Contention over the Bayh-Dole march-in rights provision is in the news again. The National Institute of Standards and Technology (NIST) proposes using the process as a “back door” for drug price controls. In comments on NIST’s Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights, the Biotechnology Innovation Organization (BIO) states that the clause cannot be used for price controls.
Understanding Bayh-Dole
The Bayh-Dole Act was passed in 1980 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,” explained Joe Allen, Executive Director of the Bayh-Dole Coalition, in an interview with Bio.News in March 2023. “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.”
The Bayh-Dole Act “created a uniform patent policy among the many federal agencies funding research.” The Act connected universities, industry, and government to open and expand the pipeline of innovation. It has been considered a landmark piece of legislation – and a huge success.
“Bayh-Dole has spurred 13,000 startups, resulted in more than 100,000 new patents, and led to the disclosure of more than 420,000 inventions just from 1996-2017,” reported Bloomberg Law—as well as some 300 drugs on the market, Bio.News highlighted.
What is the purpose of ‘march-in’ rights?
“A central goal of the Bayh-Dole Act was to ensure the ‘practical application’ of subject inventions developed with federal support,” writes BIO in the comments. “To that end, the drafters of the statute included a ‘march-in’ provision designed as a failsafe to prevent shelving of licensed ‘subject inventions.’ The legislative history of the Act makes it clear that march-in rights were meant and expected to be rarely invoked, except in commercially unusual circumstances that are enumerated in the statute.”
The very use of march-in rights for price controls on drugs proves anathema to the Bill’s original intent as it would inherently “frustrate the goal of incentivizing partnerships to commercialize subject inventions.”
“That would knock out the underpinnings of our whole public and private sector partnership regime, which has worked for [43] years,” said Allen. “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.”
Why march-in rights can’t be used for price controls
The government can “march in” and give away patents in very specific circumstances, but using march-in rights for price controls is against the law’s scope and intention, says BIO’s comments.
“The draft framework threatens to undermine the substantial progress made over the past 43 years under the Bayh-Dole Act in promoting commercialization of federally funded inventions,” writes BIO. “It does so by endorsing a liberal and expansive use of the limited ‘march-in’ authority, creating uncertainty about when, whether and how the government might exercise the march-in authority of the Act.”
“The draft framework can and will create confusion,” continues BIO’s comments. And nothing kills investment and innovation quite like confusion.
“The draft framework fails to account for the complexity of marketing and distribution of products in a wide range of manufacturing and service industries,” writes BIO. “Commercial products, including biopharmaceutical products, flow through the chain of commerce in a myriad of ways, being offered to different actors along the chain of commerce on different terms.”
BIO requests “that NIST reconsider the necessity of developing a framework on the exercise of the march-in authority. The clarity of the statutory language, coupled with the effectiveness of conventional contract language to remedy failures of a licensee to advance development of a licensed ‘subject invention,’ demonstrate that there is no need for the draft framework. Moreover, for the reasons set forth above, the draft framework, if adopted, will discourage public-private collaborations and innovations that the Bayh-Dole Act was intended to promote.”
