Democratic members of the U.S. Congress are leading an effort to change the way federal agencies enforce the Bayh-Dole Act. This 1980 law allows recipients of merit-based federal funding, including research universities like the University of Wisconsin, to patent inventions that may then be licensed to private companies.
Concerns with the existing act revolve around the implementation of march-in rights. This refers to the ability for agencies to either reassign patent licenses to other companies or to take control of it themselves, according to Wisconsin Alumni Research Foundation public affairs analyst Kevin Walters.
March-in rights have yet to ever be exercised by an agency. Some attribute this lack of action to the prioritization of commercial gain above the health and safety needs of consumers, according to a Feb. 6 interagency guidance comment letter. The letter — signed by U.S. Sen. Tammy Baldwin (D-WI) and U.S. Rep. Mark Pocan (D-WI) — argues agencies should use high prices as a reason to use march-in rights, so that consumers can be protected from pharmaceutical price gouging.
But, others argue that the fact that march-in rights have never been used in over forty years points to the success of the act, according to Ropes & Gray LLP intellectual property litigation partner Matt Rizzolo.
“The push in recent years has been for people to say that commercialization is not enough — it has to be commercialized at reasonable prices,” Rizzolo said. “I think it’s largely been clamoring among a bunch of both politicians and interest groups where there is concern over the cost of pharmaceuticals and perceptions that a lot of products in the healthcare industry cost too much.”
Drug prices in the U.S. significantly exceed the prices set in comparable western countries. For instance, the cost of arthritis drug Humira was 423% and 186% higher in the U.S. than it was in the U.K. and Germany, respectively, according to the Peterson-KFF Health System Tracker.
In response to the trend of increasing drug prices, efforts are underway to increase affordability. The Inflation Reduction Act of 2022 requires drug companies to pay a rebate to the federal government if prices of drugs offered under Medicare increase faster than the rate of inflation.
The IRA also allows for price negotiations between pharmaceutical companies and Medicare. These drug negotiations are projected to save taxpayers $25 million by 2031, according to Reuters. Agencies such as Health and Human Services, the Department of Commerce and the National Institute for Science and Technologies have started explicitly recognizing high consumer prices as a reason to exercise march-in rights, paralleling the efforts by Democratic Congress members.
In its Feb. 6 interagency guidance comment, the Federal Trade Commission echoed the consideration of price as a reason to exercise march-in rights. The letter opposed the argument that higher drug prices are a necessary side effect of innovation.
But both WARF Director of Licensing Jennifer Gottwald and Walters said allowing the government to exercise march-in rights may jeopardize economic development without actually addressing the issue of high drug prices.
“There’s a lot of policies out there that could solve that [pharmaceutical pricing] problem out there, but we can’t get any of those through Congress,” Walters said. “The administration is looking around for potential solutions and trying to be creative about this and they’re finding a solution that I think is going to be very detrimental to university researchers. So basically, Congress is dysfunctional and as a result, university researchers are going to be collateral damage.”
Notably, the proposed amendments to the Bayh-Dole Act are simply guidelines and do not have authority to force agencies to choose to adopt them. While it still may be too early to determine if the proposals will achieve their objectives, Rizzolo said that if they are taken into consideration, a short-term increase in petitions made for march-in rights is likely.
Since its founding in 1925, WARF has provided over $4.4 billion in the form of direct grants to UW and the Morgridge Institute for Research, over $230 million to faculty inventors, and in the last 15 years, $439 million of in-kind support, according to the WARF website.
In total, WARF has issued over 4,000 patents, with the vast majority being issued only after 1980, when the act was first passed. WARF’s economic growth can notably be attributed to the opportunities the Bayh-Dole Act has allowed, according to Walters. Ultimately, this relationship between the university and WARF is just one example of how impactful the act is for fostering not only inventions but also economic expansion.
“For those inventions that result in something where everybody says ‘wow this is huge and could make a difference in the world, a practical application that could make a difference,’ we’re going to have a much, much harder time finding any industry partner willing to take the risk to come partner with us on getting those things to market,” Gottwald said. “I think that companies are probably going to rely more on their internal research again… but those really great ‘aha moments’ are coming from universities.”
Editor’s Note: This article was updated to include Jennifer Gottwald’s title and to reflect that WARF has granted $439 million of in-kind support in the past 15 years.
