March-In is Not the Answer
There is one strategy, however, that is likely to make things worse; overriding patents on drugs developed with the help of federally funded research. This so-called "march in" option is not a good idea.
01.28.2021
By: Howard Dean, Former Governor to Vermont
See the article in Newsweek HERE.
All Democrats and many Republicans are committed to making prescription drugs more affordable. There are many good ways to lower patients’ out-of-pocket spending, including getting rid of middlemen in the drug supply chain, eliminating incentives for doctors to prescribe more expensive medicines and negotiating for bulk discounts on commonly used medicines.
There is one strategy, however, that is likely to make things worse; overriding patents on drugs developed with the help of federally funded research. This so-called “march in” option is not a good idea.
It hinges on the Bayh-Dole Act, a 40-year-old law that revolutionized scientific research in the United States. A provision within the law permits the federal government to “march in” and seize intellectual property that benefited from federal grants if that IP is not being made available to the public.
Prior to 1980, the government retained the patent rights to any breakthroughs that resulted from federally funded research. But the government didn’t do a very good job licensing those patents to companies that could turn them into real-world products. In 1978, the feds held more than 28,000 patents. Just 5 percent of them were licensed.
To stop those ideas from going to waste, Senators Birch Bayh—an Indiana Democrat who created Title IX and wrote the Equal Rights Amendment—and Kansas Republican Bob Dole spearheaded legislation that allowed universities to keep the patents on discoveries made by university researchers with the help of federal funding. President Joe Biden was one of the original co-sponsors of the Bayh-Dole Act.
Universities have a huge incentive—namely royalty payments—to partner with private-sector companies to commercialize these patents. So do the researchers themselves, who may be able to parlay their discoveries into products that change the world.
In the past 40 years, Bayh-Dole has helped commercialize inventions ranging from Honeycrisp apples, which were developed in orchards at the University of Minnesota, to Google‘s original search algorithm, which emerged from Stanford University‘s computer labs.
By bringing early-stage research to private labs, the law also played a role in the development of more than 200 drugs and vaccines. Some policymakers have argued that some of those medicines are not adequately available to the public because of their high prices. They believe the government should “march in” and require licensing of the patents behind those drugs so generic drug manufacturers can produce cheaper competing versions.
This is ironic, given that we are finally administering vaccines to end the pandemic. Without taxpayer support for early-stage research at universities, drug companies would have never been in a position to create lifesaving vaccines so quickly.
Drug companies won’t spend the billions of dollars it takes to commercialize federally funded research if there’s a risk the government will seize the fruits of their research. The result will be fewer new treatments for patients—and more promising intellectual property sitting on the proverbial shelf.
Consider what happened in 1989, when the National Institutes of Health adopted a policy calling for “reasonable” pricing for companies that licensed patents that benefited from government funding. The number of licensing agreements between universities and companies, which had risen steadily over the previous few years, plummeted.
“The pricing clause has driven industry away from potentially beneficial scientific collaborations,” said Harold Varmus, the director of the NIH at the time. In 1995, NIH-funded research led to just 32 licensing agreements with private companies.
That same year, the agency eliminated the pricing clause. Not surprisingly, the number of licensing agreements in 1996 more than doubled, to 87.
If the government takes away patent rights, then less federal research will be commercialized—and fewer new medicines will hit the market. That’s not an outcome that’s in the interests of patients.
The people of the United States and the world need and deserve access to affordable medicines. But it is incredibly important to not destroy innovation in one of the last industries in the world where the United States still has a real edge, as we make the necessary and painful transition to a universal and affordable health care system in the United States.