Louisiana’s Secretary of Health, Dr. Rebekah Gee, is attempting to persuade politicians to
support the use of 28 USC § 1498, a federal statute that allows the federal government intentionally to infringe patents, to arrange for production of Gilead Sciences’s patented hepatitis C drugs. Beth Mole, There’s a federal law to lower drug prices—and Louisiana may just use it, ArsTechnica (May 4, 2017).
The statute provides, in part:
Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.
In the midst of high hepatitis C infection rates in the US, Gilead’s Sovaldi and Harvoni treatments can cost more than US$1,000 per pill. If the state succeeds in invoking the statute, a US government contractor could manufacture generic versions and be immune from patent infringement liability. Gilead could sue the US government, but could not obtain an injunction and would be entitled only to a “reasonable royalty.”
28 USC § 1498 has been the subject of several recent rulings in which the US Court of Appeals for the Federal Circuit has upheld a broad reading of the protection afforded by the law to government contractors. See, e.g., Astornet Technologies, Inc. v. BAE Systems, Inc., 802 F.3d 1271 (Fed. Cir. 2015); IRIS Corp. v. Japan Airlines Corp., 769 F.3d 1359 (Fed. Cir. 2014); and Zoltek Corp. v. United States, 672 F.3d 1309 (Fed. Cir. 2012).