In a recent op/ed (“The Law That Catalyzed Nobel Prize-Winning Research at UC Berkeley”), Carol Mimura argues, in effect, that provisions of Bayh-Dole should not be used to deter price gouging or to increase the availability of needed medical treatments. Apparently university non-compliance and government inaction and secrecy are what make Bayh-Dole work.
Mimura is entitled to her opinion, of course. But let’s look at her Bayh-Dole claims. Keep in mind that mere opinions don’t depend on reasoning or evidence, though we might expect more from professional opinions (unless they are political–in which case anything goes because no one expects the truth so any reliance is one’s own laziness). Mere opinions that become personal beliefs may persist despite evidence and reasoning, like beliefs in prophecy, like UFOs from the Planet Clarion arriving to save true believers from global devastation. Faced with contrary evidence, believers double down rather than change their opinion–and that’s especially true once they have taken a public action based on their belief. My regrets, Carol, but you know I have to respond.
Unfortunately, some misconceptions about Bayh-Dole could chill future private-sector interest in developing university discoveries.
Well, let’s look at Mimura’s misconceptions about Bayh-Dole. Her op/ed starts with three “key points”–all wrong or fallacious.
The Bayh-Dole Act induces private sector investment into R&D projects that commercialize university research
The badly chosen word here is “induces.” Nothing in Bayh-Dole induces any private sector investment. Nothing in Bayh-Dole’s contracting provisions requires or mandates or privileges commercialization. No one is forced to invest in projects to commercialize anything. University patent administrators might demand certain deals–this or nothing–but that’s on them, not Bayh-Dole. They induce themselves, as it were. Why not own it rather than blame it on Bayh-Dole, or, as bureaucrats do, credit Bayh-Dole? The administrators have got so accustomed to rationalizing their patent practices without challenge that to suggest using Bayh-Dole–properly, with compliance–all but demands they change their practices, which, stubborn typical bureaucrats that they are, they cannot do. Having spent years claiming they are doing things the best way, the necessary way, the way that works so well it is wildly successful, it is very difficult for them to admit they are wrong, misguided, and are screwing up royally.
And no, Carol, it’s not “university research” that is the target of Bayh-Dole. It’s federally supported research or development. It’s inventions made by individuals–inventors–and under federal patent law owned by those inventors, so not even “university inventions.” And somehow Mimura forgets about the small companies and the non-university nonprofits. Who reports the “successes” of those folks? NSF can’t figure out why its SBIR program is so utterly unproductive of commercialization success–there’s your Bayh-Dole effect–attracting companies that have a greater interest in more SBIR funding than in “commercializing” anything, induced or not.
It turns out that Bayh-Dole does less than induce investment–it deters investment. Actually, university administrative practice citing (wrongly) Bayh-Dole deters “private sector” investment. University practice is to demand ownership of all inventions made in federally funded work, citing (wrongly) Bayh-Dole, hold out for an exclusive license for each invention, citing (wrongly) Bayh-Dole, and using a license broad enough that it acts to assign the invention (violating Bayh-Dole).
Many inventions don’t need “private sector” investment. Research methods and tools are already developed to the point of use. There can be enhancements, but there is no need to call in speculators to troll the research community, whether nonprofit or in industry. The same is true of many other inventions–they might be practiced without substantial “development”–new features to existing products, new combinations of existing things, new applications for existing methods and devices. The idea that every invention requires development is a misconception. That every invention that does require development requires private sector investment is a misconception. That even those inventions that require private sector investment because they are mediocre or not a priority for public welfare somehow require speculative investment rather than, say, collaborative investment is a misconception. Mimura takes a case set that may be 5% or even the empty set and makes it out to be the general case. That’s at best a fallacy.
When a university suppresses access to an invention in the hope of attracting speculative investment (a company willing to agree to create a commercial product, take all the risk, and share the upside of making product or sublicensing off the rights or trolling industry to enforce rights or including the rights in a sale of the company to another company and resetting the opportunities for upsides), the university suppresses all other uptake of the invention. Everyone has to avoid, design around, block, undermine, exclude, ignore the university’s patent position–and by extension everything about the university-hosted research that produces the invention. Avoid or infringe. And oddly, infringe means use, and use of inventions is the first stated policy and objective of Bayh-Dole. Infringement meets Bayh-Dole’s purpose. Infringement–investment–in the face of what Mimura calls a legal inducement to invest that universities hope to bring about by threatening use and investment because it hasn’t paid (because the university refuses to offer access non-exclusively on fair, reasonable, and non-discriminatory terms). University practice violates Bayh-Dole and frustrates the law’s primary objective, all the while citing the law.
Congress passed the Bayh-Dole Act in 1980 to grant ownership of patents covering inventions its researchers discover using federal funds.
Bayh-Dole did pass in 1980. The rest is bombast. The Supreme Court in Stanford v Roche made clear that Bayh-Dole does absolutely nothing to “grant ownership” in patents or inventions. The Court:
The Act’s disposition of rights—like much of the rest of the Bayh-Dole Act—serves to clarify the order of priority of rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor. Nothing more.
Mimura repeats a misconception that the Supreme Court ruled against. We could call it contempt. Mimura is a university licensing office leader (and former colleague)–it’s surely not ignorance. There’s another misconception about Bayh-Dole in Mimura’s “key point.” Bayh-Dole’s scope is not “inventions its researchers discover using federal funds.” The proper scope is inventions made in work receiving at least in part federal funds. Separate accounting is not determinative. Chronology is not determinative. Identify the “work” or “project” that has been or will be undertaken. Ask, has any part of that project request federal funding and get it? If the answer is yes, then any invention arising from any part of the project, whether “using” federal funding or not, are within the scope of Bayh-Dole when acquired by a party to the federal funding agreement. Inventions not within that project–even if the inventive work “used” federal funds–are not necessarily within Bayh-Dole’s scope. The scope discussion at 37 CFR 401.1 makes these points (NIST proposes to get rid of the scope discussion, so read it while you can). So does the Supreme Court’s Stanford v Roche decision. Similarly, separate accounting does not matter. It’s not the money spent but the relation of the activity to the purpose of the project. Otherwise, it would be easy for any federal contractor, sniffing a possible invention, to shift the work to a non-federal budget and claim the conception of the invention or the reduction to practice did not “use” federal funds. Mimura, then, repeats a fundamental misconception about Bayh-Dole’s scope that it is a professional necessity to get right.
Nothing about granting ownership. Nothing about applying to all inventions. Wrong about the scope. There are shorthands that get Bayh-Dole right. “Congress passed Bayh-Dole in 1980 to authorize federal agencies to grant exclusive licenses and sue the public for infringement” or “Congress passed Bayh-Dole in 1980 to require federal agencies to allow nonprofit and small business contractors to keep rights to inventions arising in federally funded projects that the contractors chose to acquire.” Longer and less gainly, but then that’s Bayh-Dole. Everything about Bayh-Dole is longer and less gainly. It’s an ugly, fussy, defective law, from the get-go.
In 2019 alone, America’s largest biopharmaceutical companies invested $83 billion — roughly double the NIH’s entire budget — into developing breakthrough medicines. Private investors poured billions more into small startups.
Non sequitur. It doesn’t matter how much we estimate biopharma companies spent on development. How much did they spend on–induced, say–on developing patented inventions licensed from universities and arising in work receiving federal support? Same for small startups. All that money chasing healthcare profits is interesting, but it does not have anything here to do with the money that is supposed to be chasing the use of inventions made in work receiving federal funding, and owned and licensed by universities.
In 2019, according to Statistica, the profit margin for the top US pharmaceutical companies was around 70%. Worldwide pharma income in 2019 was $1.25 trillion dollars. Mimura wants us to be impressed that US pharma spent $83 billion. Take Amgen. In 2019, its revenues were $23.4 billion. It spent $4.1 billion on research and development. Its profit margin was 80%. The inducement to spend anything would appear to be the outrageous profit margin. It’s hard to see where the Bayh-Dole Act has anything to do with inducing Amgen to spend.
The truly horrifying thing is Mimura’s comparison of biopharma spending with NIH spending. NIH provides 1/3 of the industry’s research funding? And according to the most favorable spin possible, less than 10% of FDA-approved drugs cite patents on inventions that have an origin in a non-industry research organization. That’s not patents citing federal funding, but patents in organizations that aren’t pharma companies–universities, nonprofits, federal labs. 1/3 the spending for less than 10% of the product. Horrified? Not enough. Consider how much federal and state governments spend purchasing that product with its 70% profit margins. For Medicare and Medicaid alone we are talking north of $1.4 trillion in 2019. Not all of that is pharmaceuticals sold at 70% profit margins by major
US companies, but consider the sheer scale of the government expenditures. Surely the inducement for big companies and venture-backed companies to create high-priced healthcare products is here, not with Bayh-Dole. As Dean Baker has pointed out, the federal government could fund *all* biopharma development spending–for a mere $250 billion a year–get medicines produced at cost (or for a reasonable profit, like 10%)–and save billions a year. There may be reasons for the government not to take over all medicine development–that might be as bad as speculators taking over–but you see the point. Bayh-Dole is nothingburger here. Mimura cites irrelevant statistics. It’s nonsense. It’s misconception making.
Mimura claims that UC Berkeley’s CRISPR research “received a boost” from Bayh-Dole. But how? Here’s Mimura:
The law induces private sector investment into R&D projects that commercialize university research. It also allows universities to retain the resulting royalties. Royalty payments earned by U.C. Berkeley reward inventors, support teaching, bolster public service, and fund research infrastructure — such as a building that first housed Dr. Doudna’s Innovative Genomics Institute — a hotbed of research on CRISPR.
Garble. More “inducement” without evidence. We’d like to see that companies spend more money on Bayh-Dole scoped inventions than on other inventions. But no one even bothers to gather that information. Universities receive about 60% of their research funding from federal sources. But only about 45% of their patents cite federal grants. Funny that. It would appear that federally funded research is less productive of patents than other research. Sure, that research is supposed to be “basic” and some of it is related to social services and history and the like–but there are inventions in the arts, too. But not so much ending up as patents held by university administrations. It may be that Bayh-Dole induces university administrators to make outrageous claims about Bayh-Dole in order to obfuscate their own choices about how to deal in patents on discoveries made at their universities. But that’s something very different, no?
Look at where Mimura goes with her claim, though. It’s not about industry investment in university research. It’s about universities keeping licensing money to spend on research. Did Berkeley put its licensing money into the CRISPR lab work? Did Bayh-Dole invention licensing royalties build that IGI building? It’s difficult to believe. The Energy Biosciences Building–where the CRISPR labs are located–was funded by a $500 million grant from BP. Not pharma. Not Berekely royalties. Maybe with an interest in getting first dibs on inventions (big fight over that). That’s industry money, but it’s not royalty money, and its not tied to Bayh-Dole. So, garble.
Mimura works her key points:
Congress passed the Bayh-Dole Act in 1980 to grant ownership of patents covering inventions its researchers discover using federal funds. Before its enactment, the federal government owned the patents. The government’s process for turning those discoveries into real-life products was inefficient, and inventions languished.
Before Bayh-Dole, the NIH and NSF ran IPA programs to circumvent executive branch patent policy. The IPA programs required participating nonprofits to take ownership of any invention made under agency contract that the contracting nonprofit wanted to patent. Or, technically, nonprofits signed the IPA master agreement to *require themselves* to waive their own patent policies to demand ownership of faculty inventions. The federal government did not own “the patents.” The government required inventions as conditional deliverables for nonprofits and for companies without actual non-governmental business, as well as in four special circumstances, most notably when the research was directed at public health, and when required by law. But in any of these situations, the nonprofits and others could request to own (or keep ownership) of specific inventions by making a persuasive case for how exploiting patent rights would better serve the public than would open innovation. When the federal government “owns” an invention, it has the right to decide whether to issue a patent to itself or let the invention go into the public domain. Furthermore, before Bayh-Dole, the federal government did not enforce its patent rights and did not license exclusively (which might require it to enforce its patent rights and police its license agreement) except with an express authorization from Congress.
As for the “government’s process” for encouraging use, Rebecca Eisenberg found that for biomedical inventions–under 400–the government’s licensing rate–23%–was comparable to that claimed by the university-affiliated patenting organizations. Mimura is wrong. Or uncritically repeating misconceptions–which is wronger in a professional sense. Most of the 26,000 or 28,000 or 30,000 federal patents that get talked about arose in defense contracting where the contractors were allowed to keep ownership of inventions if they chose too–and didn’t. The government’s patenting then was “defensive” or “curatorial.” The patents published the inventions for all. Everyone had access. Defense departments didn’t bother with licenses, didn’t bother with enforcement.
Now, there is this issue of “dual use.” Defense research did create new technology. Defense departments liked that new technology for weapons systems and for wound healing and the like. But they weren’t so concerned that the new technology get repurposed for civilian uses–or commercial uses outside “governmental” markets. Some folks have got all hopped up about this. But it is an entirely separate issue from that of health care. In government health care research, the non-governmental “market” is the primary market, it is the “war-zone”–it’s why there is a “war on cancer” and the like. That’s not a metaphor–it’s core contracting rationale. A “dual use” for a public health discovery would be one that does not concern public health! If Bayh-Dole’s purpose was to “induce” private investment in the development of biomedical inventions for non-biomedical uses, then Mimura would have a really intriguing point. But she doesn’t go there, and instead dangles a misconception.
Once federal grantees could own their inventions — and receive royalty payments for licensing them — commercialization of these discoveries soared.
‘There is no evidence for this. And it’s ad hoc–that because something (even unsupported, it not untrue) comes later it must be caused by something that came before. The IPA program commercialization rate was 5%. There are no figures for Bayh-Dole. No one gathers the data outside of government, and Bayh-Dole requires federal agencies to keep contractor invention reports secret. But UC’s own Office of the President estimate for UC is that 1 in 1,000 inventions sees any significant commercial play. That’s more like 0.1%, then, not even 5%. That’s not “soaring.” That’s not even falling with style. It’s crap outcomes. And that’s not the worst of it. The worst of it is that Bayh-Dole has no interest in commercialization of a handful of inventions. Bayh-Dole insists on use or licensing for each subject invention–so that benefits are available to the public on reasonable terms. Commercialization is not material. Bayh-Dole’s objectives are met if an invention is being used even in the research community, or by companies for their internal processes, or as a standard. Nothing in Bayh-Dole dictates that subject inventions must be made into products to be mass produced and sold. There’s a misconception.
The licensing rate at Stanford is about 20% of inventions. The rate for UC Berkeley isn’t easy to get to. But let’s roll with 20%. That means that of the 120,000 patents (not inventions–reported inventions would be more like 250,000) universities have acquired in the Bayh-Dole era, since 1981, only 20% have even been *licensed*. That means–coarsely–that over 90,000 inventions have been withheld from public access. Over 50,000 of these patented inventions cite federal contracts.
Even if “commercialization” for some few inventions “soared” after Bayh-Dole (it didn’t, and hasn’t), Bayh-Dole could not possibly be the reason–university patenting did not suddenly change in 1981 or 1982. The NIH IPA program had run a decade without anything “soaring.” A huge number of inventions that otherwise would have become open access were suppressed. As federal agencies spread their research funding around for various projects, the universities claimed ownership of inventive bits and pieces so that no one could possibly get all the rights they needed just to practice–no one could get the non-exclusive rights they needed because university administrators demanded exclusive deals. I once dealt with a nanotech start up whose CEO was proud of the fact that he had managed to get licenses from 20 universities. His competitive advantage was that no one else could possibly get so lucky to get those same licenses, given all the negotiations that had taken place. Where is all that “soaring” in nanotech? No, the NSF spread the nanotech research funding around, universities patented the heck out of every aspect of carbon nanotubes they could think of, and now we sit for 20 years waiting for enough patents to expire that anyone can work in the area without infringing some university’s suppressing, unlicensed or exclusive licensed and “undeveloped” patents.
The legislation has enabled the private sector to commercialize thousands of products, has led to the launch of more than 13,000 startups, and has brought over 200 medicines to pharmacy shelves nationwide.
This is a false claim. The 13,000 startups does not distinguish federally scoped patents from everything else. If the 13,000 startups is based on AUTM’s statistics, those figures over count startups by about 20% (when a startup licenses a patent with joint inventors from different universities–joint inventing happens all the time–each university involved reports the startup as theirs–and then some universities, such as Utah create shell companies to run up their counts, and others, such as the University of Washington, fabricate their numbers and don’t bother so much with even shell companies). And even then, the 13,000 companies is over 40 years. That’s under 400 startups per year, for all sources of university technology. If the technologies follow university funding sources, only 60% of the startups would be based on subject inventions–250 a year. That’s across 200 odd colleges, universities, and related nonprofits receiving federal research funding. One or two a year per university. Big wow.
In 2019, there were nearly 300,000 new business applications per month in the United States. Somehow, though, we are to believe that the 20 a month taking licenses to patents that cite federal contracts have had any meaningful effect. Well, yes, Google has had an effect, but that’s not a matter of volume of startups, and it’s sketchy whether a license to a patent on page rank had much of anything to do with Google’s development of page rank or the advertising and information harvesting that was its prime source of income.
And as for the “over 200 medicines” claim–that appears to based on an Stevens et al. report that tried to identify medicines based on patents held by “public sector” research organizations. That report did not distinguish Bayh-Dole inventions from others. And the Stevens figure was more like 160. The “over 200” is more like anticipatory hype than anything based on fact. Here’s something sobering, though: in all those 40 years of Bayh-Dole and federal research, there is not a single FDA-approved medicine for diabetes based on a patent citing federal funding. Diabetes, one of the nation’s most prevalent, damaging diseases. Nothing. Apparently there’s much better money in making medicines to treat the complications from diabetes than to destroy those billion-dollar “markets” by finding preventions or cures. Is that what Bayh-Dole has done–induce “investment” in creating medicines that prolong payments for health care? Is that what universities are so hot to get their share of upside for? It’s sort of ghastly, really.
Mimura goes on to tell a story about a cancer drug, ipilimumab–brand name Yervoy. Nice story. Just that the startup that took exclusive patent rights got bought by Gilead for its foreign sales force and revenue from a different drug, and Gilead dumped the Yervoy patents to another company, Medarex, which then was acquired by its research partner Bristol-Myers Squibb. A whole lotta speculation, and not so much diligent drug development. Even so, there’s a product, it costs north of $100,0o0 a year, buys a cancer patient 14 months on average. Some combinations with other drugs work better for some cancers, but really, “life-changing” is perhaps true but in the “life-savings draining but now with side effects” sort of way. Misconception, perhaps, of what it is the public expects from university health research. Not price gouging. Not products just over the statistically significant line of beneficial for the short term. Pick better examples of what you mean, Carol, and show that the examples are members of a significant set, not just cherries that are the exception to the sundae.
Universities do not have the resources, skills — or the legal status or mandate — to turn their researchers’ ideas into consumer products.
Another untrue claim. Universities do have the resources and skills to create “consumer products.” But they don’t have to. The Kennedy patent policy standard was “the point of practical application.” Not a consumer product, but a technology platform that could readily be put to use or turned into a commercial product–and even both. For biomedical it’s just this way. Universities provide the training for all those pharma science professionals. It’s not like pharma companies hire out of high school and train folks up on the job.
As for legal status–nothing prevents a university from creating and selling “consumer products.” Some such products, such as teaching materials, are directly in line with university missions. Other products, such as, say, patents on offer for exclusive license, are not necessarily in line with university missions but that’s just a matter of navigating tax law–pay the unrelated business income tax–and not to legal standing. As for mandate, the whole point of public support for university research lies in obtaining benefits from that research without price gouging, false scarcity, and suppression of multiple sources of products and services. If there’s a mandate, it certainly is not “commercialization” at any cost by attempting to deal out patent monopolies.
Thanks to the commercial success of Yervoy, tens of millions of dollars were reinvested into research at U.C. Berkeley to refuel the cycle of innovation.
And where has all those dollars gone? What inventions at Berkeley cite the use of r0yalty dollars? How’s the commercialization of those inventions gone? No–Berkeley doesn’t even track that. It’s just an assertion pulled out of the air, an administrative aspiration. A happy misconception.
Some critics have suggested using Bayh-Dole’s march-in rights — which allow the government to re-license patents in rare circumstances — to dictate the price of drugs.
Here are big misconceptions. It is not critics of Bayh-Dole that advocate march-in. Those people are fully bought into the law. They want it used, not misused or ignored. You can’t be a critic of Bayh-Dole by wanting the law to be foregrounded and used. Just can’t. As for march-in rights–those rights arise in Bayh-Dole as part of the sharing of patent rights between a contractor and a federal agency. Bayh-Dole is part of federal patent law. Under Bayh-Dole, when a contractor, having acquired ownership of an invention made in work receiving federal support, elects to keep that ownership, then certain patent property rights in the invention are divided between the contractor and the federal agency. Bayh-Dole provides that the federal government has an undivided right to make, use, and sell (and authorize others to do so) for any government purpose. That would include providing the public with medicines. That’s the license requirement of 35 USC 202(c)(4).
March-in, 35 USC 203, has to do with public access to the benefits of a subject invention for non-governmental purposes. March-in allows the federal government to compel a contractor (or anyone that the contractor has off-loaded the invention to) to grant licenses to the invention if there’s no use or unreasonable use of the invention, such as not making the benefits of using the invention available to the public or setting unreasonable terms–such as price-gouging, or the contractor (and ilk) cannot meet public needs. If the contractor grants the compelled licenses, then it stands to make money (on reasonable terms) from doing so. If the contractor doesn’t license when requested, then the federal government can grant the licenses itself (and make money for itself, or not).
There is absolutely nothing about march-in that is restricted to “rare” events. A reason that requests for march-in are rare (aside from their being no public right of appeal in Bayh-Dole) is that no march-in request has ever been granted. No federal agency has ever marched-in. In the few instances in which a federal agency has nosed into march-in, they have found that the procedures are unworkable and a contractor can delay a determination through administrative and legal wrangling so long that march-in will be moot long before any license can be compelled.
Mimura is also wrong about “the price of drugs.” One standard for march-in is that the benefits of using an invention are available to the public on reasonable terms. The primary “term” that matters is price. Sure–there may be unreasonable ties of an invention to other products or services, and there may be discriminatory access or suppression of important features or formulations or methods of delivery–but the primary thing in public reasonable terms is price. March-in does not *dictate* the price of drugs. Instead, it gives access to a drug (the invention–full disclosure of the invention including the data that demonstrates clinical reduction to practice and the formulation of the best mode of practicing the invention–so that one with ordinary skill in the art could practice the invention without undue experimentation)–for organizations willing to make the drug available on reasonable terms. Those new licensees set the price. The government does not dictate the price. Competition dictates the price. Bayh-Dole insists that the price be reasonable–reasonable as the public sees it, or as someone charged with thinking on behalf of the public sees it, not reasonable as some university administrator with a financial interest in an upside based on speculation, price-gouging, and patent trolling might think is reasonable.
The critics of Bayh-Dole aren’t critics. Misconception. March-in is not reserved for rare events. Misconception. March-in does not concern “re-licensing.” Misconception. The “critics” (advocates for the law) don’t claim march-in will dictate drug prices. Misconception. March-in dictates competition and reasonable pricing. But even that misses the point. The federal government does not need march-in to deal with something like the covid crisis. It has all the rights it needs under Bayh-Dole via the government license. No procedures necessary, no determinations, no legislation, no regulatory changes, no executive orders. Just get at it. For anything that’s not a federally sourced invention, there’s 28 USC 1498, which allows the federal government to use or manufacture any invention, and owe “reasonable and entire” compensation. That compensation is set by the Court of Federal Claims. Again, we can expect that compensation to be, necessarily, reasonable. For state governments, it gets even better. States cannot be sued for patent infringement. They have sovereign immunity. They could just get on with it, contracting for manufacturing and sale . Sure, there are federal regulatory barriers, but those can also be dealt with. The point–the price the public would pay in the *governmental market* would be a lot, lot less than they pay when their governments refuse to act on the rights–and responsibilities–that they have.
No drug developer will invest billions into unproven technologies if the government could intervene to limit drug prices, profits, and the return on investment.
But that’s exactly what Bayh-Dole does provide for, and that’s what pretty much every university exclusive patent license announces as an express provision, and that’s what every university licensing officer has to explain to any company contemplating that license. Mimura’s argument is that companies *have* taken such licenses, knowing that the federal government could intervene, that commercialization has “soared.” Sure, she’s wrong, but now you see how wrong–drug developers invest anyway. Mimura’s argument is antagonistic to Bayh-Dole. “If Bayh-Dole were acted upon and enforced, we could not hold patented inventions from public access in hope for speculators that never show up, and when those speculators show up, they wouldn’t get involved if they could not be assured of price gouging, suppressing multiple sources for medicines, and patent trolling to monetize patents.” Well, that’s pretty twisted. The university and federal patent licensing practice is so sketchy under Bayh-Dole that both universities and federal agencies fight bitterly to prevent the public disclosure of exclusive licensing terms. Even revealing the terms of the licenses would, they claim, “chill” their commercialization efforts. Misconception. While revealing the terms of exclusive licenses might chase away companies that would be embarrassed to have the terms disclosed, companies accept fair, reasonable, and non-discriminatory terms all the time–and know those terms are, in effect, public.
Drug developers don’t, generally, “invest billions” into the development of a compound into a medicine. Xtandi was less than $300 million. Furthermore, for that kind of expenditure, there have got to be more inventions to be made. It’s not just running clinical trials but also formulations, combinations, delivery means, areas of application, dosing, monitoring, and the like–any of which is likely to be inventive. The issue is not the intake of some new class of compounds or methods by a drug company, but whether for its work it will find ways to suppress competition that would have a “free ride” and could make and sell the same product without doing the same development (or helping out with the development costs). That’s hugely different. A university’s patent in such development work is often meaningless. There will be plenty of other ways to block competition. The patent is important to the university–to get paid–not to the company forced to take a license. We are not talking about companies that would walk away from a potential class of compounds merely because they don’t present with a university bureaucrat demanding payment in exchange for exclusive rights. They expect to develop new formulations, new methods, and file patents on those things to “protect” (or “rationalize”) their expenditures. We see this in the metrics. Less than 10% of FDA-approved drugs are based on patented inventions citing federal contracts. But nearly all FDA-approved drugs appear to have benefitted from federal research at some point in their development. Companies are fine with using the results of federally supported research without the university patenting and the negotiations and the payments and the auditing and all the other fussiness.
Instead, a drug developer would turn to company-funded research discoveries that are free of government pricing encumbrances.
Really? Or would the price-gouging, patent speculation, competition-suppressing bubble burst for public health? Drug developers also work on contract–as was the case for Xtandi, for instance, fronted by an investment firm prospecting for drug products, farming out the development work. There’s still good money to be made from patients suffering from injuries and diseases, if that’s one’s thing. It just does not involve price gouging and the like. Drug developers already avoid university patents–unless a company gets an exclusive. Even then, it may design around or abandon one invention in favor of another. Everyone else, though, is excluded. If a company cannot rely on price gouging or patent trolling, then another alternative is to find ways to reduce the risk of development and to share the costs of development. In such matters, pharma has plenty of room for growth.
Or, put another way, if pharma CEOs are unwilling to change, then we have incentives–inducements–to find other ways to develop the medical interventions that we want–not to maximize our profit from extending suffering, but perhaps (I put this out there) rather to reduce the suffering, to prevent it, to cure it. Perhaps the optimal profit points for university patent licensing (one big hit per decade) and for pharmaceutical companies (monopoly pricing of drugs that delay disease progression for a matter of months) are not proper public health objectives–we don’t get development of the medical interventions we actually want, and get instead interventions that exploit us while often offering only minimally statistically demonstrable benefit.
Why should our universities be privileging such “development”? Why should their representatives conflate producing useful products with products that price gouge and aren’t even necessarily an appropriate focus for public health? Why are universities suppressing practices that rely on cost-sharing and risk-sharing, practices that rely on open standards, practices that allow opportunistic competitive development, practices that make it easy to pull in at need technology and data and ideas from multiple universities? Nothing in. Bayh-Dole forbids or discourages such practices. University administrators have chosen to suppress these practices all on their ownsome, have chosen to do licensing deals that violate Bayh-Dole’s patent rights clause, have chosen to hold back inventions and in doing so violate Bayh-Dole’s patent rights clause. University administrators have got into federal agencies to persuade them to adopt practices that allow universities to continue violating Bayh-Dole and deceiving the public, faculty, and lawmakers about what’s happening. That’s what’s happening at NIST, now. NIST proposes rule changes to make it appear that university administrators have been in compliance and their claims about Bayh-Dole are not clueless or deliberate misrepresentations.
You might think that so many university tech licensing officials and their lawyers cannot be so completely wrong. If so, read the amicus briefs in Stanford v Roche submitted by universities and their front groups and signed by scores of university attorneys. They made crappy arguments, misconstrued the law, and the Supreme Court took them to the woodshed and gave them a pounding. They were told they were wrong. They emerged unrepentant, wiped the tears, and doubled down on their destructive, ineffective, Bayh-Dole violating practices.
The biggest misconception here, then, is that Mimura appeals to the federal government not to act on the rights the government has under Bayh-Dole, while at the same time making it appear that she is defending the law, when it is just the opposite. Mimura is, with this op/ed, now another leading critic of Bayh-Dole. All the more reason to repeal the law, roll back Reagan’s executive order 12591, get NIST out of the prissy business of writing stupid regulations for federal contracting, and do a reset, working with ideas before Latker and Bremer, before Kilgore and Thornton, even before Vannevar Bush. Wow. Discussion out in the open, about the future, and not depending on universities hoping to sell out public research to price-gouging, patent trolling speculators. Not for medicines. Not for anything.