The National Governors Association (NGA), a conservative body, has issued a report in support of compulsory licensing for high-priced drugs, writes Nicholas Florko for IWP News. In simple English, the NGA recommends that the government step in and break prescription drug patents for essential drugs when their prices are unreasonably high.
If there is a public health crisis, compulsory licensing is needed to ensure Americans have access to expensive drugs. Compulsory licensing is already permissible, and has been for more than 50 years, under 28 USC 1498, but it has not been used to break a drug patent since the 1960’s. The US Department of Defense has used 1498 in a few instances: for waste-removal techniques, night vision goggles and for verification of electronic passports.
Under the compulsory licensing law, the federal government can manufacture the patented drug or contract with an outside company to manufacture the drug. The drug maker that owns the patent has the right to sue the government for compensation.
The federal government also has “march in” rights, which enables it to bring down the cost of excessively priced drugs that have been developed with government funding. The federal government has never exercised this authority.
Representatives of 11 states drafted the NGA report, and the recommendation supporting compulsory licensing as a best practice in certain instances was not unanimous. Some members believe it would thwart innovation, even if without it people lack access to critical drugs. Other members were concerned that the federal government would never use this tactic to bring down prices, a reasonable belief given that it has not done so in more than 50 years.
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