Source: Gwen O’Loughlin and Duane Schulthess, “March-in Rights Under the Bayh-Dole Act & NIH Contributions to Pharmaceutical Patents,” (Vital Transformation, November 30, 2023).
Commentary: The Bayh-Dole Act, enacted in 1980, affords universities and other research institutions with the rights to the intellectual property generated from federally funded research. University licensing of those IP rights and technologies to small, often start-up, companies has become a powerful enabler of American innovation, with academic tech transfer contributing to the launch of over 18,000 startups and the creation of over 200 novel drugs and vaccines from 1996 to 2020. Congress included “march-in” provisions in the Bayh-Dole Act that give the federal government rights, in limited circumstances, to require patent holders to license their IP to others. Some have contended that the government can use Bayh-Dole march-in rights to control drug prices, but as ITIF has written, that’s a specious argument that stems from a fallacious understanding of the legislative intent and mechanism of the Bayh-Dole Act. The government simply does not have the right to use the price of a resulting product as the basis for march-in rights.
Moreover, research by Gwen O’Loughlin and Duane Schulthess finds that patents developed with federal funding represent just a small percentage of FDA-approved therapies (only 8 percent). And even for those therapies developed in part with federal funding, that funding makes up just a fraction of the total investment. NIH-funded research played a part in the development of 18 FDA-approved therapies between 2000 and 2020, investing $670 million. By comparison, private firms invested $44.28 billion in these therapies, 66 times more than the federal government. Using march-in rights to control drug prices would have a devastating impact on America’s life-sciences innovation system and is a proposal that should be discarded.
