Recent statements and actions by the US Biden Administration regarding march-in rights and drug pricing have made these issues a hot topic for life sciences companies. This article briefly discusses the US position and then the Australian position.
The US Position
As discussed more fully in our US colleagues’ recent article (which should be read in conjunction with this article):
- under the US Bayh-Dole Act, the US Government has long had “march-in” rights with respect to inventions, including life sciences inventions, made with US federal funding if certain statutory criterion apply;
- in December 2023, the Biden Administration released for public comment a draft framework seeking to broaden march-in rights in order to lower drug prices;
- in setting forth the factors that an agency may consider when deciding whether to exercise march-in rights pursuant to the Bayh-Dole Act, the draft framework explicitly states for the first time that the price of a product can be used to determine whether or not statutory criteria have been met; and
- the draft framework “details certain factors agencies should consider prior to exercising march-in rights, such as the terms of sale and whether health or safety needs of the public are being exploited ‘in order to set a product price that is extreme and unjustified given the totality of circumstances.’”
The Australian position
Australia does not have an equivalent of the Bayh-Dole Act. Nor is there a legislative framework that provides for march-in rights to the Australian Government specifically in relation to drugs, life science inventions or other inventions, derived from publicly funded research. However, in theory, third parties may still be granted comparable march-in rights under the Australian Patents Act 1990 (Cth) by means of a compulsory licence or the exercise of the Crown use provisions.
Chapter 12 of the Patents Act grants the Federal Court of Australia the power, in certain circumstances, to order a patentee to grant a “compulsory licence” to a third party. All of the following circumstances must be established before a compulsory licence is to be granted:
- demand in Australia for the invention is not being met on reasonable terms;
- authorisation to exploit the invention is essential to meet that demand;
- the applicant has tried for a reasonable period, but without success, to obtain authority from the patentee to exploit the original invention on reasonable terms and conditions;
- the patentee has given no satisfactory reason for failing to exploit the patent to the extent necessary to meet the demand for the original invention in Australia; and
- it is in the public interest to grant the licence.
Chapter 17 of the Patents Act also grants the Australian Commonwealth and State Governments the power to exploit patented inventions “for Crown purposes” without the authorisation of the patent holder. Such use will not be infringement if, for example, it is a national emergency, or an authority has tried for a reasonable period, but without success, to obtain from the patentee an authorisation to exploit the invention on reasonable terms.
It is clear from the above that the criteria that must be satisfied under Australian law in order for a compulsory licence to be granted or for unlicensed Crown use not to constitute an act of patent infringement are generally quite different to the criteria that must be satisfied in order for march-in rights to be exercised under the Bayh-Dole Act (as described by our US colleagues in their recent article).
As our US colleagues noted in their recent article, march-in rights have never been exercised under the Bayh-Dole Act. Similarly, the Crown use and compulsory licensing provisions have not been exercised in Australia. Indeed, there have been only three applications for a compulsory licence since 1903.
Unlike recent statements from the Biden Administration, including in the draft framework, the Australian Government has done nothing to suggest that it is looking to exercise the Crown use or compulsory licensing provisions, or that it is seeking to expand its rights under those provisions, to lower drug costs in Australia.
 35 U.S.C. § 200–212.