July 28, 2021

Warren, Doggett Question Whether DoD Has Taken Required Steps to Reduce Costs of DoD-Funded Prescription Drugs and Medical Products

Text of Letter (PDF)

Washington, D.C. -- United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Armed Services Committee (SASC), and Representative Lloyd Doggett (D-Texas), Chair of the House Ways and Means Health Subcommittee, sent a letter to Secretary of Defense Lloyd J. Austin III requesting information about the Department of Defense’s (DoD) efforts to implement congressional directives from the National Defense Authorization Act for Fiscal Year 2018 Report (FY2018 Report) requiring DoD to reduce the prices of DoD-funded drugs, vaccines, and medical equipment. The report directed the Secretary to use march-in rights to lower the cost of DoD-funded medical products priced more expensively in the U.S. than in other countries. The lawmakers also filed the Make Taxpayer-Funded Department of Defense Medical Interventions Affordable Act to require DoD to provide a public list of all drugs, vaccines, and medical technologies receiving funding from the Department, complete transparency on the costs of developing these inventions and the Department’s patent ownership, and requires DoD to use march-in rights on at least ten of these inventions within one year.

“Americans are spending more on drugs than people in any comparable country, and over the past years, patients have been bearing the cost of price hikes as drug companies continue to make profits. The Senate directed the Department of Defense to use its existing authority to help lower the cost of medical products including prescription drugs, and the Department must update Congress on its steps to comply with the FY18 report,” said Senator Warren in a statement.

“Taxpayers are the angel investors in pharmaceutical development—providing critical financing for almost all of the miracle cures and treatments we have today, including COVID-19 vaccines and treatments,” said Congressman Doggett in a statement. “These key investors should receive complete transparency on where their dollars have gone and protections from outrageous price-gouging. As the Department defends our national security, the Department must also defend taxpayer rights.”

Over the past two decades, DoD has contributed more than $15 billion to support medical research. Under the Bayh-Dole Act, the federal government has the authority to make certain medical products more affordable. Specifically, the law grants the federal government the authority to retain “nonexclusive, nontransferable, irrevocable, paid-up” licenses for drugs, devices, and vaccines developed with government funding. In certain situations, such as when necessary to “alleviate health or safety needs” that have not been “reasonably satisfied” by the licensee, the federal government can “march-in” and direct other licensees to produce the desired product or contract with third parties for manufacturing at a reasonable price. The FY18 Report directed the DoD to use these measures to lower costs where applicable.

“It is unclear what steps, if any, DOD has taken to comply with this report language. To better help us understand what steps DOD has taken since the NDAA directions in 2017, we request answers to the following questions no later than August 9,” wrote the lawmakers in their letter.