IP Explained: Will America Cede Global Medical Innovation Leadership to Asia?

The amendment is a win-win-win for patients, innovators and generic drug companies alike by enabling the orderly resolution of patent disputes before potentially-infringing products enter the market.

September 18, 2019

Thanks in large part to strong intellectual property protections – including policies that incentivize public and private investments in research and development (R&D) – the United States is the global leader in biopharmaceutical innovation. We’ve previously examined how the public and private sectors play complimentary roles with the biopharmaceutical industry doing the majority of R&D that translates basic science into new medicines. In today’s IP Explained, we are going to take a closer look at the Bayh-Dole Act and how it laid the foundation for effective technology transfer that modernized the U.S. economy, set a global precedent and is helping patients today.

Below are four things to know about the Bayh-Dole Act.

  • Adopted by Congress in 1980, the bipartisan Bayh-Dole Act allows institutions and grant recipients, such as universities, to hold the title to patents on inventions stemming from government-funded research and to license the rights to those inventions to private sector partners who further develop them for commercialization. These private sector partners, including biopharmaceutical companies, assume the full risk of developing and commercializing the technologies that may eventually prove to be viable products. This can generate royalties for the research institution, paid by the commercial developer, once a product is brought to market.

  • The Bayh-Dole Act has been a tremendous success. Between 1996 and 2015, the licensing activity spurred by the Bayh-Dole Act contributed close to $591 billion to U.S. gross domestic product and supported an estimated 4.2 million jobs in the U.S. In 2016 alone, more than 1,000 start-up companies were formed and nearly 800 commercial products stemming from university research were introduced to patients.

  • Over the past 39 years, the Bayh Dole Act has successfully fostered early basic research and helped ensure such findings are translated into new medical innovations. Before the Bayh-Dole Act, no drugs had been created from federally funded inventions. In contrast, after its enactment in 1980, more than 200 new drugs and vaccines have been developed through public-private partnerships facilitated in part by the Bayh-Dole Act. As the Economist notes, the Bayh-Dole Act “unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money.”

  • Despite the Bayh-Dole Act’s tremendous success, petitioners have demanded that the U.S. government exercise “march-in” authority to drive down drug prices. “March-in” authority is specific to the Bayh-Dole Act and was included to ensure that inventions developed with government support were effectively commercialized – it was never intended as a blunt tool to regulate prices and has never been used. In fact, according to a recent report, “Using ‘march-in’ rights to control prices could undermine the U.S. life-sciences innovation ecosystem and reduce the pace of American biopharmaceutical innovation, resulting in fewer drugs.”

Today, the Bayh-Dole Act’s technology transfer policy is fundamental to the U.S. biomedical R&D ecosystem and has been highly successful in fostering the development of innovative therapies that have revolutionized patients’ lives.

To learn more about the importance of intellectual property protections, visit PhRMA.org/IP.

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