Representative Ro Khanna (D-CA-17) was joined by 17 other members of Congress in calling upon Department of Health and Human Services Secretary Alex Azar to issue a compulsory license on patents for medications to treat hepatitis C, by exercising 28 U.S.C. § 1498 to expand access to treatment.
The letter sent on February 15, 2018 was co-signed by Rep. Lloyd Doggett (D-TX-35), Rep. Mark Pocan (D-WI-2), Rep. Janice Schakowsky (D-IL-9), Rep. Chellie Pingree (D-ME-1), Rep. Peter Welch (D-VT-At large), Rep. Raúl Grijalva (D-AZ-3), Rep. Keith Ellison (D-MN-5), Rep. Gwen Moore (D-WI-4), Rep. Jamie Raskin (D-MD-8), Rep. Marcy Kaptur (D-OH-9), Rep. Rosa DeLauro (D-CT-3), Rep. Earl Blumenauer (D-OR-3), Rep. Steve Cohen (D-TN-9), Rep. Eleanor Holmes Norton (D-DC-At large), Rep. Elijah Cummings (D-MD-7), Rep. Judy Chu (D-CA-27), and Rep. Colleen Hanabusa (D-HI-1).
The members cite the high prices of HCV medication, including Gilead’s Harvoni and AbbVie’s Mavyret, as causing most reimbursement entities to constrict reimbursement to only those patients with the most severe liver damage, which often leads to chronic liver disease.
28 U.S.C. § 1498 allows the federal government, or any designee of the government, to use patented inventions without a license from the patent holder. As a remedy, the patent holder is entitled to sue the federal government for the recovery of “reasonable and entire compensation,” which in certain circumstances can include “the owner’s reasonable costs, including reasonable fees for expert witnesses and attorneys.”
The letter points out that in the 1960’s, § 1498 was used to obtain 50 drugs for over $21 million in savings, and cites the 2001 example of HHS Secretary Tommy Thompson’s using the threat of government use to drive down prices of Cipro.
KEI has long supported the use of § 1498 to authorize generic competition to address shortages or other cases where there is an abuse of a patent monopoly, such as excessive pricing, or when competition is otherwise in the public interest, but KEI has also recommended reforms in the statute.
In the recent past, uncertainty over compensation has been a deterrent to making use of the law. In 2015, in response to a request from Senator Bernie Sanders to exercise the government use provision on patents for HCV drugs, the Department of Veterans Affairs cited uncertainty regarding the extent of compensation as an obstacle to using § 1498. In response, Senator Sanders proposed an amendmentto the government use statute that would limit compensation to a “reasonable and affordable royalty,” taking into account the impact of the royalty on the Department’s budget for services to veterans.
“(c) REASONABLE AND AFFORDABLE ROYALTY.—In determining a reasonable and affordable royalty under subsection (a), the Secretary shall consider the following:
“(1) The impact of paying the royalty on the budget of the Department for providing hospital care and medical services to veterans under chapter 17 of this title.
“(2) The extent to which the owner of the patented invention has recovered or is expected to recover, through sales other than under this section, the research and development costs incurred by such owner.
“(3) Such other factors as the Secretary considers appropriate, including the impact of the patented invention on improving health outcomes for individuals.”
During committee markup, the Senate Veterans Affairs Committee promised a hearing on the Sanders Amendment and consequently the amendment was withdrawn presumably until that time. To our knowledge, this hearing has still not taken place.
KEI has a video which explains Senator Sanders proposal, available here.
While KEI supports the use of any and all legal tools to increase access to affordable medicines, including § 1498, we also recommend that Congress consider amendments to 1498 to provide greater certainty regarding the liability for using the Act when medical technologies are involved, and to establish norms for royalties that are consistent with the government’s objectives to protecting the public from excessive pricing and providing universal access to health care including new technologies, within reasonable budget constraints.