Skip to content Skip to footer

End Price-Gouging on Drugs Developed With Public Dollars

Why should the drug industry be the exclusive financial beneficiary of research that the public helps fund? The public should benefit as well.

(Photo: Pixabay)

The US invests more than $32 billion each year in drug and biomedical research. This major public investment in drug research empowers the government to make drugs affordable under the Bayh-Dole Act of 1980. But, even when drug companies price critical drugs at staggeringly high prices, the government has never used this authority. Why doesn’t the federal government ensure reasonable prices for drugs developed with public funds — an appropriate return on the public’s investment?

According to Peter Arno and Michael H Davis, Bayh-Dole revises the US patent law so that the federal government can ensure new drugs developed in part or whole with federal dollars are priced reasonably. Put differently, when federal dollars support research on a new drug, the drug manufacturer is supposed to price the drug reasonably. If the manufacturer does not, the federal government has the right to authorize another manufacturer to license the drug and sell it at a reasonable price.

So, even when there’s a patent on a drug developed with federal money, the US has the right to a royalty-free license. As Alfred Engelberg and Aaron Kesselheim write in the June 2016 issue of Nature Medicine, Sen. Birch Bayh explained that the goal was for the US to “use for itself and the public good inventions arising out of research that the Federal Government helps to support” while seeing that “the inventions receive their full potential in the marketplace.” But, the government’s authority under the law can be interpreted broadly or narrowly.

To date, the government has interpreted the Bayh-Dole law narrowly. According to Peter Arno, “the federal government essentially has argued time and again that if a drug company sells the new drug in the US, it has met the criteria for Bayh-Dole; it completely misconstrues the part of Bayh-Dole that calls for making the drug available to the public on “reasonable terms.” Based on a review of Congressional testimony before passage of the Bayh-Dole Act, “reasonable terms” means reasonable prices.”

Arno further explains that “both Democratic and Republican administrations have, for more than 30 years, refused to enforce this provision of Bayh-Dole. At the same time, counting on the lack of government interest in enforcement, the drug companies have been cavalier in even recording the Bayh-Dole legend in their patent applications (a requirement) — often leaving them out altogether, making it harder to track Bayh-Dole inventions.”

Earlier this year, 50 members of Congress formally requested that the Department of Health and Human Services (HHS) and the National Institutes of Health use their authority to enforce Bayh-Dole’s reasonable pricing provisions to help bring down the price of drugs. In a related response to a high-priced drug (Xtandi), HHS argued that the need was not there since there was an adequate supply of the drug.

Why should the drug industry be the exclusive financial beneficiary of research that the public helps fund? The public should benefit as well. Instead, federal policy is driving up drug prices. If you think it’s time the federal government took action to bring down the price of drugs, sign this letter from Social Security Works to the next president of the United States requesting the president take executive action to rein in drug prices.

We’re not backing down in the face of Trump’s threats.

As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.

Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.

As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.

At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.

Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.

You can help by giving today. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.