Bayh-Dole at 35: Lauded in Kazakhstan, Dissed in Boston

theater-masks-crying-335Perhaps it hit harder because I was in Kazakhstan on the 35th anniversary of the Bayh-Dole Act when “How an obscure law brought us nasal flu spray—and new conflicts of interest” appeared in STAT, a publication of the Boston Globe. As reflected in the title, it presents as equally valid the documented benefits of the law and the unsubstantiated claims of the critics.

Fly 17 hours to Astana, Kazakhstan and you’ll find a better perspective on what this “obscure law’ accomplished. Perhaps Bayh-Dole, like Biblical prophets, is best appreciated far from home.

The Republic of Kazakhstan was formerly part of the Soviet Union.  Traditionally dependent on oil and gas production, the government is making the creation of an entrepreneurial private sector based on a strong intellectual property system and the integration of its research universities into the economy critical national priorities. Several international experts were asked to benchmark best practices and candidly review its Constitution and other laws to suggest where improvements could be made. We were presenting our findings at a World Bank event when the STAT article appeared.

Being abroad where Bayh-Dole is recognized as the gold standard in technology transfer made the article more jarring. Like whack a mole, the refuted claims of the critics pop up to create the impression the public is being cheated. That may attract attention but it unfairly disparages a system producing tremendous public benefits.

[Joe-Allen]

Senator Bayh and I were invited to write an article for STAT on Bayh-Dole’s anniversary. We noted its accomplishments like spurring the creation of the U.S. biotechnology industry, that more than two new products are commercialized and two spin out companies are formed every day from academic inventions, its $1.18 trillion contribution to our economy while supporting 4 million good paying jobs and the impact Bayh-Dole’s made alleviating human suffering. Incredibly, STAT’s link reads: Senator Bayh on the fallout from his namesake bill.

If more laws had similar “fallout” the country would be a lot better off.

STAT says “critics find plenty of fault with the law” which they list without reservation. Let’s consider them:

  • “They say it’s shifted focus away from basic research and toward inventions with commercial potential.”

Universities have been performing about the same level of basic research for decades. Any fluctuations are the result of changes in government support, not because universities are “shifting focus.”

“The proportion of basic research performed at universities and supported by universities themselves tripled from 7.1% in 1965 to 21% in 2012 (emphasis added)” according to a paper by the American Association of Universities. The document illustrates that universities continue to embrace their traditional role performing basic research for the benefit of the nation.

  • “Replaced a spirit of collaboration in academia with secrecy.”

An exhaustive study by the National Research Council found that “commercially oriented faculty… are more prolific publishers” than those not working with industry partners. It also found that industry collaborations have not caused anything more than modest delays in publishing research results.

The National Science Foundation reports the U.S. dominates international scientific publications in the Bayh-Dole era. “Articles with U.S. authors were among the top 1% most-cited articles about 74% more often than expected (emphasis added).” Previously NSF concluded that the substantial increase in university/industry co-authored papers is one of the most positive developments in U.S. scientific publications– a result of Bayh-Dole’s opening the door to R&D partnerships.

  • “And created a structure that effectively rips off taxpayers, who fund the research that leads to big discoveries—but don’t get any of the profits when those discoveries are turned into pricey new drugs.”

Before Bayh-Dole most inventions made with taxpayer support simply wasted away, benefitting no one. Today they are turned into new products, new companies and new jobs driving our economy while promoting human welfare.

The government funds research at universities to increase human knowledge or to meet agency mission needs. It doesn’t fund commercial development, which under Bayh-Dole falls on the shoulders of the private sector. Further, the government doesn’t fund the considerable expenses of academic tech transfer. Universities do that on their own dime.

University inventions are more like ideas than products when federal funding ends. Industry pays many times more in developing these inventions than the government spent funding the research. It often takes 3-5 years to develop an academic invention. Drugs require more than $2 B of industry investment over more than a decade with formidable odds they will fail. When they do, companies take the hit, not the taxpayer.

Bayh-Dole originally had a recoupment provision for the rare university invention achieving substantial success in the marketplace. It was dropped when agencies complained it would cost more to track inventions than they were likely to gain. Agencies get what they pay for when funding university research. They also have royalty free access to inventions made under Bayh-Dole. The best payback is that academic patent licensing creates new products, businesses and jobs that grow our economy, generating tax revenue supporting more federal research.

  • “The public does get access to those medications, of course, but skeptics say most of them would have reached the market anyway…”

Before Bayh-Dole not a single new drug was developed when government took patent rights away from universities. According to the New England Journal of Medicine at least 153 federally funded drugs and vaccines are fighting disease world-wide because Bayh-Dole provided the intellectual property protection and incentives needed for development. Claiming these would have been commercialized anyway is ludicrous.

  • “Now that patents are so valuable, universities are defending them in court… Litigation is not a game that higher education is well-suited to play … and the Bayh-Dole Act says nothing about any need for universities to play it.”

Universities are charged under with the law with being good stewards of the public interest. If they have licensed a technology for development they cannot turn a blind eye when it’s infringed (i.e. stolen). Sometimes that involves litigation. Without enforcement, patent ownership is worthless.

  • “Entangled academics in a web of conflicts of interest.”

Managing potential conflicts of interest on campus is nothing new and didn’t start with Bayh-Dole. Universities have extensive conflict of interest policies covering a wide range of activities well beyond patent licensing.  They insure that arrangements like consulting agreements are reported so potential conflicts are identified and managed. This is particularly important with clinical trials where FDA rules may apply to ensure patient safety.  The Department of Health and Human Services issued extensive regulations addressing financial conflicts of interest related to research.  Universities have worked hard to comply with both the letter and spirit of these rules.  As a result, both President Obama and Congress strongly support Bayh-Dole, recognizing its importance to the nation. They would not do so if universities were “entangled in a web of conflicts of interest.”

It’s ironic that a Boston based publication doesn’t know what to make of Bayh-Dole. Few cities have benefitted more from its passage. Boston is attracting companies from around the world because the law cleared the way for partnerships with its universities and research hospitals. Rather than a trip to Kazakhstan, perhaps a tour of their own town would be beneficial.

Cicero said: “Gratitude is not only the greatest of virtues, but the parent of all others.” So thank you Bayh-Dole for the benefits you have brought to our nation and the world. And don’t worry about the critics: your record speaks for itself to those who care to listen.

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4 comments so far.

  • [Avatar for EG]
    EG
    December 22, 2015 02:44 pm

    Hey Anon,

    It could be a Coastal effect. And don’t forget Feldman at UC Hastings.

  • [Avatar for Anon]
    Anon
    December 22, 2015 07:34 am

    EG,

    Maybe it is a Coastal thing – think too of Stanford (home to Lemley), and yet the State of California University System is among the leaders in patent earnings from the benefits of Bayh-Dole.

    Not surprisingly, there may be a political inclination to this bi-coastal effect.

  • [Avatar for EG]
    EG
    December 22, 2015 05:31 am

    Hey Joe,

    Not surprised that a Boston-area article dissed Bayh-Dole, as it is the haven of Bessen & Co. I wonder how MIT and other universities with TTO’s in the Boston area feel about the anti-patent/anti-Bayh-Dole mavens in their midst.

  • [Avatar for Edward Heller]
    Edward Heller
    December 21, 2015 08:23 pm

    Joe, the article perhaps was not intended to praise Bayh-Dole, but it ended up doing so anyway. Just for example:

    “The Bayh-Dole Act wasn’t supposed to enrich universities. But the law made it possible for universities to negotiate licensing deals with companies. In a few cases, they have paid off spectacularly.

    Take Northwestern University.

    In 1989, Northwestern chemist Richard Silverman made a discovery that ultimately became the blockbuster anti-seizure drug Lyrica — and has brought the school a windfall well north of a billion dollars. It’s also helped Northwestern build a $100 million building to house a research institute, paid for in part by a donation Silverman made from his own royalties.”

    Young Rebecca Robbins just graduated from Harvard. Perhaps she needs to understand that most people do not invest their time and money in projects that do not provide a return, and this includes Universities.

    Here is a link to her articles at the Harvard Crimson. http://www.thecrimson.com/writer/1206815/Rebecca_D._Robbins/