The Biden administration may soon cripple America’s economy — inadvertently, of course.
Officials are reportedly giving serious consideration to a “march-in” petition, nominally filed by a handful of cancer patients but promoted by Knowledge Ecology International, the activist group founded by Ralph Nader. The petition urges the administration to relicense the patent on an advanced prostate cancer treatment — which is currently manufactured by Astellas Pharma — to generic drugmakers that could create cheaper knockoffs.
KEI, and a host of allied lawmakers like Sen. Elizabeth Warren, claim the Biden administration has the authority to do this thanks to a four-decade-old law, the Bayh-Dole Act. In the past, Republican and Democrat administrations have rejected similar petitions as both illegal and counterproductive.
But the Biden administration is getting desperate. The president’s approval ratings are underwater. Senior officials may feel they need a win — and can satisfy their progressive base by granting the petition.
That’d be a horrendous mistake with dire long-term consequences. Most Americans have never even heard of the Bayh-Dole Act — but it laid the foundation for America’s dominance of high-tech sectors, from pharmaceuticals to agriculture to computer science.
Prior to Bayh-Dole, if a university lab received federal grant funding, the government automatically owned any patents that resulted from researchers’ work. The government did a poor job of licensing these patents to private sector firms that could turn the promising ideas into real products. Of the government’s roughly 28,000 patents, only 5% were ever licensed.
To address this problem, Congress — including Delaware’s junior senator at the time, Joe Biden — overwhelmingly passed the Bayh-Dole Act in 1980 to give universities the right to retain the title to their patents and license them out.
By incentivizing universities to license their own research breakthroughs to private firms — in exchange for royalties — the Bayh-Dole Act opened the innovation floodgates. The law has contributed to more than 117,000 U.S. patents and upwards of $1.7 trillion in U.S. economic output. And it has allowed for the development of more than 200 medicines.
Under the law, the government can “march-in” to relicense a patent under exceptional circumstances when a licensee either can’t — or won’t — bring the idea to market.
KEI and its ilk are trying to twist the plain purpose of the march-in clause. They want the feds to take away Astellas Pharma’s exclusive licensing rights to the patents behind the prostate cancer drug, Xtandi, simply because they think its price means that the medicine isn’t available to the public on “reasonable terms.”
This is ridiculous, of course. The Bayh-Dole Act doesn’t mention pricing when defining “reasonable terms” — and the law’s namesakes, the late Sens. Birch Bayh (D-Ind.) and Bob Dole (R-Kan.) clarified that they never intended the government to march in because of a readily available product’s price. In fact, the government has never invoked its march-in rights at all
If that suddenly changes, it will set an economy-disrupting precedent.
Astellas licensed the patents on the molecule — which later became Xtandi — from UCLA, whose researchers had benefited from roughly $500,000 in federal grants. Astellas then invested $1.4 billion to turn UCLA’s research into a viable medicine.
No executive in his right mind at Astellas, or any other company, would greenlight such enormous investments if he thought the government could take away the exclusive license based on the price of the resulting products.
Private companies could hesitate to license patents from universities. Innovation in nearly every high-tech industry could slow to a crawl.
Democrats and Republicans both want to reduce drug costs. They could probably even find common ground on ways to do so. Instead, the Biden administration seems poised to cut corners — and inadvertently destroy the foundation of American innovation.