The COVID-19 pandemic demonstrated the ingenuity of American life-sciences enterprises, which introduced effective vaccines and therapeutics in record time, within a year of the virus’s discovery.
According to Information Technology and Innovation Foundation, America’s world-leading life-sciences innovation system is a product of myriad policies, but a critical yet all-too-often overlooked one is the Bayh-Dole Act, which enables the commercialization of federally funded research and development by affording universities rights to intellectual property generated from that funding.
Unfortunately, a determined group of civil society activists who oppose the U.S. public-private system of drug innovation are trying again to undermine this critical policy.
The Bayh-Dole Act has played a catalytic role both in turning America’s universities into engines of innovation and fostering the translation of federal R&D funding into innovative products, from new anti-cancer drugs like Gleevec and Yervoy to cold remedies like Allegra and Flumist. Academic technology transfer activity enabled by Bayh-Dole since its 1980 enactment has contributed to more than 11,000 U.S. start-up companies and the development of more than 200 drugs and vaccines.
Against the backdrop of the Bayh-Dole Act’s success — and the pressing need to sustain American biopharmaceutical R&D — it’s troubling that a group of civil society activists continue to advance petitions with multiple government agencies encouraging the use of an authority known as “march-in rights” to issue licenses to third-party companies enabling them to manufacture lower-cost drugs. Imagine the signal it would send to biopharmaceutical researchers and investors if Washington establishes a precedent that it can swoop in and take control of a particular medicine anytime policymakers don’t like its price.
More background here is necessary. The 1980 legislation, sponsored by senators Birch Bayh, D-Ind., and Bob Dole, R-Kan., granted universities and other non-profits the rights to intellectual property stemming from federally funded research. Universities could then license promising molecular compounds discovered by university researchers, for instance, to pharmaceutical companies that had the ability to undertake the arduous clinical trial process and then mass-produce those drugs, once approved by the Food and Drug Administration.
Bayh-Dole has contributed to an explosion of biopharmaceutical innovation in this country. In fact, in the last half of the 1970s, European pharmaceutical companies invented twice as many drugs as American ones did, and throughout the 1980s fewer than 10 percent of new-to-the-world drugs were introduced first to American patients.
But by the 2000s, America had flipped the script: American companies accounted for 57 percent of new drugs innovated and roughly that share of drugs were being introduced first in the United States: Bayh-Dole effectively unleashed hundreds of billions of dollars in investment, creating millions of jobs and spurring development of breakthrough treatments and therapies that have saved countless lives.
The so-called “march-in rights” are indeed part of the Bayh-Dole Act, but they were designed as a fail-safe for limited instances in which a licensee might not be making good-faith efforts to bring an invention to market. In other words, the concept behind “march-in rights” was that intellectual property should not sit idle without being used to improve the human condition. They were never envisioned as a bludgeon to impose arbitrary price controls on pharmaceutical products. In fact, in the 42-year history of this law, “march-in rights” have never been used to control drug prices.
Such moves to distort the Bayh-Dole law so that government can impose price controls without legislation could not come at a more inopportune time. The emerging COVID variants that continue to confound public health experts have made it abundantly clear that we need robust, continuing research into new vaccines and treatments. Further, we are on the verge of transformative breakthroughs on therapies for diseases ranging from cancer to diabetes to Alzheimer’s.
Investment is the lifeblood of research. What’s the motivation to invest time and energy thoroughly researching and developing lifesaving cancer treatments if the government can charge in retroactively and commandeer that intellectual property (or force its licensure to others)? Why invest hundreds of millions of dollars in R&D if the government could license the treatment to a hand-picked entity that will sell it at an artificially low price, preventing the innovator from recouping the dollars it invested to create and product it?
If Washington establishes this detrimental precedent, technology transfer from universities will shrivel, meaning universities will have less resources for scientific infrastructure, research and discovery.
Short-term political objectives and long-term societal benefits rarely go hand in hand. Policymakers must manage a tradeoff between lower-price drugs today and the availability of innovative new drugs tomorrow. Price control advocates may claim a victory if they subvert federal law in this way, but the health and economic effect on the American people will be tragically severe. What’s even worse: that outcome is preventable.