Claim: On December 7, the Biden administration proposed a policy framework claiming a newfound authority, under the 43-year-old Bayh-Dole Act, to rescind patent licenses on drugs, energy, climate change, and all other inventions that benefit from federal research funding based on the price of the resulting product. The administration asserts that this framework is an effective way to reduce drug pricing.
Correction: The 1980 Bayh-Dole Act catalyzed an unprecedented wave of American innovation by granting universities and other nonprofits the ability to license their federally-funded discoveries and inventions to the private sector. In so doing, this pivotal law facilitated the introduction of numerous cutting-edge technologies to the market, including more than 200 new medicines and vaccines. The impact of the Bayh-Dole Act is recognized for contributing nearly $2 trillion to America’s GDP.
The policy framework proposed by the administration contradicts the plain text of this law, which specifies that march-in rights can only be exercised to relicense patents under narrow circumstances.
None of these circumstances pertain to pricing. The administration’s proposed framework also goes against the explicit intent of Bayh-Dole’s authors – former Senators Birch Bayh and Robert Dole – and a decades-long bipartisan consensus on the appropriate limits of government intervention through march-in.
In the 43 years since the law’s passage, administrations under both parties have refused to march-in on any product for any reason. Yet, the current administration identifies several scenarios in the proposed framework alone where march-in could be appropriate, spanning from water purification to vehicle communications.
The proposal encompasses all technologies. As for pharmaceuticals, misusing march-in to relicense patents on groundbreaking discoveries would not be effective in lowering drug prices in any event.
Numerous non-patent-related factors within the supply chain, such as the involvement of middlemen, play a significant role in the cost of drugs. Moreover, a recent study revealed that of the 361 drugs approved between 2011 and 2020, only 5 would qualify for march-in – the rest resulted exclusively or mostly from non-governmentally funded research.
Such government intervention would, however, introduce significant uncertainties and risks for inventors and investors, discouraging partnerships with government-funded research across the entire innovative ecosystem.
The Bayh-Dole Act has been instrumental in driving breakthroughs far beyond the life-sciences in agriculture, green energy, computer technology, and more, benefitting millions globally. Investments in these technologies would be compromised if patents could be arbitrarily revoked. Particularly at risk are innovative companies, especially smaller ones, which receive nearly three-quarters of university patent licenses.
The Biden administration’s attempt to misuse the Bayh-Dole Act to impose price controls on groundbreaking inventions is not only legally unsupported but also shortsighted.
Bottom Line: This claim is false.