April 3, 2020 at 5:00 am ET
As the urgency of finding a treatment and vaccine for the coronavirus accelerates, dozens of American biomedical companies, startups and universities are rushing to develop COVID-19 therapeutics. There’s a good chance the Bayh-Dole Act will play a critical behind-the-scenes role in facilitating these efforts.
Congress passed the bipartisan Bayh-Dole Act in 1980 to give universities and nonprofit research institutions such as Battelle Memorial Institute, Sloan Kettering and Mass General Hospital rights to the intellectual property they generate from federally funded research. The Economist hailed the act as “possibly the most inspired piece of legislation to be enacted in America over the past half-century,” and that judgment proved to be correct. The law has since stimulated a tremendous amount of innovation, unlocking the potential of inventions and discoveries that in many cases had been sitting untapped on national laboratory or university shelves.
Prior to the Bayh-Dole Act, when the federal government retained ownership of the innovations it funded, very few were ever commercially produced. Only 390 patents were awarded to universities the year the act was passed. But in 2017, that number had increased to nearly 7,500. In fact, more than 100,000 patents have been issued to U.S. universities or nonprofit research institutes between 1996 and 2017, resulting in more than 420,000 inventions and 13,000 startup companies formed.
In the life sciences, Bayh-Dole enables universities to secure IP rights — often in the form of patents for molecular compounds or biotechnological processes — which they in turn often license to startups and bigger biopharmaceutical companies. Over 200 new drugs and vaccines have been developed through public-private partnerships facilitated in part by the Bayh-Dole Act since its enactment in 1980. These medicines treat conditions ranging from Crohn’s disease to hepatitis B, HIV/AIDS and HPV, among many others. In contrast, not one drug was created from federally funded research under the technology-transfer regime that existed prior to Bayh-Dole.
Today, there’s a direct link between the Bayh-Dole Act and the quest to develop a COVID-19 therapeutic. For instance, Moderna, the company that has come the furthest toward developing a vaccine — with Phase 1 clinical trials already underway in Seattle — credits the pivotal role of patents in the field of messenger RNA and associated mRNA delivery technologies, which it licensed from Harvard and the University of Pennsylvania.
Another company, Cepheid, which has developed a point-of-care COVID-19 diagnostic, leveraged Bayh-Dole to license technology developed at the Lawrence Livermore National Laboratory for technology for rapid polymerase chain reaction thermocycling, integrating amplification, and detection. These examples show the level of collaboration (as well as the speed of research and development) that has resulted in the decades since Bayh-Dole was enacted.
Moreover, many of the companies working to research and develop COVID-19 therapeutics are doing so using their own funding. They feel comfortable doing so because Bayh-Dole allows research institutions to transfer the IP rights needed to commercially license or market their inventions.
This clear path to commercial production also incentivizes private investors and venture capitalists to back risky research, because they can have confidence they will receive a fair return on their investments. As a result, even small biotech firms, largely funded by private capital, are working to develop a coronavirus vaccine right now.
Unfortunately, at the very moment U.S. life-sciences companies, supported by the world’s most effective life-sciences innovation policy system, are gearing up to tackle the coronavirus threat, some are advocating for policies that would undermine the Bayh-Dole Act and thereby weaken efforts to find treatments for COVID-19. In particular, some have advocated for using Bayh-Dole “march-in-rights” — provisions included in the 1980 legislation to give the federal government the right, in certain instances, to reclaim and potentially compel nonexclusive licensing of the IP — to control drug prices, whether for coronavirus therapies or anything else where the government might regard the price of the innovation in question as being too high.
Just recently, some lawmakers briefly delayed the COVID-19 emergency funding bill in an attempt to include a “reasonable pricing” provision based on the concept of march-in-rights. The provision would have empowered the government to strip away IP rights and impose price controls for all coronavirus vaccines and therapies.
These lawmakers wrongly claim that since the government is funding the breakthroughs, companies shouldn’t benefit from “a blank check to monopolize” them. But in fact, companies licensing technology using Bayh-Dole often invest hundreds of millions — sometimes billions — of dollars to bring new drugs to market. One study finds that life-sciences companies invest over $100 in development for every $1 the government invests in research leading to a biomedical innovation brought to market.
Moreover, the authors of the original Bayh-Dole legislation, Sens. Birch Bayh (D-Ind.) and Bob Dole (R-Kan.), have clearly stated that the act’s march-in provisions were never intended to be exercised for price-control reasons. (Rather, they were primarily designed to intervene if licensees were failing to take specific steps to license their innovations.) In a 2019 review of federal policies regarding technology transfer and commercialization, the U.S. National Institute of Standards and Technology observed that the “use of march-in to control drug prices was not within the scope and intent of its authority” and concluded that “the use of march-in is typically regarded as a last resort.”
It’s critical that patients always be able to access the medicines they need. The Bayh-Dole Act represents one of the bedrock policies that has helped make the U.S. biomedical innovation system the envy of the world and a key place the world is now turning to in the search for an accessible coronavirus vaccine or treatment. Those who would misguidedly interpret Bayh-Dole march-in-rights as a price-control provision that could be leveraged in the coronavirus case or other circumstances advocate for an approach that threatens to seriously deter biomedical innovation and undermine a key pillar of America’s biomedical innovation system.
Stephen Ezell is vice president for global innovation policy at the Information Technology and Innovation Foundation, the leading think tank for science and technology policy.
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