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Biden Admin's March-In Plan Would Hurt Medical Innovation

By Ken Thorpe
February 22, 2024

In December, the White House issued a new policy framework that could have devastating effects on access to cutting-edge drugs. The proposal would radically reinterpret a 43-year-old law to let the government march in and take patents from one company and reassign them to another. 

While billed as a way to decrease the price of medicines, the framework is unlikely to do any such thing. Instead, it would discourage private investment in research and development that builds on federally funded research at American universities, which often identifies novel disease targets critical for future drug development.

The framework will undermine 43 years of progress and ultimately reduce the pace of innovation by gutting the practical application of taxpayer-funded research.

To understand what is at stake, let's go back to the problem Congress was grappling with as it considered the legislation in question, the Bayh-Dole Act, which President Joe Biden, then serving in the U.S. Senate, rightly supported. 

Prior to 1980, patents created with federal research funding largely collected dust. The federal government retained the patents, but had little incentive to license them for development. As a result, fewer than 5% of government-owned patents led to new products. 

The Bayh-Dole Act overhauled this system, allowing universities to hold the patents for inventions arising from federal funding. The law has been a success. Between 1996 and 2020, entrepreneurs and their investors used those patents to create over 495,000 new products, including more than 200 drugs and vaccines, as well as technology inside our high-definition televisions and touch-screen phones. 

To ensure federally funded discoveries benefit the public whenever possible, Bayh-Dole permits the government to march in and claw back patents that aren't being commercialized. The goal was to encourage continued innovation and to prevent promising discoveries from languishing.  

But the law limited march-in authority to a few rare circumstances. For example, if a patent holder makes no effort to turn their patent into a commercial product, the government can relicense the patent to a company that will do so. 

The inclusion of the provision worked as intended. In the more than four decades since the passage of Bayh-Dole, the government has never had to exercise march-in rights.

But the Biden administration's march-in framework would introduce new triggers for march-in not permitted by the law. Specifically, the plan would allow officials to relicense patents whenever they determine the price of a successfully commercialized product is too high. 

The consequences of finalizing this unprecedented reinterpretation of the Bayh-Dole Act are impossible to overstate. For four decades, startups have agreed to license and develop revolutionary research from universities with the understanding that the IP rights of any resulting product would be respected and enforced.

Companies rely on patents to attract venture investment and recoup the enormous costs of bringing a useful but basic discovery out of the lab and turning it into a real-world drug, vaccine or device. This process can take years and cost hundreds of millions — or even billions — of dollars. 

The technologies that have come to market thanks to the Bayh-Dole Act likely wouldn't exist if the government had had the power to march in and relicense exclusive patents based on qualms over price.

If the Biden administration succeeds in establishing price as a legitimate justification for tearing up exclusive patent licenses between the public and private sector, potentially billions of dollars worth of cutting-edge taxpayer-funded research will go to waste. This includes research that could hold the key to novel treatments for cancer, heart disease, diabetes and other chronic diseases affecting millions of Americans.

Universities would suffer under the proposed march-in framework as well. Many academic institutions receive millions of dollars in royalty revenue annually from firms licensing and developing their federally funded patents. These dollars are then reinvested into research, leading to the next wave of innovative, world-changing discoveries. 

The march-in framework would cut off this beneficial cycle of research, licensing and reinvestment. Most federally supported universities would struggle to find willing partners in the private sector, no matter how promising their research is. 

This disastrous outcome would directly undermine the admirable purpose of the Bayh-Dole Act. The law's authors rightly understood that when the U.S. government spends money on research, the taxpaying public should benefit from the fruits of that research, whether in new cures from the world of biotech or revolutionary consumer electronics or robotics. 

The misguided march-in framework wouldn't effectively address issues relating to affordability. But it would have the unintended consequence of undermining the Bayh-Dole Act, a law that has brought thousands of life-enhancing innovations to market.
Kenneth E. Thorpe is the chair of the department of health policy and management at the Rollins School of Public Health at Emory University. He is also chairman of the Partnership to Fight Chronic Disease.