A vacation to Africa would be a highlight of most anyone’s year, if not lifetime. But one couple has a competing highlight: the wife’s lung cancer coming under control. She could make the trip all because her cancer medicine used her own immune system to identify and fight the cancer. In a clinical study, that medicine added an average of 3 months to the lives of patients. It also reduced or completely shrunk tumors in nearly one-third more patients, and the shrinkage lasted nearly three times longer, than another therapy.
Lung cancer kills the most Americans each year of any cancer, and cancer is the second-leading cause of death. But, as my friends have seen firsthand, biopharmaceutical progress is lengthening lives and improving health for cancer patients.
Unfortunately, some politicians and advocacy groups would short-circuit these kinds of medical advancements. They demand the misuse of a narrow provision of the Bayh-Dole Act that’s intended for exceptional circumstances. In the name of reducing drug costs, using this extraordinary measure would poison America’s intellectual property environment. So-called “march-in rights” would upend a key element of the U.S. innovation system, namely sound and secure intellectual property rights.
Over 35 years ago, the Bayh-Dole Act started a success story. This law facilitates commercialization of federally funded research by providing reliable property rights to related inventions. This law unleashed thousands of inventions that otherwise would have never moved toward commercial application. Taxpayers paid for research advancements, so why not enable universities and private companies to bring the new knowledge to practical use?
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America has benefited from the IP-based commercialization ecosystem that Bayh-Dole created: more than 11,000 start-up companies since 1980 (more than 900 in 2014 alone), 3.6 million jobs created and $518 billion added to the economy since 1996, a thousand new commercial products on the market, university patenting and technology transfer activity flourishing, and promoting private-sector and academic collaboration.
Before Bayh-Dole, the U.S. government owned 28,000 patents from research it funded in universities and research labs. But commercial entities used only 5 percent of those promising inventions because the government retained and controlled the property rights and resisted exclusive licensing.
The Congressional Research Service reports, “One of the major factors in the reported success of the Bayh-Dole Act is the certainty it conveys concerning ownership of intellectual property.” A health-innovation business book affirms that Bayh-Dole “has had a substantial impact in enabling publicly funded technology to be developed and commercialized within the private sector” in research-intensive sectors such as pharmaceuticals and biotech.
The focus of the political advocates pushing march-in may be lower drug costs. But the long-term costs of ripping apart IP rights are far higher and more fundamental than advocates acknowledge. The long-term price of exercising these exceptional prerogatives could include creating a crisis in confidence over use of federally funded research discoveries, dried-up private investments where basic research has federally funded fingerprints, hesitation to commercialize university research, and a corresponding drop in start-ups, new products, economic development and technological advancements. March-in could effectively repeal Bayh-Dole.
Also, march-in on pharmaceuticals might backfire. If government takes away IP rights long after many intervening decisions, investments, commitments and succeeding inventions have occurred, government is essentially imposing price controls.
Artificially constrained pricing doesn’t make a product cheaper. It makes a product scarcer. Foreign price controls such as in France and Japan deprive patients from new, more effective therapies most Americans would readily be given. Advocates may claim to aim at a single industry sector and a few expensive medicines. But they’re aiming a shotgun, not a rifle, so other intellectual property-oriented economic sectors will suffer, too.
For those companies whose business models don’t depend on intellectual property, government grabbing back a patent may not seem like a big deal. But for those sectors that make sophisticated products, require capital-intensive operations, rely on research and development investments and are heavily regulated, patents and IP are crucial.
The strong, secure property right to their inventions and the exclusivity of the IP they license from others form the basis of trust and confidence on which progress is achieved. IP is vital to investors and business allies. And IP-backed private investment is critical for discovering and commercializing breakthroughs like new cancer medicines.
Fortunately, the National Institutes of Health so far has consistently declined demands to “march in” because of certain drugs’ current sticker prices — NIH’s most recent determination, regarding Xtandi, was announced this past June 20.
NIH cited its previous decisions on march-in, saying, “As set forth in NIH’s prior march-in determinations (1997 Cell Pro; 2004 and 2013 Norvir; 2004 Xalatan), practical application is evidenced by the ‘manufacturer, practice, and operation’ of the invention and the invention’s ‘availability to and use by the public . . . “ Xtandi is broadly available as a prescription drug.”
How long will the NIH be able to hold out against continued pressure to use march-in? This episode surely won’t be the last time march-in is demanded.
Soon after the couple’s return home from Africa, doctors found that the obstinate cancer had spread, discovering enlarged lymph nodes. They knew a specific gene, BRAF, was involved with their patient’s form of cancer.
A medication now available to lung cancer patients with this gene targets that specific gene and disrupts this cancer. In trials, the disease didn’t progress in any patients while they underwent this treatment. Within weeks, this biologic drug eliminated the swelling of the lymph nodes and the wife’s lung tumor had stabilized. Also, the new drug is administered as a pill, meaning fewer shots.
Advocates with a political axe to grind may think they’re saving the nation on drug costs. But what they’d really be doing is sacrificing the patients whose lives depend on tangible progress achieved only through a long, expensive process of research, development and commercialization, of which the Bayh-Dole framework is one important part.