Don't "March In" on American Innovation
By Sally C. Pipes
The Biden administration may soon cripple America's economy -- inadvertently, of course.
Officials are reportedly giving serious consideration to a "march-in" petition, nominally filed by a handful of cancer patients but promoted by Knowledge Ecology International (KEI). The petition urges the administration to relicense the patent on an advanced prostate cancer treatment -- which is currently manufactured by Astellas Pharma -- to generic drugmakers that could create cheaper knockoffs.
KEI, and a host of allied lawmakers like Senator Elizabeth Warren, claim the Biden administration has the authority to do this thanks to a four-decade-old law, the Bayh-Dole Act. Most legal experts disagree with their tortured interpretation of that legislation's "march-in" clause -- and in the past, Republican and Democrat administrations have rejected similar petitions as both illegal and counterproductive.
But the Biden administration is getting desperate. Senior officials may feel they need a win -- and can satisfy their progressive base by granting the petition.
That'd be a horrendous mistake with dire long-term consequences. Most Americans have never even heard of the Bayh-Dole Act -- but it laid the foundation for America's dominance of high-tech sectors.
Prior to Bayh-Dole, if a university lab received federal grant funding, the government automatically owned any patents that resulted from researchers' work. The government did a poor job of licensing these patents to private sector firms that could turn the promising ideas into real products.
To address this problem, Congress -- including Delaware's junior senator at the time, Joe Biden -- overwhelmingly passed the Bayh-Dole Act in 1980 to give universities the right to retain the title to their patents and license them out, even if researchers benefited from federal funding.
By incentivizing universities to license their own research breakthroughs to private firms -- in exchange for royalties -- the Bayh-Dole Act opened the innovation floodgates. Under the law, the government can "march-in" to relicense a patent under exceptional circumstances when a licensee either can't -- or won't -- bring the idea to market.
KEI and its ilk are trying to twist the plain purpose of the march-in clause. They want the feds to take away Astellas Pharma's exclusive licensing rights to the patents behind the prostate cancer drug, Xtandi, simply because they think its price means that the medicine isn't available to the public on "reasonable terms."
This is ridiculous, of course. The Bayh-Dole Act doesn't mention pricing when defining "reasonable terms" -- and the law's namesakes, the late Senators Birch Bayh (D-Ind.) and Bob Dole (R-Kan.) clarified that they never intended the government to march in because of a readily available product's price.
If that suddenly changes, it will set an economy-disrupting precedent. Private companies could hesitate to license patents from universities. Innovation in nearly every high-tech industry could slow to a crawl.
Democrats and Republicans both want to reduce drug costs. With a little wrangling, they could probably even find common ground on ways to do so. But instead, the Biden administration seems poised 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. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes. This piece was originally published in the Boston Herald.
