The Biden administration is putting pharmaceutical corporations on notice, telling them that if the price of some pharmaceuticals becomes too high, the government may revoke their patent protection, allowing competitors to produce their own copies.

According to a plan proposed Thursday, the government would explore overriding the patent for high-priced pharmaceuticals created with taxpayer funds and allowing competitors to manufacture them in the hopes of bringing down the cost.

(Photo : by JIM WATSON/AFP via Getty Images)
The Biden administration is putting pharmaceutical corporations on notice, telling them that if the price of some pharmaceuticals becomes too high, the government may revoke their patent protection, allowing competitors to produce their own copies.

President Joe Biden guaranteed cheaper rates in a 15-second video posted on YouTube on Wednesday night.

Potential Patent Seizures and Health Policy Initiatives

Officials from the White House refused to specify any pharmaceuticals that may be targeted. According to the plan, which will be open for public discussion for 60 days, the government would consider seizing a patent if a medication is only available to a "limited set of consumers." If the proposal is implemented, drugmakers are probably certain to sue.

It's the latest health policy appeal from a White House preparing to make attempts to reduce medication prices a core issue of its reelection campaign next year. With health-care costs in mind, the administration issued a warning to private equity groups that have been buying up and dismantling hospitals and medical practices throughout the country, then selling for a profit, on Thursday.

Already, Biden has spent months bragging about the $35 ceiling on insulin for Medicare participants that he signed into law last year, as well as a proposal for government officials to negotiate some prescription costs paid by Medicare for the first time.

Washington has never taken such a strong stance against medicine patents, a move known as "march-in rights." Federal agencies can do so if the federal government has committed money in the product's research or development.

Read Also: CEOs Urge Lawmakers: Pump the Brakes on Regulations, Risk Economic Fallout

Pharmaceutical Funding Dynamics and Government Intervention

Pharmaceutical corporations have traditionally depended on government research to generate pharmaceuticals, with the COVID-19 vaccines and therapies being the most recent important breakthrough. Taxpayers in the United States contributed billions to the endeavor and, until recently, were able to obtain treatments and preventions for the virus without having to pay for them out of pocket.

While just a small percentage of pharmaceuticals on the market are substantially reliant on taxpayer funds, the fear of a government "march-in" on patents would make many pharmaceutical companies reconsider, according to Jing Luo, a professor of medicine at the University of Pittsburgh.

The pharmaceutical industry reacted angrily to Biden's statement, claiming that the White House's reading of the law is incorrect and that their proposal will restrict medication research and development.

For years, debate has raged over how the government may deploy "march-in rights," with a few Democratic senators, like Massachusetts Sen. Elizabeth Warren and Minnesota Sen. Amy Klobuchar, urging the Health and Human Services Department to confiscate the patents of some expensive pharmaceuticals. The National Institutes of Health recently refused to do so with the prostate cancer medication Xtandi.

According to William Pierce, a former HHS official under President George W. Bush's administration, the plan raises a logical question: "What reward should there be before the taxpayers who help fund this product?"

The White House also aims to pay more attention to private equity firms that buy hospitals and health systems, then shrink them down and sell them swiftly for a profit. The departments of Justice and Health and Human Services, as well as the Federal Trade Commission, will collaborate to exchange more information regarding health-care ownership.

Related Article: Supreme Court Case Threatens Billionaire Taxes, Could Unleash Chaos on U.S. Finances