Misusing Bayh-Dole “March-In Right” Could Result in Fewer New Drugs, New Report Shows

March 4, 2019

WASHINGTON—In an attempt to control drug prices, there have been recent calls to use the long-standing Bayh-Dole Act to allow the government to forcibly license privately owned patents to third parties. However, a new report released today by the Information Technology and Innovation Foundation (ITIF), the world’s leading think tank for science and technology policy, shows why misusing the law would significantly reduce the pace of biopharmaceutical innovation, which could result in fewer new drugs and reduce progress in human health.

“Before the Bayh-Dole Act was signed into law, the majority of discoveries made from federally funded life-sciences research weren’t brought to market,” said ITIF Vice President Stephen Ezell, author of the report. “Giving intellectual property rights to universities has enabled a successful technology-transfer system, which stimulates more innovation. Weakening the certainty of access to IP rights would make companies less likely to commercialize products stemming from federal research.”

The Bayh-Dole Act, signed into law in 1980, gives universities and other contracting organizations rights to intellectual property (IP) generated from federal funding. It also includes a “march-in right” provision, which permits the government, in specific and limited circumstances, to require patent holders to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” However, the march-in right was not intended to be used to control prices, and it has never been exercised during the 39-year history of the Bayh-Dole Act.

The report highlights four case studies to demonstrate how the Bayh-Dole Act works in practice, tracing how life-sciences innovations develop—from federally funded basic research to private-sector development and finally to market. The case studies include: Yervov/Ipilimumab, the first drug demonstrated to significantly improve overall survival rates for patients with advanced metastatic melanoma; CardioMEMS, a remote monitoring system used to measure pulmonary arterial pressure and heart rate; Gleevec, a landmark drug for patients suffering from chronic myelogenous leukemia; and Luxturna, the first gene therapy drug approved by the FDA for the treatment of a genetic disease.

“There is an inherent trade-off between making drugs cheaper and introducing more drugs,” said Ezell. “Calls to use the march-in right to control drug prices could allow a government entity to retroactively commandeer innovations that private-sector enterprises invested hundreds of millions, if not billions, of dollars to create. That threat would significantly reduce the pace of biopharmaceutical innovation.”

Read the report.