IP Explained: Four key takeaways from new Bayh-Dole white paper

2020 marks the 40^th anniversary of the Bayh-Dole Act being signed into law. The Bayh-Dole Act laid the foundation for effective technology transfer that modernized the U.S. economy, set a global precedent and is still helping patients to this day. As The Economist noted, the Bayh-Dole Act is “Possibly the most inspired piece of legislation to be enacted in America over the past half-century.”

In our new white paper released today, “The Role of the Bayh-Dole Act in Fostering Technology Transfer and Implications for Innovation,” we focus on the contributions of Bayh-Dole in fostering technology transfer in the life sciences and current threats to this robust framework.

Below are four key takeaways:

1 – The Bayh-Dole Act is a crucial lynchpin in supporting a robust technology transfer system. It allows federally funded researchers to patent inventions that arise out of federally funded research and license those patents to companies who then invest in further research and development with the hopes to eventually create a product for patients. According to The Association of University Technology Managers (AUTM) 2016 Annual Survey, they found that on average, three new start-up companies and two new products are launched in the United States every day as a result of university inventions being developed and brought to market, in part, thanks to the Bayh-Dole Act.

2 – The positive effects of the Bayh-Dole Act are nearly universally acknowledged. The Bayh-Dole Act’s licensing has returned more than $3.1B to American universities in royalty payments, enabled the creation of more than 11,000 start-ups and allowed Americans to benefit from federally funded research. In the specific case of biopharmaceuticals, together with other factors such as the development of advanced scientific tools and techniques, the Bayh-Dole Act helped lay the foundation for today’s robust biomedical R&D ecosystem and its spirit of entrepreneurship, which has helped patients and propelled U.S. global leadership in the life sciences.

3 – The Bayh-Dole Act’s “march-in” provision exists to ensure that products are developed – not to enable the U.S. government to set prices. To ensure that companies who licensed inventions arising from federal funding are actively working to incorporate those inventions into commercial products, Congress built in safeguards through a provision of the Bayh-Dole Act. This grants the federal agency funding the research a limited right to “march-in” and require the owner of a patent developed through federal funding to grant additional licenses to the technology. This provision is applicable only under certain very limited and specified circumstances – it was never intended as a tool to address drug pricing. In fact, there have been six petitions to the National Institutes of Health (NIH) to use march-in rights in an effort to reduce the prices of innovative medicines and all have been denied. Recently, NIH Director Francis Collins stated that “I don’t think we have the levers to pull to help with this that wouldn’t have other really negative consequences. The march-in approach does not appeal to us at all.”

4 – Misusing the government’s authority under Bayh-Dole threatens its ongoing success. Without the Bayh-Dole Act’s clear, consistent and predictable framework for universities retaining title to patents and the right to enforce and exclusively license these patent rights, private companies might not invest in the extensive, risky process of fostering government-funded technologies into medicines and other therapies for use by patients. Researchers have estimated that the vast majority of drug research and development is conducted by the private sector. Another study found that biotechnology companies invest $100 in development for every $1 the government invests in research that leads to an innovation. Basic research – often conducted by universities – is the first step in developing a product and represents only a small portion of the total investment and the substantial scientific and regulatory uncertainties required to bring an idea from “the bench to the bedside.”

Read the full white paper here.