UN Access to Medicines Panel Undermines Bayh-Dole 

By Chris Gallagher
June 15, 2016

United Nations Building, New York City, NY.

United Nations Building, New York City, NY.

Global epidemics are outrunning globally accessible containment and cures. There are now more ways to spread diseases worldwide than safe, effective ways to counter them. Biomedical stakeholders are engaged in finding solutions. Now rumored recommendations pending at a UN High Level Panel may make matters worse. Appointed by outgoing Secretary General Ban Ki-Moon, the Panel is said to be preparing to release its examination of world  “Access to Medicines”.  Amazingly it is rumored to be encouraging international flouting of U.S. Bayh-Dole-based patent protection and producer pricing prerogatives. This inevitably will undermine our nation’s life science innovation ecosystem, effectively destroying world hopes for effective response to evolving epidemics.

Instead of improving and expanding future access to much needed cures, its pending short-sighted directives are a recipe for “medicine access” madness. As referenced in an earlier IPWatchdog post this month authored by Joe Allen, one item on the panel’s pre-determined wish-list recommends the following destructive remedy:  “Drugs developed with publicly funded clinical trials would not be eligible for patenting or market exclusivity.”                       

Enacted almost 50 years ago, Bayh-Dole’s stated purpose was to enable and encourage the commercialization of federally-funded basic scientific research conducted by federal agency grantees. Before its passage patented research simply gathered dust on federal shelves. But by enabling researcher grantees to themselves patent promising basic science discoveries, then partner with private sector investors willing to commercialize them, a tsunami of economically and medically beneficial benefits washed across America and the world. Bayh-Dole is still working well.

Despite past significant accomplishments, Bayh-Dole-based life science commercialization partnerships entail increased risk for private sector investors. Beyond inherent biological uncertainties, uncertainty investment risks have recently been increased by congressionally self-inflicted post-development patent invalidation uncertainties. Political rhetoric aimed at pricing is simmering. But this pending UN panel’s directives may permanently erase private sector incentives to commercialize globally needed medicines that involve life science discoveries that earlier were supported by basic science government grants.

The Panel’s apparent reliance on a patient “double payment” problem is a ridiculous red herring for several reasons. First, that same argument was raised and rejected when Bayh-Dole was enacted. Secondly, although basic scientific research and applied returns driven research and development may sometimes be sequentially related, they are very different animals with very different goals.

Scientific research peers into biological unknowns. It pursues knowledge for the sake of learning. It is far too risky to attract private sector, profit-driven investment. But because such fundamental research is so important to biomedical progress, our government funds it annually at $130 billion, granted mostly through NIH. Indeed, Congress recently agreed to raise NIH’s budget allocation, not as an endorsement of so-called “double-payment” for biomedical products but in recognition of its, scientific, economic and medical value.

NIH’s mission is to direct and manage this congressional funding, a majority of which goes to research universities. They in turn use the grants to carry-out their own tripartite education/ research/ public benefit missions. They often patent promising basic research results then arrange for their commercialization in the private sector. In the USA, Bayh-Dole’s virtuous circle is closed when commercialization’s innovative cures are finally made available for patient use. Accordingly, payment for medicines is not “doubled”. Federal and patient supporters fund entirely different functions.

Acting largely for non-U.S. Interests, it is preposterous for a UN Panel to officially recommend no cost medicinal access to citizens of other countries who contribute nothing to its production but their need. By implicitly sanctioning international bypass of the most essential patent/pricing components of our innovation ecosystem’s public/private commercialization partnership, this finding by itself will add even more prospective uncertainty to a technology transfer process occurring years before development can be completed. This added predevelopment uncertainty will further deter voluntary private investment that our innovation ecosystem system must attract. Our life science ecosystem is by far the world’s most significant and substantial source of worldwide medicinal cures. Short-sighted recommendations for international abandonment of Bayh-Dole’s patent and pricing protections will internationally increase life science investment uncertainty and risk; risk already elevated by past and pending U.S. anti patent legislation and populistic campaign rhetoric.

Last but not least, the most seriously short-sighted concern triggered by this panel’s dangerous recommendation is its inevitably counterproductive medical consequences. Yes, it certainly may provide minor temporary fiscal relief to nations now underfunding their citizens’ healthcare. It certainly will not undo the many other known barriers blocking access to the world’s medicine cabinet. But new diseases constantly evolve. We can stay ahead only by being steps ahead. Often, the very nations who underfund public and private healthcare, also serve as breeding grounds for epidemics that globalization spreads across the world. We cannot know what biological killer will next emerge, when it will be born and where globalization’s winds will take it. But we do know that choking-off future private investment in future healthcare needs is foolhardy. And that is what will happen if the UN sanctions this finding.

Investment hates uncertainty. And innovation dies without investment. The underdeveloped countries the Panel may seek to protect are often those that suffer first from epidemics like HIV /Aids, Ebola; and Zika. They will suffer first when the next biological scourge begins taking lives. But globalization’s teaches us that “what goes around comes around”. That means undiscovered cures for as yet undetected epidemics may not be ready when they spread to our shores. Thus the UN Panel’s threat to Bayh-Dole thus us as well.

The Author

Chris Gallagher

Chris Gallagher is President of IP Strategic.com and a perennial selection to The Best Lawyers in America. Having spent years as one of the most influential and highly regarded advocates in the New Hampshire Legislature and state administrative agencies, Chris is now focused primarily on federal policies in Washington, DC. Chris has been involved in nearly every substantial New Hampshire economic regulatory initiative over the last 25 years. He has served as general counsel for the New Hampshire Bankers Association and has represented New Hampshire utilities, hospitals, insurers, aggregate manufacturers and numerous other entities. This experience provides him with a uniquely respected voice on Capitol Hill, enabling him to communicate effectively with members whose federal decision-making must reflect and respect the complexities of their home-state constituents.

A frequent speaker and commentator in local and national media on policy issues, regarding financial services, privacy, business and government, Chris has testified on financial services issues before U.S. House and Senate Committees and has been a panelist in Capitol Hill briefings on intellectual property issues. He can be reached at chris@ipstrategic.com

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There are currently 1 Comment comments.

  1. Anon2 June 16, 2016 10:17 am

    UN collectivism and statist sentiments are quite sickening. They violate the freedoms and property rights of people genuinely interested in solving the world’s health problems, providing value, in expectation of a fair voluntary exchange.

    If America does not stand up to collectivism and violation of rights who will?