For decades, partnerships among government-funded academic institutions and private companies in the United States have led to the discovery and development of innovative medicines that are improving, extending, and saving lives. My company’s treatment for advanced prostate cancer, Xtandi (enzalutamide), which emerged from a public-private collaboration, is an example of how this system works to benefit patients.
Yet despite the clear health benefits and broad availability of Xtandi, some individuals and organizations want to use it as a test case for disrupting the technology transfer and medical innovation ecosystem that is the pathway to the treatments of tomorrow.
Xtandi was the first — and remains the only — novel hormone therapy approved by the Food and Drug Administration (FDA) to treat three distinct types of advanced prostate cancer. It helps men with any of these three types of prostate cancer live longer. It has been prescribed to more than 209,000 patients in the United States and more than 678,000 worldwide.
Xtandi is widely available in the U.S. In 2021, the majority of Medicare beneficiaries paid $20 or less per month out of pocket for Xtandi. Retired military service members and their families enrolled in TRICARE can access Xtandi for co-pays ranging from $0 to $14 per month, with active-duty TRICARE members having no co-pay.
A small group of critics have sent a petition to the Department of Health and Human Services, urging the government to seize the intellectual property rights associated with Xtandi and license them to another party. Doing this, they say, would allow some other party to manufacture and sell the medicine at a lower price.
Such a move would set a troubling precedent and jeopardize important future medical innovation, discovery, and development.
Background on the Bayh-Dole Act and march-in rights
In 1980, Congress enacted legislation, sponsored by the late Senators Birch Bayh (D-Ind.) and Bob Dole (R-Kan.), that shifted the paradigm of ownership for inventions. The Bayh-Dole Act allowed inventors to retain title to inventions conceived or generated with support of federal funding in exchange for giving the government certain rights to the invention.
This shift provided strong incentives for private industry to invest in the development of such inventions — including medicines — and bring them to market for the benefit of U.S. consumers and patients.
By any measure, the act has been astoundingly successful. Before it became law, less than 5% of patents arising out of public-private collaborations were developed into commercial products that benefited the public. Since the law’s passage, these rates have increased dramatically. In the 22 years following passage of the act, U.S. universities generated a tenfold increase in patents. More than 200 new therapies and vaccines have been introduced to the market as a result of Bayh-Dole.
The Bayh-Dole Act anticipated instances in which an invention generated in part by government funding wasn’t commercialized by the inventor and patent holder. In those cases, the act gave government the ability — in specifically outlined circumstances — to “march-in” and redirect licensing rights toward an entity that would get the product into the market. However, as Bayh and Dole made clear, the law that bears their names “did not intend that government set prices on resulting products. The law makes no reference to a reasonable price that should be dictated by the government. This omission was intentional[.]”
Over the years, however, the government has been repeatedly pressed to employ march-in rights as a way of lowering drug prices — including petitions filed against Xtandi.
Consistent with the Bayh-Dole Act’s four circumstances under which march-in rights may be exercised, the National Institutes of Health (NIH) has consistently and unequivocally denied every march-in request based on price, whether for Xtandi or any other drug, explicitly acknowledging that march-in is not the right tool to address drug prices.
In 2016, for instance, NIH denied a march-in petition specific to Xtandi which argued that practical application of the drug had not been achieved because its price did not make it available to the public on reasonable terms. In rejecting the petition, the NIH clearly stated that price is not a statutory basis for march-in. Instead, consistent with the statutory language and Congress’s expressed intent, NIH director Francis S. Collins explained that a subject invention is available on reasonable terms when it is on the market, widely available to the public, and being used by patients.
The NIH found that “Xtandi is broadly available as a prescription drug,” thus Xtandi met each of these requirements in 2016 and still meets them in 2022.
The NIH has repeatedly determined that the Bayh-Dole Act does not convey the agency authority to use “march-in” rights to affect drug pricing.
Discovery and development of Xtandi
Xtandi’s patents cite financial grants from the NIH and the Department of Defense that cover a number of research goals and laboratory projects, including some work that led to the initial discovery of the molecule that would become Xtandi.
An analysis of these grants that Astellas completed in 2016 indicates that the federal government provided early-stage funding of less than $500,000 to the University of California, Los Angeles that directly contributed to the initial discovery of Xtandi. This represents a small fraction of what Astellas and its partners have invested to date to take this molecule from initial discovery to FDA approval of Xtandi and beyond.
Astellas and its partners conducted the pre-clinical studies and the extensive clinical trials necessary to demonstrate the safety and efficacy of Xtandi for FDA approval. To date, these private entities have invested more than $2.2 billion to bring the drug to men with advanced prostate cancer. Astellas alone invested more than $1.4 billion, 98% of which was attributable to the company’s investments in preclinical and clinical testing; chemistry, manufacturing and controls; medical affairs; quality control; and other expenses.
Xtandi’s development journey is not uncommon. Academic, public, and private industry scientists contribute to the vast body of basic science discoveries, and that knowledge is shared and expanded upon through peer-reviewed publications, scientific meetings, and licensing of intellectual property. The biopharmaceutical industry’s unique role in this ecosystem is to employ its scientific and industrial expertise to take on the extensive work — and the necessary risks — to build on and further advance basic science into safe and effective treatments that can be made available to patients for a well-defined period of time and then become generic products.
If Astellas had known early in the development of Xtandi that its investment would be seized by the government, the company would not have invested as it did. Other companies now on the cusp of entering into public-private partnerships or acquiring assets for development that received public funding may well second guess their investments if a march-in precedent is set.
Xtandi is accessible to patients
Proposals to apply march-in rights to Xtandi have been based on misleading and disingenuous claims around the cost of Xtandi to patients.
This medicine is widely available and priced in line with other oral therapies for advanced prostate cancer. Although there are examples of some patients paying high prices as a result of determinations made by insurance companies or pharmacy benefit managers, in 2021 71% of U.S. patients paid less than $100 in out-of-pocket costs for their Xtandi prescriptions regardless of insurance type. While march-in proponents have pointed to the wholesale acquisition cost of Xtandi — which Astellas makes transparently available on XtandiPricing.com — the oft-cited list price does not reflect what is ultimately paid or reimbursed for the product, and it does not reflect the amount that most patients pay for it.
The list price does not account for lower prices paid by the government, rebates that manufacturers negotiate with insurance companies, or patient-assistance programs, such as the Astellas Patient Assistance Program.
There are many steps society can take to improve affordability of medicines in the U.S. Astellas has long advocated for common-sense solutions like capping out-of-pocket costs, enabling Medicare beneficiaries to spread costs over the course of a year, and requiring insurers and pharmacy benefit managers to pass discounts and rebates to patients. Such policies would help make medicines more affordable for patients, without jeopardizing the collaborative R&D engine in this country.
Fueling new innovation
The development of Covid-19 vaccines and therapies has made clear what is possible when public-private partnerships work to meet emergent health care needs. The biopharma industry developed multiple, highly effective vaccines and therapeutics in record time. The country needs more of these partnerships, not fewer.
Similarly, Astellas applauds efforts to continue these collaborations, including through the renewed Cancer Moonshot initiative, in which President Biden has called for collaboration among the private sector, foundations, academic institutions, and health care providers to bring new innovations to defeat cancer.
Today’s collaborative ecosystem, largely made possible by the Bayh-Dole Act, has served Americans through the pandemic and will be instrumental to meet future challenges — and for continued progress against many other diseases we face.
To prevail, Astellas and stakeholders across the health care system must embrace the importance of collaboration and the proven investment framework established by the Bayh-Dole Act that incentivizes complex, high-risk medical innovation. And together, the biopharmaceutical industry, policymakers, patients, and all stakeholders must address the affordability of medicines in responsible, measured ways, not through short-sighted proposals that would discourage future investment and public-private innovation.
Mark Reisenauer is the president of Astellas Pharma U.S., Inc.