[Ip-health] DC Compulsory Licensing - a final word

[Kevin Outterson]

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At the risk of placing Jeff Williams back into confusion, I comment a
final time on the DC Compulsory Licensing bill.

First, take a step back and see this as one example (among many) of a
State facing increasing drug costs, both in Medicaid and for its
employees.  States have turned to many policy options to address the
problem.  Maine tried to use carrots and sticks to negotiate
Medicaid-like rebates for the near-poor, and was sued all the way to the
US Supreme Court by drug companies, on Commerce Clause and preemption
grounds.  Maine and other States have passed PBM transparency laws,
which have also been enjoined, this time on other Constitutional
grounds.  Several States are openly defying federal law by importing
prescription drugs from Canada, perhaps on unarticulated federalism
grounds.  In short, many significant attempts at reform in the area are
immediately litigated or face daunting federal legal issues.  The
laboratory of the States, indeed!

The DC bill certainly faces challenges.  It must avoid federal
preemption (Bonita Boats, et al.).  This license is exclusively for
State use, which may be an important factor.  It is understood that
'eminent domain for IP' is a relatively novel idea.  But surely we can
agree that there may be a distinction between a State patent law
(illegal) and a State law permitting, with compensation, the
non-exclusive taking of IP for a public purpose.

The DC bill can be as a model for others as well.  For States with 11th
amendment protections, additional Constitutional arguments may well
apply, per Florida Prepaid.  Compulsory licensure as a remedy for State
drug litigation, or as a backstop to price negotiations, may have other
legal defenses too.

It has always been understood that due process and compensation must be
given for the the taking.  It will not be a free ride.  But for those
who believe in transparency, the due process hearing on the level of
compensation could significantly improve the public's understanding of
pharma pricing.  That alone might be worth the trouble.

Perhaps there are a few IP attorneys, IP academics or others who are
interested in looking at these topics in depth, despite the obvious
challenges.  If so, I suggest we continue the conversation off list, so
as to not clog the lists on this issue.

Best,

Kevin Outterson

>>> Jeff Williams <jwkckid1@ix.netcom.com> 2/14/2005 11:31:41 PM >>>

Arti and all,

  Thank you for helping me to become somewhat "unbaffeled"...

Arti Rai wrote:

>    I take it that the D.C. bill is just a model for bills that might
> be passed by actual states with real power. The Florida Prepaid
> decision makes it clear that states are immune from suit for damages
> when they infringe patents (and they are immune from suit for
damages
> independent of the reason they infringe patents e.g. they could set
up
> their own for-profit pharma firms).  Under the Ex Parte Young
> doctrine, state actors could, however, be sued for injunctive
relief.
> Given the possibility/likelihood of suits for injunctive relief, I
am
> not sure that the end result would be very satisfying.
>
>