This series starts here:
How history informs the present
Why spend all this time on a lost university policy from 1969 in response to a canceled IPA program? After all, we have the wildly successful Bayh-Dole law now, with university policies all changed to “comply” with the law. Why not focus on that and leave history alone? What university research administrator reads history, other than the twisted political history made up by Bayh-Dole advocates in lobbying to preserve Bayh-Dole, Billy Joel fashion, just the way it is? Here are some reasons:
First, because WARF’s behavior illustrates the reasons why the Public Health Service and then the Department of Health, Education, and Welfare instituted policies in the early 1960s to preclude private patent monopolies on federally supported inventions directed at improving public health.
Second, because the circumvention of PHS/HEW patent policies morphed into NIH’s revised IPA program, which gave universities a clear shot at enabling private patent monopolies and gave them a financial incentive to do so, all the while making it appear that there was a substantial apparatus to protect the public interest, making a show of a default non-exclusive patenting program–which never happened.
Third, because the revised IPA program, when folks aimed to make it government-wide (under the guise of needing a uniform–meaning arbitrary– federal patent policy), resulted instead in the statutory scheme called Bayh-Dole, embedded in federal patent law, designed to prevent the executive branch from asserting rights in inventions made with federal support and further designed to make it difficult or impossible for federal agencies to enforce the various public protections that Bayh-Dole makes a show of providing. As a result, Bayh-Dole is a do WTF you want sort of law, allowing universities to exploit patents on federally supported inventions at will–to do nothing with them, to troll industry, to enable private patent monopolies, to assign patent rights under the guise of exclusive licenses, and to benefit financially from all these things regardless of whether any product ever reaches the market or if in reaching the market it is offered on less than monopoly terms.
Finally, it is worth seeing the history because even if those arguments for circumventing PHS/HEW patent policy might appear in their way reasonable, the circumstances have changed–for instance, there is Bayh-Dole–so the reasoning about university-side patent policies must also change. Holding onto old arguments in changed circumstances can lead to failed management, and that’s what we have at universities. Yes, the university licensing programs have slick web sites and in many cases capable people–but the fundamentals of the activity are skew from the reality that presents. It’s like having well run plantations with orderly slave labor in a time of freedom, and machines–there’s both a moral argument for change and a pragmatic (if not financial) argument for change.
In its way, WARF’s attempt to turn 5-FU (and its analogs) into a private monopoly as a way to create commercial products for those suffering from cancer follows a cascade of events that lead, eventually to the faux Bayh-Dole environment we have today. The PHS response to WARF’s action was litigation, followed by dedicating its share of WARF’s 5-FU patents to public access. Once the federal government had co-ownership of the patents, all it had to do was to refuse to enforce its share and WARF’s exclusive monopoly was broken, ruining the monopoly business deal it had worked out with the company that got involved in the federally supported work.
Two interpretations
There are two obvious ways to interpret these events. In one, it’s utterly unreasonable that PHS should assert that it has a right to decide the disposition of inventions that “might possibly be construed in any manner” as supported by federal funds. That’s over-reaching and all the worse because the PHS then mindlessly claims that giving inventions away to everyone is the default public interest. By asserting control over inventions made with federal support in this way, the PHS creates “uncertainty of title” because no one can tell just what “construed in any manner” might mean until the PHS announces what it means. Thus, it’s impossible to collaborate with others, mix in funding from non-federal sources with different requirements, or even to take “invented” compounds to companies for screening for possible therapeutic use. Almost everything we have in Bayh-Dole and faux Bayh-Dole comes about as a reaction to this interpretation.
In the other interpretation, the PHS has established a policy that makes perfect sense, given the history of the pharmaceutical industry–monopoly pricing, deceptive if not outrageous claims of benefits, refusal to reveal ingredients, no standards for testing or safety, and generally suspect manufacturing practices. During the PHS’s policy on invention ownership, every few years, hundreds of people died or suffered from tainted, mis-marketed, mis-prescribed, often ineffective (but otherwise dangerous) compounds produced by the pharmaceutical industry. By the time that the PHS announces its enhanced invention policy, we are only twenty years from the 1938 FDC Act, which required at least a modicum of attention to safety, and only a few years into the Durham-Humphrey Amendment that set standards for drugs available only by prescription. And we are just getting (1962) to the law that requires drug makers to submit evidence for the efficacy of their products before they are permitted to sell them. It is in the public’s interest that the PHS step into this rat’s nest of industry money-seeking to profit in matters of health at the public’s expense and separate the inventive work that the federal government supports from that of the pharmaceutical “industry.” It makes sense for the PHS not to permit monopolies (by default, at least) on new potentially therapeutic compounds. The PHS’s action is not a matter of blind principle but pragmatic reality.
In this interpretation, the PHS does not have any pressing reason to make a commitment to subsidize academic research into new therapeutic agents merely to augment the financial interests of such a drug “industry.” Chemical synthesis might be the sparkling new way to medicines, but the PHS operates to produce benefits in the public interest, and might reasonably expect companies, if they are to participate in the effort, to subordinate their desire for monopoly positions and maximum profits to public service.
Before you go all Ayn Rand here, consider the fundamental premise operating at the time, derived from Vannevar Bush’s Science the Endless Frontier. If new technology could be developed urgently to meet a military need in a time of war and without companies worrying about monopoly positions in order to provide services and products to the government in the public interest, then could not this same mindset–of urgency in war for the public good–also apply to a war on disease and suffering?
Here’s Alvin M. Weinberg, writing in 1965 (“Scientific choice and biomedical science”):
Of all the sciences, the biomedical sciences are most directly aimed at and most relevant to alleviating man’s most elementary sufferings-disease and premature death. There is urgency of the most excruciating kind in getting on with this job. The assault on human disease, insofar as it may result in alleviation of immediate everyday human suffering, has an urgency about it comparable to the urgency with which a nation prosecutes a war. Indeed, I would draw an analogy in this regard between war-time research in physics and present-day research in the biomedical sciences.
If the PHS makes this “assault on human disease” metaphor real, then the circumstances do not call for minding the profit motives of incumbent companies. While drug companies may have the best resources for screening compounds, they ought to provide those resources, if they care to participate in the government’s assault, without holding out for monopolies on what they find in sorting through the thousands of possible compound variations included in any single discovery made with federal support.
A case for government intrusion into matters of health
Thus, we have a case for the intrusion of the government into an area of research dominated by established companies, and that intrusion carries with it an urgency that only considers financial matters in the context of public service. Yes, companies should be compensated for their participation. No, companies should not get monopolies on federally supported discoveries in order to exploit for maximum profit the very thing that the government has targeted as a matter of public health. Put it another way: the government, by moving into research in medicinal chemistry and reciting the urgency of war, seeks to take control of the public market for medicines. The PHS position is consistent with a claim that as a matter of public health, in which the federal government has a legitimate interest–including research to enable new medicines–the “market” for drug is principally a government market, just as the market for major weapons is principally a government market, just as the market for space hardware is a government market, just as the market for nuclear energy is a government market. There may be tools and vacuum tubes and all sorts of new things that could spill over to a private market, but the primary discoveries, and anything that enables them, is for a government market, that off health.
We might say that in the period 1945 to 1968, there was a war over who would control the market for medicines–drug companies or the federal government. In other areas, such as that for surgery methods, the decision was made that patent rights cannot be enforced. Medical faculty argued the same should hold for any biomedical discovery–no government-created monopolies. Why, then, should medicines–especially “life-saving” ones (as APLU and AAU champion in their recent infograph)–be unlike surgery techniques? Why should there be patents at all on medicines that have an essential life-saving quality, whether as a vaccine, antibiotic, cancer therapy, blood thinner, antidote, replacement hormone–whatever? The PHS did not go after the scope of patent rights; instead it went after the territory covered by the scope of the research it funded.
One might not agree with these ideas–that public health is an urgent matter, or that research in biomedical fields is a matter of war, or that medicines should be more like surgery techniques than television sets. But at least you might get a sense of what was at stake. For the drug companies–their livelihoods were threatened, at least in the form they had come to know, taking monopoly positions (a step up from “patent medicines”) and relying on those positions (trade secret at first, and then patent when forced to disclose all ingredients). The government was moving in on their territory, disrupting the relationships they had formed with academics, who served as their advance scouts looking for new compounds and classes of compounds to try, based on developing discoveries in physiology. The battle was fought on multiple fronts–government regulation, divulgence of trade secrets, reform of advertising, requirements to prove efficacy and establish safety guidelines, controls on manufacturing, availability, and reporting of adverse effects. One of these fronts, too, had to do with the government moving into research in medicinal chemistry. And there the fight was over patent monopolies.
Imagine the federal government moving into the comic superhero business and recruiting not only the best graphic artists but also proposing to take over the further adventures of Superman–or worse, make existing superheros obsolete and make any future superhero characters public domain. Sure, write all the adventures you want, but you can’t stop anyone else from writing their own, either. Would that be a superhero comic disaster?
Let’s work through the patent situation using the Harbridge House report and then discuss the present: