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.
Recently in the news you may have read that some are questioning the success, viability and wisdom of Universities owning patents, pushing back against University patent rights in order to raise a debate over the usefulness of the Bayh-Dole Act of 1980. While perhaps predictable it is rather sad given the unquestionable truth that Bayh-Dole has been extraordinarily successful. The Economist wrote: “Possibly the most inspired piece of legislation to be enacted in America over the past half-century was the Bayh-Dole act of 1980… More than anything, this single policy measure helped reverse America’s precipitous slide into industrial irrelevance.” Economist Technology Quarterly, Dec. 14, 2002. Lofty praise indeed, but the facts back up the claim.
The facts are overwhelmingly on the side of those who know and understand that Bayh-Dole has been a thorough and profound success. Indeed, if you actually look at the facts no one could ever objectively question whether Bayh-Dole is succeeding or has been good. Yet, year after year supposed experts and scholars choose to ignore the objective data and question whether we should go back to the way it used to be — back when no University technology was commercialized due to the enormous red-tape involved.
This isn’t just a philosophical debate. There is a right and a wrong answer, and to think that the New England Journal of Medicine would aline themselves with the clear and objectively wrong answer would be astonishing if it weren’t so predictable. The agenda of those who despite patents and the progress of science thanks to incentivizing behavior knows no boundaries.
Of course it would be wonderful to live in a world where self-interest takes a back seat to humanitarian efforts and altruism on all occasions; where financial incentives are not required to promote the greater social good. That, however, is not the world we live in and the regimes where this economic philosophy has been tried have unanimously faltered or failed. If we want maximum good for society pursuing a path that results in maximum good ought to be the agenda, not some pollyannish pursuit of the impossible because it feels better or fits into some pre-ordained social narrative that some deem acceptable. Failure for an altruistic reason is still failure, and when we are talking about the economy, jobs and hundreds of life saving treatments and cures the right thing is to do the most good. It is truly a pity that some would choose not to maximize social good simply because it means someone else will make money in the process.
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.
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.
Senator Birch Bayh (right) with then Staffer Joe Allen (left) in a Bayh-Dole Act hearing in 1980.
As I sat there this morning having breakfast and drinking my coffee I was reading Innovation, which has as its tag line America’s Journal of Technology Commercialization.
Really? I find it impossible to believe that a magazine that purports to be a journal of technology commercialization would publish the complete and utter nonsense that I read this morning.
Newsflash… Bayh-Dole is objectively positive and has been extraordinarily successful in its mission. The FACTS are overwhelming. Anyone who suggests Bayh-Dole is anything other than successful beyond anyone’s wildest dreams is simply not being honest and is ignoring factual evidence. Indeed, detractors frequently make arguments that fly directly in the face of facts. Many believe they simply lie or make up what they are saying to forward their own agenda.
Senator Ron Wyden (D- OR) is a man with an idea for lowering health care costs. Unfortunately, it’s an idea which proved disastrous the last time it was forced on the National Institutes of Health. But that hasn’t dissuaded the Senator from trotting it out again. He believes if a company commercializes a new drug whose development is in some way relatedto a cooperative R&D agreement (CRADA) it had at one time with NIH, that the government can then insure “a reasonable relationship between the pricing of a licensed product, the public investment in that product, and the health and safety needs of the public.”
Sen. Wyden seems sincere in his concern with the ever escalating costs of medicine. Unfortunately, his proposed solution empowering the government bureaucracy to second guess industry drug pricing decisions simply because they worked with NIH would make things worse. We could see fewer new drugs at any price. We may see more research shifted to India and China as our public research institutions are viewed as unreliable partners. And we may throw away a key strategic advantage of the hard pressed U.S. life science industry—its ability to draw on the unparalleled resources and expertise in our federal laboratory and university research systems.
If this path is chosen, we have fair warning of the hazards. We’ve been down it before.
On February 28, 2013, I spoke at the Association of University Technology Managers (AUTM) annual meeting in San Antonio, Texas. The topic of the panel I participated on was simple — Tech Transfer Needs You to Defend Bayh-Dole. My remarks appear below.
I provide this longer than intended introduction to my remarks at AUTM because I was speaking to a crowd of individuals who know the fact and they understand the truth. I say below that there is not a shred of evidence that supports the detractors, and 100% of the evidence supports those who favor Bayh-Dole and a continuation of University technology transfer that is based on ownership of patent rights. I don’t go through fact by fact what we in the industry all know to be true, which means that the inevitable head-in-the-sand detractors will want to pounce and claim that I am wrong. If you are inclined to disagree with me then read the links above, and read the many other articles we have published on Bayh-Dole. The evidence is overwhelmingly in support of a robust, property based, IPR technology transfer regime that was ushered in by the landmark Bayh-Dole legislation.
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