Bayh-Dole on 200 drugs, 1

The claim of “200 drugs” made after Bayh-Dole came into effect floats around the internet. Here’s an instance from a law firm:

The Bayh-Dole Act has been credited with developing over 10,000 start-up companies and at least 200 drugs and vaccines, and contributing more than $500 billion to the economy, in part, because it provides for certainty of ownership of patent rights.

Notice merely that the figures are “has been credited.” It’s not that the figures are true, but the statement that someone has claimed the figures represent Bayh-Dole’s effect is true. The figures could be totally untrue and the statement still remains, in a lawyer sort of way, accurate. As it is, you won’t find anything to support *in reality* the 10,000 startups, 200 drugs and vaccines, or $500 billion.

AUTM does not track Bayh-Dole inventions in its licensing surveys, and does not track for what assets any given startup has been formed in anticipation of taking a license, and does not even track when universities double count startups because the startup has co-founders from both, or co-inventors, or the startup needs licenses from both. For that matter, AUTM does not bother even with actual counts–its instructions tell universities to estimate where they haven’t bothered to count. Just make things up that sound about right. Leave it to others to turn those estimates into “facts” by stripping off all the qualifications, double counting, and room for puffing things up.

The 200 drugs and vaccines similarly does not report anything about federal funding, patents, or Bayh-Dole practices. It’s just a number. We will get to it in a bit.

The $500 billion is a figure from an economic model, representing the upper end of a range of outputs. But the economic model itself is unvalidated, a vanity creation of lobbying organizations. There’s nothing to indicate that the model is even remotely close to reality. And consider that $500 billion over 20 years is peanuts in an economy that is running at over a trillion dollars every year.

Beyond all that is the open question whether the money from the handful of publicly financed inventions that have made it big comes by means of monopoly pricing at 10x to 100x what the public would consider a reasonable price–cost of production, recovery over time of development costs, a reasonable profit. Even if there were a $500 billion contribution to the U.S. economy from patents on inventions made in federally supported work, if we found out that the vast majority of that impact came from money accumulated from patent-based price gouging of those of us suffering from diseases and injuries would be so very happy about it or about Bayh-Dole?

And here’s the thing: without reasonable pricing, Bayh-Dole fails utterly.

We are talking inventions directed at public health made in work funded by the federal government because that work is determined to be in the public interest. There’s a disease, suffering. The federal government chooses to support work aimed at understanding the disease, treating it, or treating the suffering.

There’s no reason for Bayh-Dole but for giving companies patent monopolies on health-directed discoveries made in work receiving federal support.

No other area much matters. For those other areas, there are not commercial markets anyway, and federal policy allowed companies with real markets to own whatever inventions they acquired under federal contract, and where federal agencies took ownership they did so to release the invention for all to use, sometimes after spending the money working with contractors to create a technology platform that companies could then easily turn into products and anyone else could use without having to buy from any of those companies. No–the target for Bayh-Dole from the get go was health-directed inventions, just as it was for a decade under the NIH IPA program on which Bayh-Dole is based.

We do not fund public health-directed work only to subsidize speculators determined to make a fortune by gaining exclusive control over any health discovery–including all variations, all formulations, all methods of delivery, all applications that they can think to claim–so that they can then charge monopoly prices, keep all income to themselves by preventing other work–research or development–to go forward, and be the sole source of beneficial product for two decades. We don’t care that such speculators then offer equities that allow “investors”–including universities hosting just such research–to buy into this envisioned future profit stream.

I don’t think we would fund health research even if we discovered that only speculators with a bent for monopoly offering other speculators a piece of the action were the only ones willing to make university research discoveries in health care available for actual use in medical treatments. We would instead find ways to develop new medical treatments without involving the speculators. The speculators may need to speculate–but federal funding for research does not need to subsidize their speculation, and if other ways to develop new medical treatments compete with such speculation, so be it. If those other ways have a chilling effect on speculation, do we care? And we wouldn’t, even if speculation was an effective way to create new medical treatments. But it’s not even effective! So all the more reason not to divert federal funding or the results of federal funding in health research to speculators or even give a second thought to their struggles to make a fortune by gaining patent monopolies on medical treatments.

In a way, public funding for health research is one such way to develop medical treatments without the bother of speculators. But here we find that speculators, citing Bayh-Dole, have co-opted the effort. We are told we cannot do without them. There’s no reason for Bayh-Dole, if we exclude health-directed inventions.

If universities license non-exclusively, there’s absolutely no reason for Bayh-Dole.

No one argues that the federal government by giving away inventions does a worse job at it than would universities if they had the right to give away those same inventions. We are left, then, with the argument that universities  can do a better job licensing exclusively–dealing in patent monopolies–than can the federal government (even though Bayh-Dole authorizes federal agencies to go ahead and try). And if we are talking exclusivity, then we face the issue of whether whatever company (if ever there is one) is chosen as the university’s favorite (as exclusive licensee, often assignee) has the freedom to price its products (if ever there are any) based on its patent monopoly or must set a reasonable price.

If the company can set whatever price it wants, based on its patent monopoly received from a university which in turn has the chance to acquire patent rights only because there’s federal funding and Bayh-Dole, then we are back to federal funding working as a subsidy to monopoly exploitation of patents to allow for unreasonable pricing of anything that results.

Just to be clear: we are not worrying about whether a patent position is necessary to spark development of a health-directed invention for use as a medical treatment, nor that treatment in the form of a commercial product. There is nothing compelling about something new becoming commercial, mass produced, offered for sale. We are fine if physicians can specify what they need for treatment (prescriptions, for instance) and have such things prepared for them. If a company can make those preparations at less expense or greater quality or with greater availability or sooner–so much the better. But if a university comes along with a patent and demands that no such medical treatments can be had until it makes money from an exclusive patent license, then we might feel the need to flip the bird.

And we are not worrying about whether any needed development must involve only a single entity. We are fine if development is spread among various people and organizations and companies all working in parallel. We don’t care if they collaborate or compete, so long as they advance a discovery to the point of use in medical treatments–that is, so physicians can use the discovery to treat patients. We don’t care, certainly, whether some single entity–the exclusive licensee or assignee of a health-directed invention–feels the need to make a fortune or is content to recover its costs and enjoy a modest profit. We might even feel much better about a company with less grand visions of fortunes to be made–perhaps they will do things right, not cut corners, not hype benefits, not plant publications or buy up physicians or buy up public health officials or legislators.

So we are not–let’s say–not interested in pipelining health-related discoveries made in public research to speculators who will get involved only if they gain a patent monopoly that shuts down all other research and development, prevents medical treatment prior to their proprietary products, and permits monopoly–unreasonable–pricing. If there are going to be speculators involved, then they have to be ones committed to reasonable pricing. And that means ones willing to permit competition, alternative sources, development of variations and different formulations or methods of delivery, willing to allow physicians to specify just what they want and have it made for them without any patent fuss or withholding of information.

If we are going out of our way to attract speculators to public health research intending new medical treatments, then the speculators we want are ones that will price their products reasonably, as if there were no patent. Otherwise, no federal funding for them or the universities that deal with them. Otherwise, no reason for Bayh-Dole to authorize universities or federal agencies to deal in patent monopolies, choosing favorite speculators, threatening all others with litigation, taking a financial interest price-gouging schemes–all the while calling such things in the public interest.

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