Unintended Consequences: GAO Report Questions Impact of Exercising March-In Rights for Drug Pricing

Why It Matters

If finalized, price‑based march‑in rights could marginally lower a few drug prices but risk stifling university licensing, venture capital investment, and broader technological advancement.

Key Takeaways

• March‑in rights have never been exercised historically
• Only ~2% of drugs qualify for price‑based march‑in
• Potential chilling effect on university licensing and VC funding
• NIST guidance lacks interagency consensus, delaying final rule

Pulse Analysis

The GAO’s recent assessment of NIST’s draft march‑in guidance shines a light on a little‑used provision of the Bayh‑Dole Act. While the proposal would allow agencies to factor product price into licensing decisions, the report shows that only a tiny slice—roughly 18 of 883 FDA‑approved drugs since 1985—are fully covered by government‑interest patents. This limited scope suggests that any direct impact on prescription‑drug costs would be modest, even if the policy were adopted.

Beyond pharmaceuticals, the GAO warns that price‑driven march‑in actions could ripple through sectors such as computer technology, electrical machinery, chemical engineering, and biotechnology. Universities and research institutions rely on exclusive licensing to attract venture‑capital funding and bring innovations to market. Introducing a pricing trigger could create a chilling effect, reducing licensing activity, deterring investment, and ultimately slowing the flow of federally funded discoveries into commercial products.

For companies, universities, and investors, the prudent response is proactive portfolio analysis. Identify patents that stem from federal research and assess their exposure under a potential price‑based march‑in regime. While NIST has no final timeline, the administration’s recent compliance review of Harvard’s patent portfolio signals willingness to leverage march‑in rights as a bargaining tool. Monitoring policy developments and preparing licensing strategies now can mitigate risk and preserve the incentives that drive the U.S. innovation ecosystem.