The Biden administration could soon cripple America’s economy – unintentionally, of course.
Officials are reportedly seriously considering a “march-in” petition nominally filed by a handful of cancer patients but sponsored by Knowledge Ecology International, the activist group founded by Ralph Nader. The petition calls on the administration to give the patent for an advanced prostate cancer treatment – currently made by Astellas Pharma – to generic companies who could make cheaper knockoffs.
KEI and a host of allied lawmakers like Senator Elizabeth Warren claim the Biden administration has the power to do so thanks to a four-decade-old law, the Bayh-Dole Act. In the past, Republican and Democratic governments have dismissed similar petitions as both illegal and counterproductive.
But the Biden administration is desperate. The president’s approval ratings are underwater. Senior officials may feel they need a win – and can appease their progressive base by granting the petition.
That would be a terrible mistake with dire long-term consequences. Most Americans have never heard of the Bayh-Dole Act — but it laid the foundation for America’s dominance in high-tech sectors, from pharmaceuticals to agriculture to computing.
Before Bayh-Dole, if a university laboratory received government grants, the government automatically owned any patents that resulted from the researchers’ work. The government has done a poor job of licensing these patents to private sector companies who have been able to turn the promising ideas into real products. Of the approximately 28,000 government patents, only 5% have ever been licensed.
To address this issue, Congress — including then-Junior Senator from Delaware Joe Biden — overwhelmingly passed the Bayh-Dole Act in 1980 to give universities the right to retain the title of their patents and license them.
By incentivizing universities to license their own research breakthroughs to private companies – in return for royalties – the Bayh-Dole Act opened the floodgates for innovation. The law has contributed to more than 117,000 US patents and more than $1.7 trillion in US economic output. And it has enabled the development of more than 200 drugs.
Under the law, in exceptional circumstances, the government can “step in” to relicense a patent when a licensee either can’t – or doesn’t want to – bring the idea to market.
KEI and his ilk are trying to twist the simple purpose of the march-in clause. They want federal regulators to strip Astellas Pharma of exclusive licensing rights to the patents behind prostate cancer drug Xtandi simply because they believe the price means the drug isn’t available to the public on “reasonable terms.”
This is of course ridiculous. The Bayh-Dole Act makes no mention of pricing when it defines “reasonable terms” — and the Act’s namesakes, the late Sens. Birch Bayh (D-Ind.) and Bob Dole (R-Kan.), clarified that they never intended to invade the government over the price of a readily available product. In fact, the government has never invoked its right to invade
If that suddenly changes, it will set a precedent that will disrupt the economy.
Astellas licensed the patents on the molecule — which later became Xtandi — from UCLA, whose researchers had benefited from around $500,000 in federal grants. Astellas then invested $1.4 billion to convert UCLA’s research into a viable drug.
No sane executive at Astellas, or any other company, would green-light such huge investments if he thought the government could revoke the exclusive license based on the price of the resulting products.
Private companies may be reluctant to license patents from universities. Innovation in almost every high-tech industry could be slowing down.
Both Democrats and Republicans want to lower drug costs. You could probably even find common ground to do so. Instead, the Biden administration appears willing to cut corners — and inadvertently destroy the foundation of American innovation.
Sally C. Pipes is President, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.
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