President Biden, Don't Undo Your Innovation Legacy
President Biden wants to lower drug prices. While that is a laudable goal, we can't afford to undermine the intellectual property rights that helped produce these innovative drugs in the first place. A recent proposal would do just that, and it's not limited to drugs. The proposed policy change would reinterpret a 1980 law that ushered in a new era of American innovation and collaboration between the public and private sector. But if this proposed policy change is finalized, it will cause a wide swathe of our high-tech sector to stall out. And, while in Congress, Biden was a passionate champion of this very law and the critical innovation it spurred.
Most Americans probably hadn't heard of the Bayh-Dole Act until the White House announced the change last month. Before the law's passage, if university researchers made a breakthrough on any project that had received public funds, the government took control of the patent. But federal agencies didn't have the resources to develop all these discoveries into viable products, so the vast majority never made it beyond federal filing cabinets.
The goal of the popular bipartisan act was to get the public and private sector to work together to further technology first developed on university campuses. We rely on universities to invest time and energy on risky scientific and technological pursuits that the private sectors won't -- many of which fail. But when they succeeded, the law enabled universities to keep control of their patents and leverage them in license deals with businesses. Universities gained a new revenue stream. Startups gained the opportunity to take that intellectual property, provide additional investment needed to create a marketable product and then commercialize the discoveries. Most importantly, the public gained access to new innovative products -- the fruits of taxpayer-sponsored research that otherwise would have never seen the light of day.
Biden was among the 91 of 100 senators to vote yes, and the legislation launched an innovation renaissance. Based on the Bayh-Dole framework, thousands of startups have formed to transform early-stage research into applications that improve health and quality of life. The results include the HPV vaccine, an HIV antiviral treatment, sophisticated airport scanners, artificial lungs, a lifesaving water purification system, and the Google search algorithm.
Yet today, as part of a war on drug pricing, the current Biden Administration proposal departs from his previous pro-innovation stance. The law provides for the government to "march in" and seize patent rights on discoveries that once received federal funds, but only in rare circumstances, such as when a company has failed to commercialize a much-needed product altogether. The law was intended as a collaboration and innovation tool to fuel and enable early-stage discovery to make it to the market -- not as a price control mechanism to be used when a new technology begins to show some promise.
Now, Biden aims to let federal agencies march in whenever they decide that the price of a medicine is too high. But based on the actual proposal, the new authority would be used on other promising technologies as well -- for instance in renewable fuels, EV technologies or any product deemed to be in the public interest.
Companies (and their investors) need reliable patent rights to justify the financial risks of licensing new discoveries. If the government guts Bayh-Dole, companies won't invest in or license academic research. The intent of the law was to create incentives for collaboration -- for the public sector and the private sector to do together what neither could do alone. And, its succeeded. Before 1980 when the act was passed, fewer than 5 percent of federally owned patents were commercialized. Today, that number is 60 percent. This current proposal turns that incredible success on its head.
As a senator in the 1990s, President Biden resisted efforts to undermine the effectiveness of the Bayh-Dole Act. He rejected a bill that granted government agencies "reasonable pricing" authority over federally funded products. It passed anyway, but so severely eroded new research alliances that the National Institutes of Health eliminated the harmful provisions. Senator Biden also resisted other legislative efforts to let the government use pricing as a pretext to weaken patent rights.
And Biden isn't just going against his previous stance on Bayh-Dole. By endorsing march-in rights as a means of price control, he's counteracting other ambitions he's been vocal about: fostering economic growth, competing with China, generating high-skill U.S. jobs, and tackling cancer. All of these goals depend on secure patent rights.
The President is right to prioritize affordable health care and to ensure that Americans have access to life-changing drugs. But, there are other ways to accomplish this goal without undercutting the success of Bayh-Dole. The 44-year-old act has made the United States a world leader in the very pharmaceutical and biotechnology industries that we need to solve global health challenges -- a model that other countries have tried to replicate. Imperiling this system would harm global health in the long run.
In short, protecting Bayh-Dole is far more consistent with Biden's legislative track record and his ambitious goals for the nation -- which is why he fought for it all those years ago. Let's get back on track, Mr. President.
Dana Robert Colarulli is a partner at ACG Advocacy LLC and executive director of Licensing Executive Society International. He is a former director of governmental affairs at the USPTO.
