The National Institute of Standards and Technology's (NIST) recent proposal to wield the "March-In Rights" under the 1980 Bayh-Dole Act as a tool for price-fixing drugs has ignited a firestorm of debate among stakeholders in the pharmaceutical, legal, and policy-making communities. At its core, this proposal seeks to expand the scope of “March-In Rights”—originally designed to ensure public access to inventions arising from federally funded research—to include considerations of the pricing of pharmaceutical products. This approach, however, is not just a deviation from the act's original intent; it is a leap into uncharted and potentially perilous waters that unnecessarily puts the economic and innovative future of the American pharmaceutical industry at risk.
The Bayh-Dole Act has been a cornerstone of American innovation policy for over four decades, fundamentally transforming the landscape of federally funded research. By allowing universities, small businesses, and non-profits to own inventions developed with federal funding, the Act catalyzed a wave of commercialization that has made the U.S. a global leader in biotechnology and pharmaceuticals. The proposed re-interpretation of “March-In Rights” by NIST to institute price fixing, represents a seismic shift in policy that could have far-reaching consequences.
The Bayh-Dole Act was designed to promote the utilization of federally funded inventions and encourage public-private partnerships. By introducing "March-In Rights" based on product pricing, the law is turned on its head. The Act was intended to strengthen property rights – the bedrock of a capitalist economy. This interpretation of the law, however, would weaken them by eroding the rights granted in patents. This not only distorts statutory intent but also sets a precedent for penalizing successful innovation and commercialization.
The pharmaceutical industry relies heavily on the certainty of patent protection to justify the significant investment required for drug development. Introducing uncertainty through the potential use of “March-In Rights” based on pricing considerations could deter investment, stifle innovation, and slow the development of new treatments and cures. The biopharmaceutical sector, known for its high-risk, high-reward research endeavors, could particularly feel the chill, jeopardizing future medical breakthroughs.
The biopharmaceutical industry is a vital engine of the U.S. economy, contributing billions in economic output and supporting millions of jobs, not to mention saving countless lives. Furthermore, weakening patent protections could diminish U.S. competitiveness on the global stage, particularly against countries like China, which are rapidly expanding their biopharmaceutical capabilities.
The complex, time-consuming, and costly process of drug development is underpinned by strong patent protections. These protections ensure that once a new treatment is developed, it can be commercialized and made available to patients. Interfering with market dynamics that drive drug pricing and availability could ultimately reduce the incentive to develop new treatments, adversely affecting patient access to innovative therapies.
The proposed use of "March-In Rights" for price control raises profound legal and constitutional questions. Patents are property rights protected under the U.S. Constitution. The arbitrary exercise of “March-In Rights” based on pricing could be viewed as a taking of property without just compensation, violating the Fifth Amendment. Moreover, such actions could be challenged as exceeding the authority granted by the Bayh-Dole Act itself, leading to prolonged legal battles and further uncertainty.
Rather than promoting access and affordability through innovation, this proposal threatens to undermine the very ecosystem that has made the U.S. a leader in medical research and development. It is imperative that policymakers seek alternative solutions that address drug affordability without compromising the foundational principles of innovation and private investment that have driven American success. Such proposals should focus on deregulation and unlocking the power of free-market competition rather than stifling it.
The insanity of using the "March-In" language of the Bayh-Dole Act to try and control prescription drug prices lies not just in the deviation from the Act's original purpose but in the potential to stifle innovation, deter investment, and undermine the U.S. economy and global competitiveness. As we stand at this crossroads, it is crucial to remember that the strength of the American innovation ecosystem lies in its ability to foster groundbreaking research and development through a balanced and supportive policy framework. We are caught in a crisis of our own doing as the price of prescription drugs reaches record highs. The solution, however, does not lie in misapplying a well-intentioned law in a way that could have unintended and irreversible consequences.
Courtland Culver is Assistant General Counsel of the CPAC Foundation, and a policy analyst with the CPAC Foundation’s Center for Regulatory Freedom.
