The law Biden seeks to invoke is the Bayh-Dole Act, a law that seeks to incentivize innovation and promote commercialization of federally funded research and development by granting patent ownership to contractors. This approach aims to foster a vibrant marketplace where consumers can access a diverse range of innovative products and services. However, the existence and invocation of march-in rights introduces complexities that warrant careful consideration, particularly regarding their potential impact on consumer access and affordability.

March-in rights, while rarely exercised, serve as a safeguard to ensure that the benefits of federally funded R&D are realized by the public, mostly through the public sector. Advocates argue that these rights provide a mechanism to address concerns about high drug prices and ensure equitable access to innovations. However, the potential, and likely, misuse or overly broad interpretation of march-in rights could have unintended consequences, such as stifling innovation or discouraging private investment in critical research areas across various industries. The Biden Administration’s plan to use march-in rights deviates from the current norm, as they were originally intended to be used with high standards in mind such as safety or national security, not in setting arbitrarily low prices. It’s worth noting that historically, of the eight cases where march-in rights were invoked in the United States, none of them were successful. 

The invocation of march-in rights as a political norm will easily lead to the erosion of intellectual property rights, a cornerstone of the American innovation ecosystem. By compelling patent owners to license their IP rights on federally funded inventions, the administration’s actions undermine the assurances provided by patent protection, ultimately discouraging private investment and stifling innovation. This erosion of intellectual property rights not only threatens the vitality of businesses and entrepreneurs but also jeopardizes the availability of inventions coming to market for consumers and patients to access.

What’s more, the expansion of march-in rights presents a significant barrier to market competition, hindering the introduction of innovative products and solutions. By reducing competition, current supply chains will be disrupted and existing shortages will be exacerbated, resulting in inflated prices for consumers. Compulsory licensing can distort pricing mechanisms within the market and when patents are forcibly licensed to third parties, it can also disrupt the ability of patent holders to set prices based on market demand and production costs. This disruption can discourage investment in R&D and disincentivize innovation in the long term, as eager entrepreneurs and innovators may limit their contributions if their intellectual property becomes expendable. While the US remains the global leader in R&D performance, contributing over 28%, China is catching up, having contributed 22% of global R&D in 2019. Its rate of growth in this area is almost double that of the US, which will put the United States’ leadership in R&D in jeopardy. 

While Biden’s measure remains focused on medical innovations and drug prices specifically, there are many worries that march-in rights could also be applied to fields such as artificial intelligence, and data computing, as the administration has hinted at regulatory action to capture and direct future innovation. As Chinese firms continue to grow and compete, the incentive for the federal government to capture the advances in American technology will only grow.