In March, the Biden Administration’s U.S. Department of Health and Human Services (HHS) and the Department of Commerce (DOC) announced a Working Group to “review” its march-in authority under the Bayh-Dole Act. The Working Group’s conclusions are expected to be released soon.
Given the Administration’s concerning instincts to misinterpret existing statutes for its own benefit and repeated pressure from leftists, Americans for Tax Reform is deeply concerned that the Working Group will encourage the misuse of Bayh-Dole march-in rights.
Not only would this constitute a blatant misuse of executive authority, but it would threaten medical innovation and American competitiveness and put the U.S. on the pathway toward socialist price controls.
Before Bayh-Dole, the government took ownership over inventions that were supported by federal funding. However, this meant that tens of thousands of government-funded inventions were never put to use and not a single new drug funded with government support was developed.
Bayh-Dole allowed academic institutions and businesses to keep ownership of their IP to encourage medical innovation.
The law also included a provision allowing the federal government, if it funded the research, to “march-in” and relicense the institution’s IP in very narrow circumstances, such as if the licensee was not making “good-faith efforts to develop the technology into a usable, real-world product.” However, the incentives of Bayh-Dole have worked and the government has never used march-in.
Now, leftists are pushing to use high prices as a trigger for march-in rights – a use of power that was never authorized under the law.
Previously, leftist special interest groups sent a letter to HHS urging the agency to use march-in rights to lower the price of six different products/classes of drugs. Additionally, Democrat lawmakers, including Senators Elizabeth Warren (D-Mass.) and Angus King (I-Maine) and Representatives Peter DeFazio (D-Ore.) and Lloyd Doggett (D-Texas), sent a letter to HHS Secretary Xavier Becerra urging him to use the Bayh-Dole Act’s “march-in” provision in order to manipulate the price of one specific prostate cancer medication, Xtandi.
Oftentimes, the government’s financing comes nowhere close to the amount privately invested in the creation of the drug. In fact, the federal government provided just $500,000 to fund research for the creation of the aforementioned drug Xtandi, while Astellas, a private company, then invested $1.4 billion in research and development expenses on the drug.
Joseph P. Allen is the executive director of the Bayh-Dole Coalition and previously served as a staff member of the U.S. Senate Judiciary Committee, helping draft the Bayh-Dole Act. Certainly, he understands the intentions of this law. In an op-ed entitled, “President Biden: Don’t misuse Bayh-Dole march-in rights,” Allen says the following:
“While making health care more affordable is a laudable goal, it can’t be done on the back of Bayh-Dole. That’s not how the law works — and pretending it does would have disastrous consequences…
Allowing the government to march in because someone believes the price a company charges for its therapy isn’t “reasonable” — a completely undefined term — would be a devastating blow to the U.S. economy and the health of Americans.”
As Allen alludes to, if Democrats are successful in undermining IP rights, medical innovators will have no incentive to create new treatments and cures, as they will have no way to recoup the investments they made in developing new medicines.
Additionally, if innovators can expect their property rights to be seized on the government’s arbitrary determination of what the price should be, then this certainly would quell innovation. It would also harm the pharmaceutical industry, which supports millions of high-paying jobs.
By allowing the government to seize IP rights for such arbitrary and subjective reasons, the IP rights of life-saving remedies like vaccines would be weakened.
It should be alarming that many on the left want to have the U.S. government seize the IP rights of businesses by misusing march-in. Not only would this violate the law, but it would also provide an implicit endorsement of the rampant theft of American IP by China and other foreign rivals.
President Biden must resist this misuse of the Bayh-Dole Act. Doing so would weaken U.S. intellectual property rights, stall medical innovation, cost jobs and economic growth, and set a dangerous precedent.