharmaceutical Research and Manufacturers of America (PhRMA) and The Biotechnology Industry Organization (BIO), to push back against calls for using the authority.
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Biden’s COVID-19 plan calls for new authority for the Department of Health and Human Services Secretary to approve the commercial price of vaccines developed with federally funded research. Such authority would either require an act of Congress, which has not shown an ability to go against the pharmaceutical lobby, or specific language to be included in drug development contracts. For the many coronavirus drugs already being developed, such as the vaccine candidate currently being tested by NIH and Moderna, it’s likely too late for contractual language to be added.
The pharmaceutical industry has given Biden far more campaign money than anyone else who has run for president this cycle, including President Trump. Joe Biden’s campaign and the outside groups backing him have taken over $1.34 million from the pharmaceuticals and health products industry, according to the Center for Responsive Politics. For context, Trump has received about $752,000 from the industry this cycle, while Sanders has received about $422,000.
The Biden campaign’s ties to the drug industry go much deeper than the contributions it has received. His campaign chairman and top aide, Steve Richetti, is a longtime healthcare lobbyist who has personally represented drugmakers Novartis, Pfizer, Eli Lilly and Sanofi on issues related to pricing and patents, among other matters.
The pro-Biden super PAC, Unite the Country, which has spent over $11.8 million supporting Biden so far, is led by multiple individuals with ties to the pharmaceutical industry. Among its leaders is longtime Biden friend Larry Rasky, the founder, chairman and CEO of Rasky Partners, a lobbying firm whose pharmaceutical clients have included Eli Lilly. Another member of the super PAC’s professional team, Amanda Loveday, is an associate director of NP Strategy, a public relations shop launched by corporate law firm Nexsen Pruet, which has clients in the healthcare and pharmaceutical industries. Unite the Country board member Mark Riddle has previously served on the board of a centrist think tank, the New Democrat Network, that received funding from the Pharmaceutical Research and Manufacturers of America, the drug industry’s top lobbying group.
Last month, House Democrats pushed to have march-in rights for coronavirus treatments codified in the emergency funding bill. That effort was abandoned due to opposition from the Trump administration and Senate Republicans. Senior Chief Deputy Whip and Energy and Commerce Consumer Protection and Commerce Subcommittee Chair Rep. Jan Schakowsky (D-Ill.) then led 45 of her colleagues in sending a letter to Trump on the matter, and she sent a separate letter to Health and Human Services Secretary and former Eli Lilly president Alex Azar on March 2.
“You must understand that the House of Representatives would find it unacceptable if the rights to produce and market that vaccine were subsequently handed over to a pharmaceutical manufacturer through an exclusive license with no conditions on pricing or access, allowing the company to charge whatever it would like and essentially selling the vaccine back to the public who paid for its development,” Schakowsky wrote to Azar.
Despite the Democrats’ pleas, the pharmaceutical lobby prevailed. The Democrats’ language on march-in rights was not included in the bill and new language was added to specify that HHS could not take any action stemming from concerns over pricing of vaccines, therapeutics, and diagnostics that could delay development of such products. The language is so broad that some observers believe drug companies could use it to block any effort to reduce prices, including march-in, by claiming that it reduces incentives to innovate. Last year, Senate Majority Leader Mitch McConnell (R-Ky.) blocked a bipartisan House bill to lower the price of some prescription drugs through Medicare negotiation after a surge in large campaign contributions from the pharmaceutical industry.
The Biden campaign has received large contributions from many executives and board members of pharmaceutical companies and lobbying groups, including PhRMA Vice President Carl Meacham ($1,658), Regeneron Pharmaceuticals board chairman Roy Vagelos ($2,800), Dendreon Pharmaceuticals Chief Operating Officer Christina Yi ($2,800), and Takeda Pharmaceuticals Vice President Joel Posener ($1,000). Among Biden’s bundlers who have raised at least $25,000 for the campaign is David Scheer, who is a board member of pharmaceutical companies including Esperion Therapeutics, OraPharma, and ViroPharma.
In September of last year, Bloomberg News reported that Biden told a private gathering of donors at a surgeon’s home in Dallas, Texas that there were “great drug companies out there—except a couple of opioid outfits.” At the second Democratic debate in July, Biden supported smaller-scale cost controls for prescription drugs, tweaking the Affordable Care Act, instead of Medicare for All’s proposed provisions allowing the government to negotiate lower drug prices with corporations.
Until 1995, the NIH had authority to require companies to make drugs based on public research available at reasonable prices. As The Intercept reports, this “reasonable pricing” authority was stripped by the Clinton administration in 1995 at the behest of the pharmaceutical lobby. Amendments were offered in Congress to restore the authority—in the House by then-Rep. Bernie Sanders and in the Senate by Sen. Paul Wellstone (D-Minn.)—but were defeated. When the measure was brought up in the Senate, Biden was one of eight Democrats who voted with Republicans to table and kill the amendment.
NOTE: Article has been updated to clarify the date Sludge asked the Biden campaign if Biden would be willing to use march-in rights for coronavirus drugs.
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