IIn a misguided attempt to control drug costs, some congressional leaders are urging the Biden administration to misapply a 40-year-old law that supports 6 million jobs, helped launch 15,000 start-ups and contributed 1 , $ 7 trillion in US economic output. Lawmakers – Senators Elizabeth Warren (D-Mass.) And Amy Klobuchar (D-Minn.) And Representative Lloyd Doggett (D-Tex.) – want the Department of Health and Human Services, as well as the Department Defense, abusing the marching provision of the Bayh-Dole Act to set the price of federally funded drugs – something the provision does not allow. Such action would undermine Bayh-Dole’s intention, while inflicting devastating damage on the United States.
Congress passed the Bayh-Dole Act in 1980. It allows academic institutions and small businesses to patent and license inventions they have made that have been funded, at least in part, by federal funding. . Prior to this bipartisan reform – which I helped draft as a senior executive to Senator Birch Bayh (D-Ind.) – the government appropriated these findings, destroying the incentives for their commercialization. As a result, nearly 28,000 government-funded inventions have dusted off. Not a single new drug discovered with federal government support has been developed. The fruits of billions of taxpayer-funded R&D dollars were simply wasted.
The Bayh-Dole Act put an end to this waste by giving academic institutions and small businesses the responsibility of authorizing their discoveries so that they can be turned into useful products. Since its enactment, the United States has become the world leader in innovation by creating, on average, three new start-ups and two new products every day of the year under Bayh-Dole. The law has also supported the discovery of nearly 300 new therapies.
Under Bayh-Dole, the federal government has the right to step in and force universities and small businesses to license their inventions to other companies, primarily if the original license holder does not license their inventions. good faith efforts to develop the technology into a usable product. , product of the real world. Patent holders actively monitor their licensees to ensure that they are working hard to turn inventions into useful products. If they don’t, the technology transfer offices terminate the license and find a better partner. In four decades, the government has never intervened because federally funded inventions are managed and developed efficiently.
Warren, Klobuchar and Doggett’s demands that the Biden administration invoke marching rights to control drug prices throws this delicate balance into chaos. While making health care more affordable is a laudable goal, it cannot be done at Bayh-Dole’s back. This is not how the law works – and claiming it does would have dire consequences.
Commercializing federally funded inventions in the private sector is a high-risk endeavor, much more likely to fail than to succeed, especially when it comes to developing new drugs. It can easily take over a decade and hundreds of millions – if not billions – of dollars for a company to turn an invention into a new therapy. The system of public-private collaboration established by the Bayh-Dole law is the most successful in the world. Making the marketing process even riskier will create fewer much needed drugs without doing anything to control costs.
The marketing system supported by Bayh-Dole is driven by small businesses. They receive about 70% of university patent licenses and create more than half of new drugs developed in the United States. These companies “bet the farm” when they try to commercialize federally funded research. Allowing the government to intervene because someone thinks the price a company charges for their therapy is not “reasonable” – a totally undefined term – would be a devastating blow to the American economy and the health of Americans.
The federal government has already tried the defenders of the march theory, and it has been a disaster. In 1989, nine years after Bayh-Dole’s adoption, the National Institutes of Health imposed a reasonable price clause on its patent licenses and Research and Development Cooperation Agreements (CRADA) – R&D pacts between the public sector and a private company – based on the theory of progressives of the abuse of walking rights.
But rather than lower drug prices, the CRADAs between the NIH and private sector companies collapsed. Harold Varmus, who headed the NIH at the time, repealed the policy in 1995, concluding that “the price clause has kept the industry away from potentially beneficial scientific collaborations with [government] scientists without offering a compensatory benefit to the public. The number of research and development cooperation agreements immediately increased.
As a senator, Joe Biden had a commendable record of supporting the Bayh-Dole Act. He voted in favor of it in 1980. When then Rep. Bernie Sanders (I-Vt.) Introduced a bill in 2000 to reinstate the reasonable price clause that the NIH had previously revoked , Biden voted to table the motion, and the bill failed to pass. The Obama-Biden administration has rejected any attempt to abuse market rights to control drug prices as unauthorized by law.
As president, Biden must continue to protect the Bayh-Dole law. It has been the cornerstone of the historic development of Covid-19 vaccines and keeps the United States ahead of its economic competitors like China. Failure to stand by Bayh-Dole will undermine essential alliances between academic research institutes, federal laboratories, and private sector entrepreneurs who contribute to the country’s prosperity and security. This is a mistake we cannot afford.
Joseph P. Allen is executive director of the Bayh-Dole Coalition and previously served on the staff of the US Senate Judiciary Committee.