Contrary to popular belief, the government can take steps to protect Americans from exorbitant drug prices invented with American taxpayers’ money. It can, for example, appropriate the drug’s patents and license them to a generic manufacturer, if the drug is not available to the public at a reasonable price. Unsurprisingly, some companies and trade associations would prefer to maintain absolute control over their prices, and therefore their profits, and simply do not want to accept this reality.
The Bayh-Dole Act of 1980 states that the government may intervene in a federally funded invention if, among other reasons, a rights holder fails to obtain “practical application” of the invention.
This reality, however, is firmly rooted in the plain language of existing federal law, and three words in particular. The Bayh-Dole Act of 1980 states that the government may intervene in a federally funded invention if, among other reasons, a rights holder fails to obtain “practical application” of the invention. “Practical application” is defined as putting the invention into practice “under such conditions that it is established that the invention is in use and that its advantages are … available to the public on reasonable terms”. (See 35 USC 201(f))
These three words, “on reasonable terms”, create an independent obligation for pharmaceutical companies and other rights holders. Congress included them for a reason. Moreover, the use of the word “and” after the word “used” shows that practical application requires more than an invention available for public use. The terms on which the invention is available must also be reasonable. And Congress didn’t need to use the word “prize” to bring it within the scope of the law. Congress can legislate using general terms that apply to a class of things without listing all members of the class. In this case, the class was “reasonable terms”, which refers to all the terms under which an invention is available to the public. Inventions become available to the public through sale, and price is a term of most sales.
The words “on reasonable terms” are clearly important. This is the inconvenient truth that marching adversaries hope to avoid through deflection. In his recent opinion piece in The hill, Joseph Allen once again took the diversion route. For decades, Allen inserted himself into this controversy by publicly asserting that the meaning of the Bayh-Dole Act was finally resolved by a 2002 letter to the editor of the Washington Post written by Bayh and Dole, written in response to an editorial written by one of us. Allen now takes umbrage that people have raised legitimate questions about any disputes that may have swayed former senators’ opinions, hyperbolically alleging that such criticism amounts to “attacking the dead.”
What is really at issue here is the degree of deference to be given to the letter of two former senators written decades later on the meaning of a law when those views conflict with the plain language of the law. The Supreme Court’s answer to this question is: not much. And the view of the highest court in the land on this matter is important. The beliefs of individual legislators about a bill they have sponsored do not determine legislative significance. As the Court has ruled elsewhere, “it is ultimately the provisions of our laws rather than the primary concerns of our legislators that govern us.”
Legislating requires that more than half the members of each house of Congress vote “yes”. Bayh and Dole were two legislators, so their intent and understanding is not the law, nor can they be evidence of majority intent. This same majority voted on a bill that included the “on reasonable terms” requirement.
There is no clearer example of the meaning of reasonable terms than the case of Xtandi, a drug approved for the treatment of prostate cancer. Xtandi was developed by UCLA scientists with grants from the NIH and the US military. It is sold by Astellas, a Japan-based company, and costs more than $189,000 a year for US patients, more than three to five times what Astellas charges residents of other wealthy countries and five times more than ‘in Japan. And it’s not just cancer patients who are overburdened. Between 2015 and 2019, US taxpayers paid $5.2 billion for Medicare to purchase the drug.
Astellas and other marching opponents answer different questions, sidestepping the heart of the matter: whether exorbitant prices for US consumers mean Xtandi is available to the public on reasonable terms.
Practically and legally, making drugs available to the public on reasonable terms must certainly mean making them available at a reasonable price. In recognizing the government’s power to intervene, the best indication of legislative significance is the clear wording of the Bayh-Dole Act. Three words in particular.