There’s a proposal in Congress that poses a direct threat to innovation across a broad spectrum of industries including medicine, national defense, computer science, infrastructure, green technologies, quantum computing, semiconductors, agriculture, and more. If implemented, it has the potential to erode one of the most economically impactful laws in the history of our country, and it could cause irreparable harm to the country’s state of innovation and to American companies, employees, and consumers.
The proposal under consideration right now in Congress is called the Draft Interagency Guidance Framework for Considering the Exercise of March-In-Rights. This proposal undermines the spirit of the bi-partisan Bayh-Dole Act.
This proposal was developed in an effort to reduce drug prices nationally, but its eventual impact is debatable. What it most certainly will do is significantly undermine important research and development across American industries and threaten the viability of the world’s most robust innovation economy. If successful, the proposal has the potential to destroy thousands of small companies, undermine venture capital investments reducing the overall U.S. investment landscape and, importantly, cost thousands of high paying skilled jobs across the country. If enacted this proposal will greatly benefit other countries and diminish our country’s reputation as a global leader in innovation. Further, it doesn’t make sense for the federal government to enact a policy that hampers tech-based economic growth while simultaneously investing in initiatives like EDA Tech Hubs, ARPA-H, and CHIPS, each of which are crucial for fostering timely and significant innovations across industries.
The Bayh-Dole Act was established over 40 years ago and has been instrumental in fostering unique public-private partnerships that have made the United States a global leader in the production of lifesaving medicines and other innovative technologies. It incentivizes the private sector to license inventions resulting from early-stage government-funded research and further develop those inventions into useful products. For example, to take a research concept proven through an NSF grant and turn it into a life-saving medical technology. By allowing grant recipients, such as universities, to retain the title to patents covering their inventions, and license them to private sector partners, the Act has spurred the development of important and life-changing medical treatments and other advancements. Proceeds from licensing of patents have also developed into an important revenue stream for the research institutions from which they originate.
When Covid hit, it was the Bayh-Dole Act that allowed us to respond to the pandemic as quickly as we did, by creating a licensing pathway and market case for mRNA to go from lab to market. Our ability to react the way we did, was because of the trust built through the Bayh-Dole Act. It’s imperative to ask, if this proposal passes, why would companies have any incentives to continue developing cutting-edge research and treatments?
We’ve been down this road before, and the results were disastrous. The imposition of “reasonable pricing” conditions in Cooperative Research and Development Agreements (CRADAs) in 1989 significantly chilled collaboration between the public and private sectors. The policy was ultimately revoked in 1995 after it drove industries away from beneficial scientific collaborations without providing a benefit to the public.
If the Bayh-Dole Act is not preserved as is, instead of leading the world, American patents will sit on shelves collecting dust as they did in the last century before Bayh-Dole. Innovation without application is senseless. By one report:
- “At one point, the government held nearly 30,000 patents, but fewer than 5% of those patents were licensed to firms for commercialization.”
- “The law has been responsible for nearly $2 trillion in additional U.S. economic output, supporting over 6 million jobs in the process.
- “Over 15,000 innovative startup companies have launched thanks to Bayh-Dole and the public-private cooperation it encourages.
It will also deprive the country of robust, sustained economic activity. On a micro level, the economic impact of University City Science Center-supported companies within Greater Philadelphia alone is estimated at $7.6 billion annually, supporting more than 29,100 full-time equivalent jobs with $2.6 billion in employee compensation. The 60-year-old nonprofit generates an estimated $171.5 million in combined annual tax revenue for the Commonwealth of Pennsylvania and the City of Philadelphia.
The draft guidance framework as currently shaped has the potential to drastically undermine the impact the Science Center has, and the 700 technology-based companies it has supported throughout the years. This is just one example of the hundreds of companies and thousands of technologies at risk. Domestic chipmakers could be sidelined, at a time when a shortage has reduced our manufacturing capabilities, as well as an initiative focused on neurological devices called “BRAIN”.
It is crucial that we preserve the unique public-private partnership framework that drives innovation in our country by ensuring that the Bayh-Dole Act remains intact. It encourages investment, fosters collaboration, and ensures that the American public benefits from innovations, including medical breakthroughs, which will improve the lives of millions of Americans.
We strongly suggest that the Commonwealth’s congressional representatives support the Bayh-Dole Act and ask the Biden Administration to withdraw this economically dangerous proposal to exercise March-In-Rights.
about the author
Heath Naquin is Vice President, Government and Capital Engagement, at the University City Science Center.
