Biden’s March to Kill Medical Innovation & Freedom

This year’s headlines have been dominated by discussions about drug prices and drug shortages. But don’t worry, President Biden is “marching” in to save the day. Or is he?

The President believes he knows better than anyone else and is refusing to listen to reason when it comes to addressing drug prices and shortages.

First, he touted the Inflation Reduction Act (IRA) as the answer to high drug prices despite the “fair” prices not being effective until 2026. What seniors and people with disabilities have gotten is higher premiums – 21.5 percent more on average this year alone in Medicare Part D. In 2025, premium increases could double.

President Biden has also ignored warnings from the Congressional Budget Office, analytics firms, university economists, and health-industry analysts about the damage the IRA will do to the pharmaceutical industry and Americans’ health. Forcing down prices means companies will be less likely to invest hundreds of millions of dollars and decades into research and development, leading to fewer treatments. That means people will be sicker, and costs will go up, not down.

Now, in his infinite wisdom, the President has proposed allowing the government to “march in” and seize the patents of drugs and other innovations if drug prices are too high. According to a tweet posted to the President’s X account under the new proposal, “the government reserves the right to ‘march in’ and license that drug to another manufacturer who could sell it for less.”

He claims this will promote competition and lower drug prices. It won’t.

You might be asking how the President can do this. He is using the 1980 Bayh-Dole Act, which allows universities, research organizations, nonprofits, and small businesses receiving federal aid to develop new products and then license those products to companies to sell to the public while retaining control of the patent. It has been extremely successful. Many products on the market, like cell phones, solar panels, water filtration systems, and some drugs, were developed using government funding in one way or another.

Bayh-Dole says the government can seize patents in extreme circumstances, such as a grant recipient not commercializing the invention. That makes sense. If taxpayers fund research that leads to a great idea and then a company refuses to bring it to market, taxpayers have an interest in making sure it is available. But this has never happened because companies have an interest in bringing these ideas to consumers.

Under the proposed approach, government-funded projects, no matter how little the investment, belong to the government and can be seized at the whim of a bureaucrat. As a result, most companies, universities, nonprofits, and research organizations will stop accepting research funding, and fewer products will be developed. This applies to all tech transfers, including new phone apps, clean water technology, green energy, medical devices, and prescription drugs.

The impact on the drug industry will be immediate. With less funding for research and development, we can expect fewer new treatments, both existing and new. The drug shortage crisis will get worse, treatable diseases will go untreated, and drugs that could have cured a previously uncurable disease will be abandoned. This policy is an innovation killer.

The irony is the Bayh-Dole law does not include a reference to prices at all, and it does so on purpose. The Act was to spur collaboration between the private and public sectors to help speed up the process of getting products to the public. The National Institutes of Health, the Department of Health and Human Services, and the Defense Department know this and have rejected march-in rights as a price control maneuver over the years.

In fact, when the National Institutes of Health (NIH) added a clause requiring "reasonable pricing" to its Cooperative Research and Development Agreements (CRADAs) in 1990, the number of CRADAs decreased. After the clause was eliminated in 1995, the number of partnerships soared, with 126,000 new patents to research institutions and the creation of almost 17,000 startups from 1996-2020. The new system also added $1 trillion to the U.S. gross domestic product and contributed more than 200 life-saving drugs and vaccines to the healthcare system.

It makes you wonder if President Biden talked to anyone in his administration or made the decision based solely on political posturing.

The recent efforts by President Biden to control prices, both through the IRA and now using the Bayh-Dole Act, put the future of the United States’ access to new medicines at risk. Worse, with the government dictating prices and who can produce goods and services, our free economy is at stake. That’s what Russia and Cuba do in their economies, and look at the results – few products, little innovation, low living standards.

For now, this revision to Bayh-Dole is a proposed framework. Should President Biden get his way and finalize the approach, I hope you like socialism.

Joel White is the President of the Council for Affordable Health Coverage (CAHC). CAHC promotes policies that lower health costs through increased competition, informed consumers, and more choices to help promote access to affordable coverage.