In a previous alert, "What you need to know about retained rights in federally funded patented drugs" (March 24, 2016), we provided background on the US Department of Health and Human Services' and the National Institutes of Health's retained rights in patented drugs developed in part through federal funding, as well as the history of the exercise (or lack thereof) of those rights. In concluding that alert we noted that, in light of the continued refusal to exercise those rights, Congress was still pressing the issue and that there was still pending a request for the exercise of "march-in" and license rights with respect to enzalutamide (Xtandi®).

In a June 7, 2016, letter to Rep. Lloyd Doggett (D-TX), Secretary of Health and Human Services Sylvia Burwell again reaffirmed the agency's position that the exercise of march-in rights with respect to Xtandi was not appropriate. Secretary Burwell begins by recognizing the importance of the issue of drug pricing: "I can assure you that Dr. [Francis] Collins [Director of the National Institutes of Health] and I share your concerns about the rising costs of drugs and the impact these costs have on Americans' access to life-saving treatments." However, the letter then advises Rep. Doggett that the NIH does not see the need to hold a public hearing on the use of march-in rights with respect to Xtandi: "The NIH considers the application of the statutory criteria for march-in very carefully, according to the process outlined in the stature and implementing regulations at 37 CFR 401.6. At this time, NIH believes this process allows the agency to collect sufficient information to consider the petition without a public hearing."

On June 20, NIH Director Collins advised Knowledge Ecology International, the petitioner for the exercise of march-in rights with respect to Xtandi, that NIH was declining to exercise those march-in rights or to exercise the government's license in the patents. In reaching this determination, Director Collins stated: "Xtandi® is broadly available as a prescription drug. Your letter states that sales of enzalutamide increased 77% from Fiscal Year 2013 to Fiscal Year 2015 (from your letter, pages 99-10); however, it provides no information and no information was identified from public sources to suggest that enzalutamide is currently or will be in short supply. In view of the above information presented in your letter and your follow-up correspondence and public information identified by the INI, we decline to proceed with the government's march-in authorities at this time or utilize the government's license to the patents."

It thus appears that, absent some change in federal statutory or regulatory authority, the use of retained rights in federally funded patented drugs will not be the vehicle by which drug price controls will be implemented. However, as recently reported by Michael Hiltzik of the Los Angeles Times, a number of states are looking at various means of curbing the cost of drugs. Thus, the battle may shift from the federal to the state governments.