A New Way to Contain Unaffordable Medication Costs: Exercising the Government's Existing Rights

From the New England Journal of Medicine

By Alfred B. Engelberg, JD; Jerry Avorn, MD; Aaron S. Kesselheim, MD, JD, MPH

SUMMARY: This NEJM Perspective identifies two underused federal legal tools that could significantly reduce drug costs without new legislation. The first is the government's statutory right to a royalty-free license to use any patented invention that was discovered using federal funding — a provision already embedded in existing law but rarely invoked. The second is the government's immunity from patent-infringement suits, which could allow it to procure lower-cost versions of high-priced drugs without industry consent. The authors — Engelberg, Avorn, and Kesselheim — argue that invoking these rights selectively for the most unaffordably priced drugs could create meaningful price competition and save billions in public health expenditures. The piece is notable for its focus on existing legal mechanisms rather than new legislation, offering an actionable near-term pathway to cost containment.

BACKGROUND: Medication costs in the United States have reached levels that are unaffordable for many patients and payers. Prior legislative efforts to address pricing have faced significant political obstacles.

KEY FINDINGS: Two existing federal laws provide unused tools: a royalty-free government license for federally funded patented inventions, and government immunity from patent-infringement suits. Both could be invoked to enable lower-cost drug procurement.

IMPLICATIONS: Exercising these existing legal rights for the most unaffordably priced medications could create meaningful price competition and reduce public expenditure without requiring new legislation.