Protect the Bayh-Dole Act for Our Health and Wealth
By Joseph P. Allen
In the waning days of the Trump administration, the Commerce Department proposed a rule to strengthen the Bayh-Dole Act of 1980. If the Biden administration approves the rule -- with a few semantic changes -- Americans will continue to enjoy the fruits of university research. If it doesn't, we could lose the public-private sector alliances that turbo-charge American innovation.
Before Bayh-Dole, the government retained the patents on any university discoveries developed, even in part, with federal funding. The rationale was that taxpayers helped pay for the discoveries, so they should be readily available to everyone.
That sounds laudable in theory, but in practice, it destroyed the incentives for private companies to invest in developing and refining universities' research. Of the 28,000 patents the government stockpiled before 1980, it licensed less than 5 percent. Even worse, not a single new drug was created from National Institutes of Health (NIH) research when the patent rights were taken.
That was a colossal waste of billions of federal R&D dollars.
Bayh-Dole ended that waste by allowing academic institutions and companies to own the patents that stemmed from their research. It restored the intended incentives of the patent system and spurred decades of American innovation.
By encouraging the private sector to collaborate with universities, Bayh-Dole has contributed $1.7 trillion to U.S. industrial output, spawned more than 14,000 startups, and supported nearly 6 million jobs in the last 25 years. On average, we create 3 new companies and commercialize 3 new products every day thanks to the law.
Despite its success, Bayh-Dole is under attack -- which is why we need the Commerce Department's clarifying rule.
The law requires that universities owning inventions under the law ensure that good faith efforts are made to turn those discoveries into useful products. If that's not the case, or if the developer cannot meet the needs of a national emergency, the government can "march in" and relicense the patent to additional companies capable of developing the invention.
Twenty years after the law passed, critics claimed they had discovered a hidden meaning in the law: that the government can march-in if it doesn't think a resulting product's price is "reasonable."
The law never intended this. It's architects, Democratic Senator Birch Bayh of Indiana and Republican Senator Bob Dole of Kansas wrote in the Washington Post, the act "did not intend that government set prices on resulting products." Accordingly, the NIH has rejected every petition to use Bayh-Dole's march-in provision as a price control mechanism under both Democratic and Republican administrations.
The proposed Commerce Department rule clarifies that march-in rights should only be used as defined in the statute. This clarification would be highly beneficial, because the constant threat to misuse Bayh-Dole is eroding private companies' confidence in our universities and federal labs as reliable research partners. That is particularly dangerous as we may well need to mobilize our best and brightest minds in the public and private sectors to fight the next pandemic, just as we did for Covid-19.
Bayh-Dole has borne great fruit over 40 years at no cost to the taxpayer. It created thousands of products, from high-definition televisions, Google's search algorithm, treatments for multiple sclerosis, breast cancer, and cutting-edge mRNA Covid-19 vaccines.
That is quite a track record. With approval of the proposed Commerce Department rule, the Bayh-Dole Act will continue to make us healthier and wealthier.
Joseph P. Allen is executive director of the Bayh-Dole Coalition.
