The National Institutes of Health recently made its long anticipated ruling on a petition seeking to use the “march in” provisions of the Bayh-Dole Act as a mechanism for the government to control prices on drugs derived from federally-funded research by issuing compulsory licenses.
NIH correctly ruled that such actions are not sanctioned under the law. Three succeeding NIH directors have reached the same conclusion: the march in rights provision was never intended as a price control mechanism. Hopefully, the third time is the charm.
The petition was a reiteration of one dismissed in 2004 seeking to have the government march in to control the price of Norvir, part of the AIDS “cocktail.” Norvir was invented by Abbott Laboratories with partial NIH funding, thus it falls under the Bayh-Dole Act which grants ownership of federally funded inventions to universities and industry contractors so they can be developed for public use.
Before Bayh-Dole not a single drug was commercialized when the government took patent rights away from inventing organizations. Under the law at least 153 new drugs and vaccines are now alleviating human suffering world-wide.
“Gentleman: a man whose conduct conforms to a high standard of propriety or correct behavior.” Webster’s Ninth New Collegiate Dictionary
Howard Bremer (1923 – 2013)
Unfortunately, I’ve known for a couple of weeks what this month’s column was likely to be about. After a brief illness, my friend Howard Bremer died last Friday.
Howard was part of what’s rightly called The Greatest Generation—those who survived the Great Depression, fought and won World War II and then came home to build the most prosperous nation in history. Howard represented a rapidly receding era when integrity, modesty and personal responsibility were commonly held virtues.
As a 21 year old he went into the Navy during World War II. Coming back he attended his dearly beloved University of Wisconsin, becoming a patent attorney. He worked at the Wisconsin Alumni Research Foundation (WARF) from 1960 until the very end of his life. Howard claimed that he retired in 1988, but we all knew that wasn’t true. Anytime I called his office he was likely to answer.
I well remember first meeting Howard in 1978. I was on Senator Birch Bayh’s Judiciary Committee staff. Purdue University contacted the Senator about a patent problem they were having and Senator Bayh asked us to meet with them to learn more. Ralph Davis, who ran Purdue’s technology transfer office, brought along Howard and Norman Latker, then patent counsel at the National Institutes of Health. The trajectory of my life was about to change.
Senator Bayh (right) and staffer Joe Allen (left), circa 1980.
In its August 29, 2013 edition the New England Journal of Medicine saw fit to print two “perspective” pieces attacking the Bayh-Dole Act. The primary article is by Dr. Howard Markel entitled Patents, Profits, and the American People—The Bayh-Dole Act of 1980. It repeats previously refuted charges that patenting and licensing federally funded inventions harms the public interest. To give the author due “credit”, Dr. Markel does invent some new allegations as well which simply cannot go unanswered.
The Bayh-Dole Act was passed because Congress was rightly concerned that potential benefits from billions of dollars of federally funded research were lying dormant on the shelves of government. Government funded inventions tend to be very early stage discoveries—more like ideas than products—requiring considerable private sector risk and investment to turn them into products that can be used by the public.
Under prior patent polices government agencies took such inventions away from their creators and offered them non-exclusively for development. There were no incentives for the inventors to remain engaged in product development. Not surprisingly, few such inventions were ever commercialized even though billions of dollars were being spent annually on government R&D. This failure spurred two Senators from opposing sides of the aisle, Birch Bayh of Indiana and Bob Dole of Kansas, to form a remarkable partnership seeking a remedy.
“Strategic planning is worthless—unless there is a strategic vision”
~ John Naisbitt: in Megatrends
“The final test of a plan is its execution”
~ U.S. Army Field Service Regulations
Before attempting to overhaul a complex, deeply entrenched system you’ll need to have an effective plan to get you where you want to go despite predictable opposition, and someone who’s charged with the insuring that the plan is being faithfully adopted. Two completely independent reports— one looking at improving the commercialization of federally-funded research overall and another focusing on the Department of Energy’s laboratories— produced remarkably complimentary blue prints on both aspects needed to move forward.
Both reports looked at fundamental issues preventing greater commercial development of federally funded R&D. The problem is not so much that needed legal authorities or White House direction is lacking. Rather, an absence of effective day to day oversight means that the need to change often gets smothered in the system. Without hands on leadership, huge systems simply don’t change long established behaviors on their own.
Senate Judiciary Committee Chairman Patrick Leahy (D-VT) asked NIH in a July 12 letter to force compulsory licensing of Myriad’s BRCA breast and ovarian cancer genetic test under the “march-in rights” provision of the Bayh-Dole Act. “Testimony presented to the U.S. Patent and Trademark Office made clear that many women are not able to afford the testing provided by Myriad.” Senator Leahy also charged that the Myriad test “was developed with federally-funded research.” See Leahy Urges Action.
Myriad received an exclusive license to develop the test from universities operating under Bayh-Dole Act. The law allows nonprofit institutions receiving federal R&D funds to own and license resulting inventions so they can be commercialized for use by the public.
Critics of Bayh-Dole have long sought to reinterpret its statutory standards under which the government can compel universities to issue compulsory licenses as a weapon to control prices. This was not the intent of the law.
Determine that the thing can and shall be done, and then we shall find the way. ~ Abraham Lincoln
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Countries, like people, have inherent potential assets for achieving success. The question life poses is what is actually done to utilize them. A tremendous potential asset the U.S. enjoys is possession of the greatest public research system in history. It’s staffed by some of the most creative people in the world working in state of the art facilities performing cutting edge research in every field of science. The system designed after World War II does exceedingly well in what it was intended to do: pushing forward the frontiers of science; and helping federal agencies meet their mission needs.
However, neither goal is oriented toward the commercialization of resulting discoveries by our private sector. And therein lies the rub. TheLab to Market Summit at the White House Conference Center held on May 20 spent a day looking to solve that conundrum.We have made significant strides over the past 30 years through laws like the Bayh-Dole Act, the Federal Technology Transfer Act, and supporting Executive Orders leading to the creation of 9,000 new companies around university inventions, the development of 153 new drugs from federal funding now protecting public health world-wide, the leadership of the U.S. biotechnology industry, the addition of $836 billion to our gross domestic product supporting 3million good jobs from university patent licensing between 1996-2012, etc.
Normally when we discuss the impact of the Bayh-Dole Act, allowing universities and small companies to commercialize inventions made with federal support, we focus on the life sciences where the resulting new drugs and therapies dramatically improved lives for millions around the world. However, the celebration of Earth Day is an appropriate time to consider the contributions our publicly funded research organizations– partnering with an entrepreneurial private sector– make in protecting our environment.
A key purpose of the Bayh-Dole legislation is unleashing federally funded basic research so that it could be commercialized, thus benefitting society. As industry retreats more and more from conducting early stage research (where breakthrough discoveries are made) this alliance is essential to our nation.
One of the drivers behind the bipartisan support of the Bayh-Dole Act was that 28,000 taxpayer funded inventions were sitting idly on the shelves in Washington, D.C. benefitting no one. Under pre Bayh-Dole policies the government took federally funded inventions away from their creators destroying the intended incentives of the patent system. Thus, the full impact of billions of dollars spent annually on taxpayer supported R&D was squandered.
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