What distinguishes America from the rest of the world and accounts for our lopsided lead in drug innovation is our world-leading system of protecting patents and other intellectual property. ... With its new proposal, however, the Biden Administration seeks to disregard that status.

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"Nice invention you’ve got there.  Be a shame if someone marched in and seized it from you."  

Imagine yourself the inventor on the receiving end of that warning from some thuggish organized criminal.  It would bring your incentive to continue inventing to a grinding halt, and probably frighten you into taking your enterprise elsewhere.  

Disturbingly, that’s precisely the threat that the Biden Administration just issued to American pharmaceutical innovators, who invent an astounding two-thirds of all new drugs worldwide.  For perspective, the United States accounts for less than 5% of the world’s population, and while our economy is also the world’s largest, it only accounts for approximately a quarter of worldwide production.  

What distinguishes America from the rest of the world and accounts for our lopsided lead in drug innovation is our world-leading system of protecting patents and other intellectual property.  

As patent holder Abraham Lincoln observed, patent rights “added the fuel of interest to the fire of genius.”  

With its new proposal, however, the Biden Administration seeks to disregard that status.  If successful, it will come at a cost measured in millions of lives lost.  

At issue is a provision of the Small Business Patent Procedures Act of 1980, commonly known as the Bayh-Dole Act for former Senators Birch Bayh (D – Indiana) and Bob Dole (R – Kansas).  Their law granted patent rights to small businesses, universities and nonprofits for inventions aided in part by federal grants.  That incentivized those inventors to perfect and market their creations to the public.  

Prior to the Bayh-Dole Act, those patent ownership rights remained with the federal government, which brought less than 5% of its tens of thousands of patents to consumer markets.  By finally granting patent rights to small innovators and universities, the law incentivized invention.  

The benefits were immediate and enormous.  As Stephen Ezell of the Information Technology and Innovation Foundation (ITIF) noted, only 390 patents were awarded to universities the year that Bayh-Dole was passed, but that number increased to almost 7,500 by 2017.  Between 1996 and 2017, over 100,000 patents were issued to U.S. universities, resulting in over 420,000 inventions and 13,000 new startup enterprises.  

On that basis, The Economist magazine of Britain called the Bayh-Dole Act the most vital legislation of the past four decades:  

Possibly the most inspired piece of legislation to be enacted in America over the past half-century was the Bayh-Dole Act of 1980.  Together with amendments in 1984 and augmentation in 1986, this unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with taxpayers’ money.  

Now, however, the Biden Administration stands poised to disregard that achievement and the benefits that flowed from it.  

Specifically, it seeks to exploit a provision of the law known as a “march-in” clause to empower the federal government to seize patents on inventions partly funded by federal grants.  According to its illogic, market prices for those drugs are too high, rendering them effectively unavailable to the general public under the law.  

In other words, it’s a back-door mechanism for socialized medicine price controls.  

That violates the terms of the Bayh-Dole Act itself.  Indeed, Senators Bayh and Dole flatly rejected the price control rationalization now employed by the Biden Administration in The Washington Post in 2002:  

Bayh-Dole did not intend that government set prices on resulting products.  The law makes no reference to a reasonable price that should be dictated by the government.  This omission was intentional; the primary purpose of the act was to entice the private sector to seek public-private research collaboration rather than focusing on its own proprietary research.  …  The law instructs the government to revoke such licenses only when the private industry collaborator has not successfully commercialized the invention as a product.  The law we passed is about encouraging a partnership that spurs advances to help Americans.  We’re proud to say it’s working.  

Against all of that, the Biden Administration nevertheless alleges that receipt of federal grants justifies “march-in” to impose price controls.  

In reality, however, private funding for research and development dwarfs public funding.  

According to the National Institutes of Health (NIH) itself, private-sector R&D amounted to five times NIH funding in 2015 alone, $150 billion to $30 billion.  In 2018, as another example, the NIH spent $3 billion on clinical trials involving new or existing drugs, compared with $102 billion in R&D by the U.S. pharmaceutical sector.  Indeed, that same pharmaceutical sector is the largest source of business R&D funding in the U.S., accounting for 17.6% of all U.S. business R&D.  Their closest counterparts?  The software sector with 9.1%, the automobile industry at 5.9% and the aerospace industry at 4.1%.  

Accordingly, the Biden Administration’s latest dangerous blunder contravenes both statutory law and real-world marketplace realities.  

American pharmaceutical innovators lead the world in saving countless millions of lives every year, with partial credit to the Bayh-Dole Act of 1980.  Americans simply cannot tolerate the Biden Administration’s indefensible and reckless proposal to threaten those achievements under misconstrued provisions of the very law created to promote them.