Haphazard attempts to make drugs cheaper could damage innovation
| March 26, 2021 7:00 AM
All Democrats and many Republicans are committed to making prescription drugs more affordable.
There is one strategy that is likely to make things worse: overriding patents on drugs developed with the help of federally funded research. This "march-in" option is not a good idea.
It hinges on the Bayh-Dole Act, a 40-year-old law that revolutionized scientific research in the U.S. A provision within the law permits the federal government to "march in" and seize intellectual property that benefited from federal grants if that intellectual property is not being made available to the public.
Prior to 1980, the government retained the patent rights to any breakthroughs that resulted from federally funded research. But the government didn't do a good job licensing those patents to companies that could turn them into real-world products. In 1978, the feds held more than 28,000 patents. Just 5 percent of them were licensed.
To stop those ideas from going to waste, senators Birch Bayh and Bob Dole spearheaded legislation that allowed universities to keep the patents on discoveries made by university researchers with the help of federal funding.
Universities have a huge incentive — namely, royalty payments — to partner with private-sector companies to commercialize these patents. So do the researchers themselves, who may be able to parlay their discoveries into products that change the world.
In the past 40 years, Bayh-Dole has helped commercialize inventions ranging from Honeycrisp apples to Google's original search algorithm.
By bringing early-stage research to private labs, the law also played a role in the development of more than 200 drugs and vaccines. Some policymakers have argued that some of those medicines are not adequately available to the public because of their high prices. They believe the government should "march-in" and require licensing of the patents behind those drugs so generic drug manufacturers can produce cheaper competing versions.
This is ironic, given that we are finally administering vaccines to end the pandemic. Without taxpayer support for early-stage research at universities, drug companies would have never been in a position to create lifesaving vaccines so quickly.
Drug companies won't spend the billions of dollars it takes to commercialize federally funded research if there's a risk the government will seize the fruits of their research. The result will be fewer new treatments for patients.
Consider what happened in 1989, when the National Institutes of Health adopted a policy calling for "reasonable" pricing by companies that licensed patents that benefited from government funding. The number of licensing agreements between universities and companies plummeted.
In 1995, NIH-funded research led to just 32 licensing agreements with private companies. That same year, the agency eliminated the pricing clause. Not surprisingly, the number of licensing agreements in 1996 more than doubled, to 87.
If the government takes away patent rights, then less federal research will be commercialized — and fewer new medicines will hit the market. That's not an outcome that's in the interests of patients.
The people of the United States need and deserve access to affordable medicines. But it is incredibly important to not destroy innovation in one of the last industries in the world where the United States still has a real edge.
The author is the former chair of the Democratic National Committee and former governor of Vermont.