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As Moderna CEO Stéphane Bancel heads to Capitol Hill to testify before the Health, Education, Labor, and Pensions (HELP) Committee, experts are watching to see the impact on the conversation around drug innovation and the value of vaccines.
One expected area of discussion is the use of the Bayh-Dole Act, which has profoundly affected American innovation. Enacted in 1980, Bayh-Dole “enables universities, nonprofit research institutions, and small businesses to own, patent, and commercialize inventions developed under federally funded research programs within their organizations,” according to Drexel University.
What is the Bayh-Dole Act?
The purpose of the law was to address the fact that much of the technology owned by the government was not being put to good (or rather, any) use.
“Before Bayh-Dole, if the government funded any percentage of research and an invention was made as a result, the government would take those inventions away and try to make them available, basically, for free,” said Joe Allen, Executive Director of the Bayh-Dole Coalition, in an interview with Bio.News. “Now, this system sounds noble, but the problem is that government inventions are often not products—they’re more like ideas than products. And it takes the industry partner an awful lot of time and money to turn those inventions into products that can actually be useful to the taxpayer and in the market.”
Joe Allen has a long history with the Bayh-Dole Act. As a staffer on the Senate Judiciary Committee for Senator Birch Bayh, the Indiana Democrat who helped create the law, Allen helped write the law. He later ran a trade association called Intellectual Property Owners and was director of the Commerce Department’s Office of Technology Commercialization of the Commerce Department, overseeing Bayh-Dole before his move to the Bayh-Dole Coalition.
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Bayh-Dole does not support price controls
“While we don’t yet know exactly what is going to happen, one of the concerns is that some of the committee members may try to say that you can misuse the Bayh-Dole Act to have the government set prices on products that have been successfully commercialized,” says Allen. “That would knock out the underpinnings of our whole public and private sector partnership regime, which has worked for 42 years.”
“We want to make sure that people understand that the law doesn’t work that way and it would have a catastrophic impact on innovation and it really wouldn’t do anything to lower the cost of drugs,” continues Allen.
A recent area of focus has been government march-in rights, which allow the government to “march in,” in limited circumstances like public health concerns, and take control of a patent. But this has been misconstrued by some who believe “march-in rights” mean that if the government does not like the price of a drug a company is charging, they can go in and license it to someone else immediately. This assumption was repeatedly debunked by both Senator Bayh and Senator Bob Dole during the Act’s creation.
“There’s nothing in the statute regarding what a reasonable price is because we didn’t intend that,” says Allen.
A drug can take “10 years and $2 billion” to produce, says Allen. But under this false reading of Bayh-Dole, someone could “petition the government to march in and license it to your competitors—who contributed nothing. Clearly, that would not work.”
If the Bayh-Dole Act is effectively dismantled, the “weight will fall primarily on our nation’s small businesses, which license approximately 70% of university inventions and do so much to make America the undisputed leader in global innovation,” according to the Bayh-Dole Coalition.
And administrations on both sides of the aisle have, so far, upheld the original intent of Bayh-Dole. Petitions for price setting under Bayh-Dole have been rejected by every administration whose desk they came across.
Why we need to talk about drug development
Drug development is one of the most high-risk investments that a company or investor can make.
“If you’re looking to make some easy money, drug development is not the way to do that,” says Allen. “The odds are very stacked against the success of a new drug by more than 95 to 1.”
Here’s why: “Say you start out with thousands of applications in the laboratory, maybe one or two will make it in the market and of the ones that they make in the market, just a small percentage will actually make a profit. One thing that a lot of people glance over is that industry, as opposed to government, is on the hook for failed drug development. And oftentimes when you find a drug is priced at a certain level, it’s really because people are doing additional research or have things that have failed that they have to cover the cost for—those costs can’t just be written off.”
In the case of Moderna, it is important to remember the company spent a decade working with mRNA prior to Operation Warp Speed—work they were able to do because of the Bayh-Dole Act. Originally used for veterinary care, mRNA technology was not a readily accepted innovation. But early proponents and researchers fought tooth and nail to carve out a space for its application in humans.
Today, Moderna’s mRNA COVID vaccine is the company’s only commercial product on the market. As the world has moved from a pandemic to an endemic landscape, Moderna is moving its product from a pandemic to a commercial market, which brings new cost considerations. Additionally, the company has addressed concerns around their drug pricing for under or uninsured patients by creating a Patient Assistance Program that aims to provide COVID-19 vaccines to eligible people at no cost.
Ultimately, landmark legislation like Bayh-Dole need not be manipulated to undermine its original intent.
“I think one thing that we should all remember is that we need to really appreciate we have the most innovative system in the world, and Bayh-Dole doesn’t just apply to drugs,” explains Allen. “The other thing that people don’t understand is that if you start misusing the Bayh-Dole Act to have the government set prices, you’re not just doing that on drugs. Now you’ve let the genie out of the bottle.”
