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Why Exploiting Bayh-Dole “March-In” Provisions Would Harm Medical Discovery

bayh-dole

By most accounts, patients in the United States and across the globe are in the midst of a new era of medical discovery, one in which new treatments and cures for costly diseases will become increasingly commonplace.

As ITIF noted in a recent report, our nation has benefited from public policies that support innovation and discovery, including strong intellectual property (IP) protections, limits on price controls for innovative medicines, data protections for biologic drugs, and strong government research and development expenditures on health care.

Unfortunately, these core fundamentals are being set aside by proponents of expanding “march-in” rights to address concerns about the price of drugs.

“March-in” rights were included as a privilege for the government under the Bayh-Dole Act, which was enacted with bipartisan support in 1980 to address intellectual property created (at least in part) from government-funded research. The law has played a significant role in driving impactful medical discovery and life-sciences innovation by allowing academic and other research institutions to patent inventions created by federally funded research and exclusively license them to industry for further development and commercialization. As The Economist has written about Bayh-Dole, it was “possibly the most inspired piece of legislation to be enacted in America over the past half-century…. It unlocked all the inventions and discoveries that had been made in American laboratories throughout the United States with the help of taxpayers’ money.”

And indeed, since the passage of Bayh-Dole, there has been a dramatic rise in technology transfer activity between universities and industries resulting in innovative new products reaching consumers as opposed to sitting on the lab shelf. However, some in Congress have proposed misguided policies that could undermine this important bipartisan legislation and diminish private-public partnerships, which underpin the advancement of science and medicine.

In the rule’s 30-plus years of existence, “march-in” rights have never been used. Moreover, the march-in provision was designed for instances where a licensee was not making good faith efforts to bring an invention to market or when national emergencies require that more product is needed than a licensee is capable of making. It was never intended as a mechanism for Congress to control drug prices. To deploy march-in rights now in an effort to address drug pricing would have a negative impact on the future of innovation and set a dangerous precedent in the health-sciences industry. In ITIF’s recent report, Why Life-Sciences Innovation Is Politically “Purple”—and How Partisans Get It Wrong, we highlighted the complementary roles the public and private sectors play in developing breakthroughs in new medicines. Without this partnership in place, America risks losing its position as a global leader in life-sciences innovation, which would ultimately only have the effect of delaying the discovery and development of new treatments and cures.

Strong IP rights are at the heart of any innovative business as they provide companies with the ability to recoup the significant investments they must make to transform early-stage discoveries made at universities (or other research institutions) into new medicines that pass a rigorous series of clinical trials to ultimately reach patients. Weakening the certainty of access to IP rights provided under Bayh-Dole and employing march-in to address drug pricing would not only hurt medical discovery and the economy, but it would essentially defeat the purpose of bipartisan legislation in a contentious election cycle—a crucial time when voters need to see decisionmakers enacting new, constructive policies, not going against existing ones that are accomplishing their intended objectives.

Despite recent medical discoveries, we have our work cut out for us. If the country wants to cure diseases like Alzheimer’s or discover cures or treatments for cancers with the Moonshot Initiative, we need to strengthen public-private collaboration, not set a harmful precedent by exercising march-in rights as a way to address health-care costs.

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About the author

Stephen Ezell is vice president, global innovation policy, at ITIF. He focuses on innovation policy as well as international competitiveness and trade policy issues. He is coauthor of Innovating in a Service-Driven Economy: Insights, Application, and Practice (Palgrave MacMillan, 2015) and Innovation Economics: The Race for Global Advantage (Yale, 2012). Ezell holds a B.S. from the School of Foreign Service at Georgetown University.