NIH Reluctant To “March In”: Collins Suggests Authority Not Intended To Address Pricing Concerns

Legislators are urging the National Institutes of Health to use intellectual property levers to put pressure on prescription drug pricing. NIH has historically been reluctant to play the role of the price police – and it still is.

National Institutes of Health Director Francis Collins has an important message for legislators who want the research agency to take action to rein in prescription drug pricing: he doesn’t think the law gives NIH that authority.

During a Senate Appropriations/HHS Subcommittee hearing April 7, Sen. Richard Durbin (D-IL) became the latest legislator to urge Collins to use the agency’s “march in” rights on patents supported by taxpayer funded research to exert pressure on companies whose prices are (in Durbin’s view at least) too high. Collins has been asked about the issue frequently in the current round of budget hearings, and—reading between carefully couched responses—it seems clear that NIH is not eager to lead the charge against high prices using patent levers.

His response to Durbin, however, went farther than prior remarks in suggesting that the authority is simply not available in the context that legislators are urging its use. The “march in” language in the technology transfer act (Bayh-Dole Amendments) does “not appear to have really been designed to be utilized in a fashion where the price is the obstacle,” Collins told Durbin.

Moreover, Collins said, any attempts by NIH to push the case for “march in” rights may be counterproductive to the agency’s mission to encourage biomedical research.

Collins’ remarks do not mean NIH will ignore requests to “march in,” or that the requests for action won’t continue to drive headlines. They do, however, underscore that NIH remains fundamentally resistant to engaging in price review and regulation – and that any further steps by the agency are unlikely to end in substantive action.

Concerns About Impact On Innovation

Durbin introduced the issue by specifically focusing on a Reuters report of price increases since 2011 of the US’ top 10 drugs. He called out three brands in particular: AbbVie Inc.’s Humira, Teva Pharmaceutical Industries Ltd.Copaxone and GlaxoSmithKline PLC’s Advair as ones that may merit attention in the context of “march in” rights.

Of note, Durbin did not mention Astellas Pharma Inc./Medivation Inc.’s Xtandi in his remarks, and was not among the members of Congress who signed the March 28 letter  formally requesting that NIH consider “march in” rights the cancer therapy. For Xtandi, the issue is not price increases per se, but the magnitude of price – and the price difference in the U.S. vs. other countries, including Astellas’ home market of Japan.  (Also see "Xtandi’s Success A Double-Edged Sword" - Pink Sheet, 29 Mar, 2016.)

Collins noted the request to look into Xtandi in his response. “I am not saying in any way that we’re not going to take this potential responsibility seriously,” Collins assured Durbin. However, Collins pointed out that, after reviewing the exact language of the Bayh-Dole Act, he believes the “march-in” rights do “not appear to have really been designed to be utilized in a fashion where the price is the obstacle. It seems more to be a circumstance where the product was simply not available because it was not being commercialized and then NIH had the authority to step in and take over.”

Durbin, not surprisingly, does not see it that way. In his view, the concept of drug availability “goes beyond physical accessibility” and overpriced drugs are indeed inaccessible to some patients. He said he accepted Collins’ premise about not wanting to abuse the right. “But if you cannot find one egregious example where you can apply this, I would be surprised,” Durbin said. “And applying it even in one case sends at least the message to the pharmaceutical companies across America that patients need to have access to drugs that were developed with taxpayers’ expense in the research that went into it. I think doing nothing sends the opposite message. That it’s fair game, open season for whatever price increases they wish.”

While Collins’ interpretation of the scope of “march-in” rights is important, it is his broader concern about the impact on NIH’s ability to collaborate with industry that he has cited consistently over the years as the key factor shaping his view that a research organization should not police commercial pricing.

To Durbin, Collins added, “I am concerned that the negatives that may be flowing forward if we begin to use march-in in a very broad way about drug pricing, may, in fact, be substantial in terms of a loss of interest in terms of industry participation in discoveries that NIH has supported.”

A “March In” Precedent…

The dozen Democratic lawmakers calling for a NIH march-in hearing on Xtandi (enzalutamide) have a precedent to cite from 12 years ago. However, it’s noteworthy that the precedent hearing, while a time-consuming public defense project for the drug marketer, was eventually relatively innocuous.

In their March 28  letter requesting a NIH hearing on the issue, the lawmakers note the convening of a previous hearing in May 2004 on a march-in request for Abbott Laboratories Inc.’s Norvir (ritonavir). They describe the pressure on NIH to call a hearing as the primary stimulus to an Abbott price reduction of ritonavir for public payors, including AIDS Drug Assistance Programs and Medicaid and expansion of its patient assistance program, and reference an Abbott press release from February 2004. Abbott made the pricing response to the first publicity of a potential march-in and not at the conclusion of the eight-month process.

In the Abbott situation, NIH was petitioned in January 2004 to hold a hearing on compulsory licensing, convened it five months later in late May, and issued a decision against taking action on July 29, 2004.

There are important differences between the Norvir precedent and the current call for a similar hearing for Xtandi.

The primary difference is the political environment. The current Democratic administration is openly more interested in putting “downward pressure” on drug prices than the Bush Administration at the time of Norvir. The election year only heightens the attractiveness of drug pricing topics.  

However, even the Obama Administration has shown little enthusiasm for march-in. The administration also is aware that putting NIH on the front-line for enforcing low pricing decision by companies could also throw off efforts to extract more money for NIH from the GOP-controlled Congress – an ongoing project.

HHS Secretary Sylvia Burwell has already sent a  letter to Rep. Lloyd Doggett (D-TX) to decline a request for HHS to issue guidance on the use of the Bayh-Dole Act march-in authority. She gave examples where NIH has considered using its march-in authority to address drug pricing concerns for Norvir and Pfizer Inc.’s Xalatan (latanoprost) in 2004 and each time determined that the drugs did not meet the statutory requirements to justify use of the authority. Other big differences are the larger scale of the price issue, and the difference in price for Xtandi between the price in Astellas’ home market of Japan and the US.

The driving issue for Norvir was a big percentage price increase (400%) but $7 per day (from $1.71 per day to $8.57 per day). For Xtandi, the issue is not price increase but the magnitude of price: per the March 28 letter from members of Congress, Xtandi has a $129,000 price tag in the US. Added to that is an apparent differential price between the US and Japan (put in the Congressional letter at less than a third of the US prices, $39,000).

…Not By Coincidence

One common feature between the Norvir precedent and the call for action against Xtandi is in the roster of pricing critics.

The case against Xtandi was first made by Knowledge Ecology International and the Union for Affordable Cancer Treatment who petitioned HHS, the Department of Defense and NIH in January 2016, asking that they exercise “march-in” rights to “end the monopoly” on Xtandi, noting that Xtandi was invented at UCLA with support from federal grants from the NIH and Department of Defense. The group specifically asked the government to use its “royalty-free rights” in the relevant patents or grant the request for march-in rights.

A blog post from KEI Director James Love cites the discrepancy between the U.S. and other high income countries as the basis of the request. Love also participated in the Norvir hearing as president of petitioner Essential Inventions.

In a press release, Love said: “It is one thing for a company from Japan to take U.S. taxpayer-funded medical research and earn billions in profits, and another to charge U.S. residents three times as much a residents of Japan, for the same product. But who can blame Astellas? It is the U.S. federal government who has turned a blind eye to the abuses of drug pricing, and most inexcusable, abuses of NIH (and in this case DoD) funded patent rights.”

The specific focus on international price differences was not a key focus in the original Norvir review – but did come up when NIH was asked to revisit the question almost a decade later.

In a 2013 response to a 2012 request for NIH to exercise march-in rights on Norvir, NIH determined that the information did not support re-consideration of the decline to initiate march-in proceedings and also declined to “set the rules proposed by the Requestors directing the initiation of such proceedings based on certain price disparities between the United States and other developed countries.”

At the May 2004 hearing, Abbott said that it spent more than $300 million on Norvir R&D – about 100 times the entire amount of the NIH grant that supported the early HIV research program. Then-COO Jeffrey Leiden also noted that the protease inhibitor market had only grown slightly following the re-pricing of Norvir.

Leiden is one of two veterans of the 2004 Norvir hearing process who is now in senior pharma management: Leiden now is Chairman, President and CEO at Vertex Pharmaceuticals Inc. The other is Elias Zerhouni who was the director at NIH in 2004 and is now top R&D exec at Sanofi.