A null hypothesis for the ITIF panel on Bayh-Dole

The Information Technology & Innovation Foundation, a  self-described think tank based in Washington DC, will have a panel soon featuring Joe Allen and representatives from BIO and AUTM. Here’s the topic of the discussion:

Join us on March 7 for a discussion of the Bayh-Dole Act’s key role in catalyzing American leadership in life sciences and why implementing march-in rights would harm research universities and limit further innovation.

Folks of course are free to discuss whatever they want, even folks who lead pressure groups. But there’s so much nonsense here, it’s worth at least a comment on it.

Null hypothesis: Bayh-Dole has catalyzed virtually nothing in American life sciences, march-in cannot harm universities nor limit further innovation. Whatever has been happening during the Bayh-Dole era has been happening despite Bayh-Dole, despite the gross misrepresentation of Bayh-Dole, despite the wholesale non-compliance with Bayh-Dole and non-enforcement of Bayh-Dole and Bayh-Dole’s patent rights clauses.

First, we might ask exactly what evidence there is that Bayh-Dole has catalyzed anything having to do with the life sciences or played any role in “American leadership.” Bayh-Dole makes use reports a government secret. The AUTM licensing survey does not break out federally supported subject inventions nor ask about outcomes for these inventions. If Bayh-Dole catalyzed the life sciences, why didn’t the decade-long revived NIH IPA program do this as well? The IPA program was shut down as ineffective. Bayh-Dole was based on the IPA program, drafted by Norman Latker, the same NIH attorney who revived the IPA program. What made Bayh-Dole such a catalyst and the IPA not? Perhaps the panelists will inform us. 

I hope that the panelists come to this ITIF discussion with good evidence that patents on Bayh-Dole subject inventions have been a catalyst for the whole life sciences industry, not just posture and engage in political bluffery.  Let’s talk Bayh-Dole subject inventions, not all university or nonprofit research inventions, and let’s talk Congress’s Bayh-Dole specified objectives, not secret fingers-crossed what we really intended privately objectives.

We might also wonder how many inventions are we talking about. The total number of patents citing government funding in the Bayh-Dole era–just under 125,000–is about 2% of the total US utility patents issued during that time. One of the primary biomedical patent categories is A61K. There have been about 213,000 utility patents issued in the Bayh-Dole era in category A61K. Just under 10% of these patents recite government funding. How does it come about that this 10% of patents citing government funding, many issued to universities and unlicensed, have been the ones to catalyze the life sciences industry? How many of the products based on these licensed inventions have contributed in any significant way to American leadership in the life science industry?

We may be talking something on the order of 20,000 patents on 40,000 Bayh-Dole life sciences subject inventions over 35 years, maybe 5,000 of which have been licensed, and apparently fewer than 200 have resulted in commercially available products. This in the context of what, maybe a couple million US patented inventions in the life sciences during the same time period.

Furthermore, let’s talk Bayh-Dole’s stated objectives. There’s nothing in Bayh-Dole about catalyzing the life sciences industry in the U.S., or any particular industry for that matter. Bayh-Dole does expect a preference for US manufacturing for exclusive licenses granted in the United States. But the NIH has set up a web site dedicated to processing waivers to this preference. Bayh-Dole makes this preference for United States manufacturing the most important provision of the law, and yet the NIH actively facilitates the circumvention of the law. How many subject inventions have been licensed for manufacture outside the United States? Perhaps the panelists know the answer.

We might ask panelists to explain what they mean by “leadership” in the life sciences. Do they mean that American companies base their new products primarily on Bayh-Dole subject inventions licensed from American universities? That would appear to be the implication. But is that the case? Or are we to understand leadership has to do with total sales or total profits or best profit margins? If any of these latter measures, panelists would do well to differentiate profits from the goals of Bayh-Dole. At the very least, we should avoid confirmation bias–merely reporting points that tend to support a claim without consideration of what might work against that claim. And we should avoid post hoc fallacies–just because something comes before, it does not follow that it causes what comes later.

It is not that the American public is relieved that federal patent policy has produced companies with great profits in the area of biomedicine. It is not that we had hoped Bayh-Dole would produce companies making better profits from the sale of medicines than life sciences companies in other countries–if that is even true. The point of federal research in biomedical areas is not to subsidize the profitability of companies but to provide better health outcomes for citizens.

We might ask then about the state of American health care. Americans appear to have the most expensive health care in the world, but do not rank near the top in overall health. How can that then translate into American “leadership” in the life sciences, catalyzed by Bayh-Dole? Has Bayh-Dole played a role in getting us to pay the most by far in the world for our medicines? Is that what Congress intended the law to do? Or to concentrate economic power in the hands of a relatively few companies by creating patent monopoly pipelines from federal funding to the pharma industry?

No, it doesn’t make any sense. There is never has been evidence that Bayh-Dole has done anything seriously beneficial. Even where there are connections between Bayh-Dole and commercial products, it is not clear that Bayh-Dole has enabled or catalyzed rather than retarded and run up the costs. Stuff may happen despite Bayh-Dole’s bureaucratic horrors. Demonstrate that the stuff has been improved by Bayh-Dole. In two decades of dealing with university inventions, I have yet to hear a company official yelp in happiness that Bayh-Dole is involved. Never. No one I have ever worked with has actually wanted an invention to be subject to Bayh-Dole. Please no. That’s some catalytic effect.

Now let’s consider a second aspect of this announced ITIF discussion–that Bayh-Dole’s march-in rights would “harm universities” and “limit further innovation.” The whole concept in Bayh-Dole is that if a contractor obtains ownership of an invention arising in federally supported research or development, then Bayh-Dole preempts federal statutes and executive branch regulations pertaining to that invention and substitutes its own default purposes and public protections. Now apparently ITIF hosts a discussion in which the premise is that these Bayh-Dole public protections harm universities and limit innovation. Bayh-Dole stripped of its public protections is simply a bare statement that the government should subsidize company profits in the life sciences and allow speculators on the development of medicines to prevent for two decades anyone else working on or using anything covered by privately held patents on the classes of compounds or methods or devices based on subject inventions.

For that, Bayh-Dole could be pretty simple. Anyone who obtains ownership of any invention made with federal support can do WTF it wants with the invention, provided it files a patent application. Skip all the bungling paperwork requirements, the secret reports of utilization, the march-in, the preferences, the use of income earned. Just out and announce that the purpose of Bayh-Dole is to give subsidies to companies so they can better exploit public health needs for profits. Better profits–is that what makes Bayh-Dole so “inspired”? Congress finally found a way to help companies screw over people suffering from disease by handing companies patent monopolies and then turning the other way because public oversight would harm the universities involved in enabling this Congressionally mandated behavior. Am I getting this correct?

If march-in–government action to protect the public–harms universities, then universities must be corrupt.

Here’s the bit in Bayh-Dole’s statement of policy and objective:

to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions

What’s the point of the government obtaining any rights at all if by using those rights the government “harms universities” and “limits further innovation”? The upshot is, if the ITIF panelists insist on this point, then Bayh-Dole has failed entirely. Either the public is to be left unprotected from nonuse and unreasonable use, or universities are practicing under Bayh-Dole in an inappropriate manner if they would be harmed by actions that would protect the public.

Perhaps the claim is that Bayh-Dole march-in is defective. Well, Bayh-Dole’s march-in was designed not to be used. Howard Bremer gloated about it later, publicly, that he used his influence to make sure march-in would not work. Maybe the ITIF panelists have creative ideas for the reform of march-in, so that the government can protect the public from unreasonable use of subject inventions–say, the unconscionably high cost of medicines in the U.S.

We might also ask how it is that universities are harmed, generally, by the government acting to protect the public. Certainly such government action cannot harm research budgets, or instruction. What sort of harm will the ITIF panelists identify? Will it be the harm of not sharing in monopoly profits on high-priced drugs on the rare chance that any given university lands a lucrative patent deal–like, once every thirty years–while holding almost everything else behind a paywall and those few things that are licensed never go anywhere (and don’t have to, especially if Bayh-Dole is not enforced)? Is that sort of harm–that universities cannot expect to make piles of money at the public expense–really a harm that we should care about? I’d say–harm those universities badly and often with march-in.

And how might march-in to protect the public limit “innovation”? This is a mystery. One prong of march-in is nonuse. How can nonuse be “innovation”? Nothing can limit innovation more than nonuse plus a patent that excludes all other use. What about limited availability? The innovation has already happened, but the benefits of the invention are not sufficiently available. How is making the invention properly available a limit on innovation? No, it makes no sense. Perhaps the ITIF panelists will point out how silly it is to think march-in could ever limit innovation.

Oh, perhaps the argument is that when investors see how people who fail to innovate or who block innovation are treated by march-in–forced to give up their unproductive exclusive positions–then investors won’t invest for fear that they too will be mistreated if they don’t innovate either and, if investors don’t invest, then, uh, the public won’t get any more medicines ever. If investors cannot speculate with impunity, nothing good will ever again happen in medicine, federal research funding will be obviously wasted, and so there will be no more research funding and we will all fall back to the miserable dark ages of the 1950s when there were cures for diseases every few years and a whole lot less patenting. Clearly, um, there can be no cure–or even medicine to relieve symptoms–for any disease unless a speculator has a first opportunity to exploit the cure for two decades for maximal financial gain. Is that it? Have I got it right?

What a mess. No doubt this is why ITIF has put together a panel of lobbyists rather than, say, inventors, faculty researchers, small companies, or academics who study policy and research innovation.

I’d like to see the ITIF panel demonstrate that the null hypothesis is not true. No hand-waving bullshit bluffing pseudo quant replete with fake history and fantasy put forward as fact. I don’t think they can do it.

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