Digital Library

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January 9, 1945

President Roosevelt sends Congress the Second Report from the National Patent Planning Commission

As World War II was entering its final stages, President Roosevelt commissioned a report on the management of government-funded inventions. The report endorsed the existing practice of making such inventions available on a royalty free, non-exclusive basis. However, it acknowledged that practice often failed to incentivize commercialization, meaning the public would not benefit from many worthy inventions. In such cases, the report recommended the use of exclusive licenses or granting ownership to the contractor, conditioned “upon the prompt and proper commercialization of the invention.”

The Commission also suggested those rights might be conditioned on making the product available at a reasonable price, and that an exclusive license might be terminated after the licensee had earned a “reasonable profit.” While the recommendation of granting exclusive licenses and patent ownership was embraced by subsequent Presidential policies, the recommendation related to pricing and “reasonable profit” was not. Congress sanctioned that approach with the enactment of the Bayh-Dole Act.

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July 1945

Vannevar Bush publishes Science – The Endless Frontier

In the summer of 1945, Vannevar Bush, Director of the Office of Scientific Research and Development, submitted a report to President Truman that would forever change the course of scientific research in the United States.

In Science – The Endless Frontier, Bush made the case for greater government funding for basic research. Notably, Bush recognized that this effort would lead to inventions and included a recommendation for a patent policy that protected the public’s interests by giving the government “a royalty free license for governmental purposes” for any resulting discoveries while warning against “any absolute requirement” for patent rights “to be assigned to the Government.” Those principles would help shape the debate over the next 35 years over how to achieve that balance, finally culminating in the passage of the Bayh-Dole Act in 1980.

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Issues in Science and Technology: Whose Drugs Are These?

The second report from the National Patent Planning Commission and Vannevar Bush’s “Science- the endless frontier” set off the patent policy battle which continues to this day. Sen. Harley Kilgore (D-WV) took the position that any government funded discoveries should be freely available to all without patents, and introduced legislation establishing the National Science Foundation along those lines. Vannevar Bush countered that patents were crucial for incentivizing “the first hazardous investment.. needed to bring (them) into useful form.” When finally enacted, NSF was established closer to Bush’s view than Kilgore’s but exactly how resulting patents would be owned and developed was unclear. That led to federal agencies devising different approaches, which remained the case until the Bayh-Dole Act imposed a uniform patent policy on all agencies. This paper by a Bayh-Dole critic sheds important light on the fight over government patent policy as the U.S. emerged from World War II. As you can see, the critics want a return to Sen. Kilgore’s anti-patent vision, which remains the basis for the attacks on Bayh-Dole.

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1947

Attorney General Clark Recommends New Patent Policies to President Truman

In 1947, Attorney General Tom C. Clark concluded an exhaustive study of agency practices for determining federal employee invention rights. In the resulting report, he put forward a number of policy recommendations that ultimately led to a default policy of government patent ownership. However, Clark also recommended that in special circumstances, the contractor making the invention would be allowed to own it but would be required to license the invention “at a reasonable royalty rate” to competitors if the invention is not commercialized within a certain period. Thus, even in the inception of invention ownership policies, the basis was laid for what would later be termed “march-in rights,” which have always been triggered by a failure to commercialize the invention. The government has never had the right to march in because someone didn’t like a resulting product’s price.

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October 10, 1963

PRESIDENT KENNEDY’S PATENT POLICY MEMORANDUM

In 1963, President John F. Kennedy issued guidance to federal agencies concerning the ownership of patent rights on federally backed inventions.

Recognizing that government ownership of federally funded inventions was not promoting their development, shortly before his death, President Kennedy expanded the circumstances when contactors could own their inventions, subject to bringing them to “practical application” in the marketplace or had licensed them “on terms that are reasonable under the circumstances.” If that was not done, the government could rescind patent ownership. These phrases were adopted in the Bayh-Dole Act’s march-in provision with their original intent. Then-Attorney General Robert F. Kennedy said the purpose of march-in rights was to “guard against failure to practice the invention.” The government had no right to march in to control commercial prices.

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August 1968

U.S. COMPTROLLER GENERAL SUBMITS A REPORT TO CONGRESS ON THE PROBLEMS PREVENTING THE COMMERCIALIZATION OF NIH R&D

In 1968, Comptroller General and head of the Government Accounting Office (now named the Government Accountability Office) Elmer B. Staats prepared a report on “problem areas affecting the usefulness of Government-sponsored research in medicinal chemistry.”

Staats’ task was to research the status of discoveries resulting from National Institutes of Health grants, which totaled $53 million from 1962-1967 – equivalent to nearly $500 million today. The findings were bleak. He found that hundreds of potentially life-saving compounds invented with the help of NIH grants weren’t being tested because “manufacturers were unwilling to undertake the expense without some possibility of obtaining exclusive right to further development.” The report thus demonstrated the urgent need for change.

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December 1, 1968

FEDERAL GOVERNMENT SIGNS FIRST INSTITUTIONAL PATENT AGREEMENT WITH UNIVERSITY OF WISCONSIN

Government officials, including President Lyndon Johnson, were understandably concerned that not a single medicine had been developed from university discoveries backed by government grants because the incentives for commercialization were being destroyed by the existing government patent policies. Something had to be done.

In an attempt to promote greater commercialization of federally-funded inventions, the NIH established the Institutional Patent Agreement (IPA) program. Under the program, universities with established technology transfer offices could retain the patent rights for their federally backed inventions. On December 1, 1968, the University of Wisconsin inked the first deal with this new program.

The IPA program catalyzed research and led to a wave of new products. Patent applications spiked considerably. The program was so successful it was adopted by the National Science Foundation and recommended to other agencies. The next article shows its significant impact. However, because the IPA program was an administrative program, it was subject to change at the political whims, which later led to its undoing. As we’ll see, that action spurred Senators Bayh and Dole to expand the IPA program to all agencies with the force of law through the enactment of the Bayh-Dole Act.

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LIFE SCIENCES LAW & INDUSTRY: THE BAYH-DOLE ACT AND REVISIONISM REDUX

Critics of Bayh-Dole sometimes claim that it wasn’t that revolutionary because academic technologies were being developed and commercialized previously. That’s highly misleading because they are talking about the impact of the Institutional Patents Agreement program, the administrative predecessor to Bayh-Dole. The authors of this article, all of whom were directly involved in crafting Bayh-Dole, document the tremendous success of the IPA program. They also refute through documentation the allegation that the inventions gathering dust on the agencies shelves before Bayh-Dole lacked commercial potential, another claim of some critics.

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August 23, 1971

PRESIDENT RICHARD NIXON’S MEMORANDUM ON PATENT POLICY

Building on President Kennedy’s policy, President Nixon found that an inflexible government ownership policy “is not a satisfactory basis for Government patent policy,” so he expanded the circumstances when a government contractor could own an invention made under federal R&D. That came with a requirement that the contractor was taking effective steps towards commercialization or had licensed the invention “on terms that are reasonable under the circumstances.” The government retained the right to issue additional licenses “on terms that are reasonable under the circumstances” if the invention is needed for public use by government regulations or for health or safety needs.” Those provisions were reflected, with much the same language, in the march-in provisions of the Bayh-Dole Act.

Note that the government had no right to force the contractor to license rival companies to control market prices.

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May 26, 1977

PATENT COUNSEL NORM LATKER STATEMENT TO HOUSE SUBCOMMITTEE ON SCIENCE, RESEARCH, AND TECHNOLOGY

On May 26, 1977, Norman Latker — patent counsel for the Department of Health, Education, and Welfare — testified before the House Subcommittee on Science, Research, and Technology. In his remarks, citing the impact of the IPA program at research institutions, Latker demonstrated how exclusive patent licenses had brought federally funded research from university labs to the marketplace. Latker also stated that under the previous patent policies, no drugs were developed from NIH-supported inventions, which the government had taken from their creating organizations.

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January 18, 1978

LETTER FROM NIELS REIMERS TO AG GRIFFIN BELL ON GOVERNMENT PATENT POLICY

On January 18, 1978, Niels Reimers, founder and director of Stanford’s Office of Technology Licensing, wrote a letter to Attorney General Griffin Bell detailing how the default policy of government patent ownership was hurting innovation. Reimers wrote, “We have found that with rare exception, we are only able to encourage development at risk by industry if we are able to offer the incentive of exclusive rights in an invention. Turning to inventions conceived under government research with private industry, the same mechanisms apply.”

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THE END OF THE IPA PROGRAM

While it was tremendously successful, the Institutional Patent Agreements was an administrative policy, subject to political whims. President Carter’s Secretary of Health, Education, and Welfare, Joseph Califano (who then oversaw NIH), tried to prevent the agency from granting patent ownership to a small company that met the criteria for obtaining patent ownership, because he wanted to control prices of newly emerging CAT scan devices. He also halted the IPA program.

Those actions caused Senators Bayh and Dole to introduce the Bayh-Dole Act to restore and expand the IPA program. The courts would later overrule HEW’s attempt to deny the small company ownership of its invention.

The article also traces how the language in the Truman, Kennedy, and Nixon patent policies was adopted by Bayh and Dole in the creation of the march-in provision of their bill.

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May-June, 1979

SENATE JUDICIARY COMMITTEE HEARINGS ON BAYH-DOLE

On May 16th and June 6th, 1979, the Senate Judiciary Committee held a hearing on the University and Small Business Patent Procedures Act, the official name of the Bayh-Dole Act. In the hearing, among various expert testimonies, Senators Bayh and Dole argued how the bill would help reignite American innovation through unleashing our universities and small businesses. Comptroller General Elmer Staats presented the finding of a GAO study documenting how the current agency case-by-case reviews of patent ownership petitions were often taking more than a year to complete and were harming commercialization efforts. It was also learned that more than 20 different patent policies were in effect, with some agencies having varying policies for different programs.

Admiral Hyman Rickover argued in favor of the existing patent policies as he did not believe that patents were necessary for their development. A number of university and small business witnesses testified about how the existing government patent policies undermined U.S. It innovation. It was apparent that the bill enjoyed widespread support in the Senate Judiciary Committee, as evidenced by the hearing record.

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December 12, 1979

SENATE JUDICIARY REPORT ON BAYH-DOLE

Following the hearings on the University and Small Business Patent Procedures Act earlier in the year, the Senate Judiciary Committee unanimously reported the University and Small Business Patent Procedures Act (Bayh-Dole) to the full Senate for its consideration. This is the committee report on the purposes of the bill. Unlike the later claims of the critics, the legislative history of Bayh-Dole consists of the Senate Judiciary Committee report, hearings, and the subsequent Senate debate over the bill, which appears next.

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February 5, 1980

SENATE DEBATE ON BAYH-DOLE DAY 1

In the early months of 1980, Senators Bayh and Dole took the University and Small Business Patent Procedures Act to the Senate floor for debate. On February 5th, Senators Bayh and Dole linked the economic and innovation crisis the U.S. was then experiencing to the failure to develop and commercialize promising inventions made with the billions of dollars spent on government-funded R&D. They explained that the Bayh-Dole Act would help to solve this, by granting universities and small businesses ownership of inventions they made from federally-funded research so they could be turned into products benefitting the taxpayer.

It is interesting to note that at this stage, the legislation had a “payback” provision which allowed the government to share in royalties for inventions that achieved considerable success in the marketplace. Thus, rather than allowing the government to control prices of successfully commercialized products, the bill permitted the government to recoup some of its R&D costs when a breakthrough occurred. The payback provision was later dropped from Bayh-Dole at the request of several federal agencies who said it would cost them more to track patent licenses than they were likely to recover through the payback provision.

Shortly before the bill was slated for consideration, leaders of the Senate Commerce, Science, and Technology Committee, who had developed a rival bill which included giving patent rights to large company contractors, indicated that they would offer an amendment to Bayh-Dole. Realizing this would effectively kill any chance of passage, Senators Bayh and Dole sent out a response indicating they would oppose such an effort. The second day of Senate consideration was largely devoted to debate over that amendment. It brought out Senator Russell Long, the principal opponent of any change to the existing patent policies, in full force. Bayh and Dole were successful in defeating the amendment by a vote of 34- 60. But rather than allowing the bill to pass, Senator Long indicated that he would offer a series of amendments. That caused the Senate Majority Leader to pull the bill from the floor because the resulting debate would take up too much time on an already crowded Senate calendar. As a result, the future of Bayh-Dole was highly uncertain.

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February 6, 1980

SENATE DEBATE ON BAYH-DOLE DAY 2

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April 23, 1980

SENATE PASSAGE OF BAYH-DOLE

After extensive behind-the-scenes work, the bill was again scheduled for Senate floor debate. While Senator Long reiterated his opposition and the leaders of the Senate Commerce Committee repeated their view that the bill should include large as well as small companies, no one attempted to block the vote this time. Bayh-Dole passed 91-4 and went to the House of Representatives for its consideration. By this time, the Carter Administration had developed its own patent policy bill along the lines of the Senate Commerce, Science, and Technology Committee’s version, and it began moving through various committees until it was endorsed by the House Judiciary Committee.

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November 20, 1980

SENATE CONSIDERATION OF HR 6933

The varying approaches to patent policy were still far apart on election day, 1980. The unpopularity of incumbent President Jimmy Carter, coupled with high unemployment and inflation rates combined with international setbacks, led to a Republican landslide which elected Ronald Reagan and flipped the Senate from Democratic to Republican control for the first time in decades. Senator Birch Bayh was also defeated.

However, Congress needed to pass a budget and reconvened for a “lame-duck session.” As the budget was being hammered out, legislation was still moving, but because of time constraints, the leadership would only consider bills that could pass unanimously.

Knowing that Senator Long would object to the House’s big business approach, Senators Bayh and Dole indicated they could not accept the House patent policy bill. Then shortly before adjournment, Rep. Kastenmeier’s staff called Senator Bayh’s office, offering a deal. They would accept Bayh-Dole in a pending omnibus patent bill if Senator Bayh would accept their version of patent re-examination. The deal was accepted. Even though Sen. Long opposed the bill, he allowed Bayh-Dole to be passed unanimously as a tribute to his friend, Senator Birch Bayh.

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December 12th, 1980

THE BAYH-DOLE ACT IS SIGNED INTO LAW

Despite all of the work from Senator Bayh and Senator Dole in pushing their bill through both houses of Congress, the bill still needed to be signed into law after Congress adjourned. President Carter was under pressure to “pocket veto” it by forces as the Department of Energy because it decentralized technology management from Washington to academic institutions and small companies making federally funded inventions. Further, the bill gave agencies like DOE discretion to allow their university-operated federal laboratories (of which, DOE had several) to be covered under the law’s technology management authorities. DOE had no interest in doing so. However, through the effort of the Office of Advocacy at the Small Business Administration, which strongly supported it, Bayh-Dole was signed into law on the last possible day before it would have died.

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THE ENACTMENT OF BAYH-DOLE, AN INSIDE PERSPECTIVE

Enacting legislation is always a daunting task. That was certainly true of Bayh-Dole, which was only passed by Congress at the last minute and, even then, almost died through a “pocket veto” by President Carter. Here’s the story of how Senators Bayh and Dole overcame incredible odds to get their bill across the finish line.

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A LONG HARD JOURNEY: FROM BAYH-DOLE TO THE FEDERAL TECHNOLOGY TRANSFER ACT

Even after it was signed into law, the threats to Bayh-Dole didn’t cease. Continuing their opposition, the Department of Energy sought to undermine the implementing regulations of the new law. This article provides additional detail on the passage of Bayh-Dole, along with chronicling the fight to save the implementing regulations, Senator Dole’s subsequent amendments to the statute, and the ensuing fight to extend Bayh-Dole’s principles to the federal laboratories.

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February 18, 1983

PRESIDENT REAGAN’S MEMORANDUM ON PATENT POLICY

When Bayh-Dole was passed, the law’s provisions on patent ownership only applied to small businesses and nonprofits. With this memorandum, President Reagan instructed the federal government to expand the law’s authority so that any contractor could benefit from Bayh-Dole’s authorities, regardless of size.

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May 20, 1983

DAVID PACKARD REPORT ON FEDERAL LABORATORIES

Bayh-Dole, as originally enacted, gave the agencies the discretion to allow university-operated federal laboratories to own and manage their inventions. The Department of Energy had several of these laboratories. However, DoE refused to use that discretion, so Senator Dole amended the law making the delegation of authorities mandatory.

As the success of Bayh-Dole became evident, interest began to grow in achieving similar results with government-owned and operated laboratories. President Reagan asked David Packard to look into the situation, and the result was this report. As it was submitted, Packard wrote: “Micromanagement, or excessive detailed direction to the laboratories, focusing on procedures rather than content, should be stopped.”

The report stated: “The Panel has also made recommendations to relieve the constraints on Federal laboratories with regard to personnel administration…and to increase the collaboration of Federal laboratories with universities and industry. This last point is certainly not the least important. At a time when the nation’s economic and defense leadership is increasingly challenged, greater synergism between all our R&D institutions is a must.”

Senator Dole successfully introduced further amendments to Bayh-Dole in 1984, including what was later to become the Federal Technology Transfer Act. But it was not part of the final package because the House didn’t have a similar bill and wanted to consider the federal laboratory issue in the next session of Congress. When Congress re-convened, Senator Dole left the Senate Judiciary Committee to become Majority Leader. Two years later, the Federal Technology Transfer Act was made part of the Stevenson-Wydler Act, which fell under the jurisdiction of the Senate Commerce, Science and Technology Committee– ironically, the very Committee which almost killed Bayh-Dole six years earlier.

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November 8, 1984

SENATOR BOB DOLE’S AMENDMENTS TO THE BAYH-DOLE ACT

With the defeat of Senator Bayh in 1980, Senator Robert Dole assumed the leadership in protecting Bayh-Dole. After a few years of operation, it was clear that the law was working, but experience had shown several changes were needed to the original text. In 1984, Senator Dole successfully added several revisions. The text is found in Title V of the P.L. 98-620. As first enacted, Bayh-Dole limited the time a university could give an exclusive license to a large company to either 5 years from the first commercial sales or 8 years from the date the license was made, unless a longer term was approved by the funding agency. Because passage of Bayh-Dole helped ignite the rapid development of the U.S. biotechnology industry, such constrained terms were found to be too short to be effective. Senator Dole then removed this restriction.

Dole was actively engaged in fighting off attempts to undermine Bayh-Dole through the implementing regulations or through misuse of the exceptional circumstance provision of the law, which the Department of Energy sought to exploit to opt out of the law. Thus, Dole moved oversight of the statute from the Office of Federal Procurement Policy within OMB, to the Secretary of Commerce. Norman Latker, who had written the implementing regulations had moved from OFPP to Commerce, so Dole moved the oversight responsibility so Latker could continue to protect the law.

As passed, Bayh-Dole gave agencies the option of extending its authorities to manage their inventions to university operated federal laboratories. The Dept. of Energy made it clear it had no intention of using the option, so Dole amended the text to extend Bayh-Dole to such laboratories. Dole also had language extending Bayh-Dole to all federal laboratories, which would later become the Federal Technology Transfer Act two years later. Senator Dole left the Senate Judiciary Committee to become the Senate Majority Leader in 1985, and Senator Slade Gorton (R-WA) picked up Senator Dole’s language, re-writing it to amend the Stevenson-Wydler Act, which fell under the jurisdiction of the Senate Commerce, Science and Transportation Committee on which he served. That provision was enacted into law in 1986.

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April 10, 1987

PRESIDENT REAGAN EXECUTIVE ORDER 12591

In 1987, President Reagan issued an executive order to bolster “…our technology base by moving new knowledge from the research laboratory into the development of new products and processes” by using the Bayh-Dole Act and the Federal Technology Transfer Act. President Reagan’s executive order, which is still in effect today, aimed to fully engage federal laboratories and technologies developed abroad to bolster American economic competitiveness.

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April 11, 1995

NIH DIRECTOR VARMUS’ STATEMENT ENDING THE “REASONABLE PRICING” CLAUSE

In 1989, in reaction to Congressional pressure about drug prices, the National Institutes of Health adopted a policy requiring a “reasonable relationship between the pricing of a licensed product, the public investment in that product, and the health and safety needs of the public” This “reasonable pricing clause” was subsequently included in NIH Cooperative R&D Agreements (CRADAS) and NIH patent licenses.

The number of CRADAS collapsed, so seeing this trend continuing for several years, NIH put together a high-level review panel, which recommended ending the policy. So on April 11, 1995, NIH Director Harold Varmus rescinded the requirement, noting that “…the pricing clause has driven industry away from potentially beneficial scientific collaborations with PHS (Public Health Service) scientists without providing an offsetting benefit to the public.”

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March 3, 1997

CELLPRO MARCH-IN PETITION

On March 3, 1997, former White House counsel Lloyd Cutler and former Senator Birch Bayh filed a march-in petition on behalf of CellPro, a small, Seattle-area biotechnology company.

The company was embroiled in a patent infringement lawsuit over certain patents owned by Johns Hopkins University and licensed first to Becton-Dickinson and then to Baxter Healthcare Corporation. Since CellPro has its product on the market — and Baxter did not — Cutler and Bayh argued that 1) action was necessary to alleviate health or safety needs, and 2) Hopkins and Baxter had failed to take reasonable steps to commercialize the technology.

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August 1, 1997

CELLPRO MARCH-IN REJECTION

The NIH rejected the petition because 1) Hopkins and Baxter had taken “effective steps to achieve practical application” — indeed, Baxter’s product was pending approval at the FDA; and 2) CellPro’s product was “available for sale in the United States,” and Hopkins and Baxter had not sought injunctive relief. Cell Pro was later found to have infringed the Johns Hopkins patent.

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May 7, 1998

GAO Report: Administration of the Bayh-Dole Act by Research Universities

The General Accounting Office reported to Congress that according to the federal agencies it surveyed, the Bayh-Dole Act was “working as Congress intended. They believed that universities and researchers were receiving greater benefits from their inventions and were transferring technology better than the government did when it retained title to inventions.”

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January 2001

TULANE LAW REVIEW: WHY DON’T WE ENFORCE EXISTING DRUG PRICE CONTROLS?

In January 2001, Peter Arno and Michael Davis published a law review article based on quoting from non-Bayh-Dole hearings or opponents of the law claiming that they had discovered a previously hidden meaning in the statute. They claimed that Bayh-Dole allows agencies to march in, requiring that copiers be licensed if a drug wasn’t “reasonably priced.” That theory has been uniformly rejected by every Administration which received such petitions, but it continues to be cited by those opposed to the law.

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NEW STUDY SHOWS MARCH-IN RIGHTS ARE WORKING AS INTENDED

As opposed to Arno/Davis, this article traces the actual history of the origins of march-in rights under Bayh-Dole and how the four march-in triggers work (see subhead “Tracking the Language”). As we will see, federal agencies used this interpretation of the statute to deny every attempt to use the Arno/Davis theory asking the government to march in to control the prices of successfully commercialized drugs.

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March 27, 2002

WASHINGTON POST: PAYING TWICE FOR THE SAME DRUGS

The Arno-Davis theory was largely ignored by those familiar with the law, who recognized that it was based on misrepresenting Bayh-Dole’s actual legislative history. However, that changed when The Washington Post printed Arno and Davis’ op-ed promoting their theory, buttressed by the claim that the government was supporting the development of federally funded inventions, so the “public was paying twice” for resulting drugs.

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April 11, 2002

WASHINGTON POST: OUR LAW HELPS PATIENTS GET DRUGS SOONER

Realizing its potential for misleading the public, former Senators Bayh and Dole immediately decided to reply to Arno and Davis. Unfortunately, The Washington Post would only give them the much more limited space of a letter to the editor for their rebuttal. They rebuffed the contention that for more than 20 years, Arno and Davis had uncovered a previously hidden meaning in their law. “Bayh-Dole did not intend that government set prices on resulting products,” they wrote. “The law makes no reference to a reasonable price that should be dictated by the government. This omission was intentional; the primary purpose of the act was to entice the private sector to seek public-private research collaboration rather than focusing on its own proprietary research.”

Ironically, those pushing the Arno/Davis theory would later criticize Bayh and Dole for waiting years to say that their law doesn’t sanction marching in for price controls. In reality, they responded as soon as the Arno/Davis article appeared in the newspaper.

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December 14, 2002

ECONOMIST TECHNOLOGY QUARTERLY: INNOVATION’S GOLDEN GOOSE

On December 14, 2002, the Economist Technology Quarterly characterized the Bayh-Dole Act as “possibly the most inspired piece of legislation to be enacted over the past half-century… More than anything, this single policy measure helped to reverse America’s precipitous slide into industrial irrelevance.” The piece detailed how the law helped revolutionize technology transfer in the United States.

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July 1, 2003

GAO Report: Agencies’ Rights to Federally Sponsored Biomedical Inventions

The U.S. General Accounting Office (now the Government Accountability Office) issued a report on the scope of the government’s royalty free license under Bayh-Dole. It concluded that the license is restricted to using such inventions “for the benefit of the government” like funding more research or for procurement activities related to meeting mission needs. In addition, the government is not entitled to a discount because a product it purchases incorporates a federally funded invention.

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January 29, 2004

NORVIR MARCH-IN PETITION

On January 29, 2004, the advocacy group Essential Inventions petitioned Health and Human Services Secretary Tommy G. Thompson to “march in” and re-license the patents on Norvir, an HIV medicine, and Xalatan, a glaucoma medicine. Both petitions adopted the Arno/Davis theory that the government should march in because of the price of the medicines.

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January 29, 2004

XALATAN MARCH-IN PETITION

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May 25, 2004

SENATOR BIRCH BAYH (D-IN) STATEMENT TO NIH ON MARCH-IN CLAUSE

On May 25, 2004, former Senator Birch Bayh spoke to the National Institutes of Health to comment on the “contention that Bayh-Dole gives NIH the ability to control the price of a product developed under the law by exercising the march-in rights.” He explained that “you simply cannot invent new interpretations `{`of the law`}` a quarter of a century later.” Bayh also showed in detail how the Norvir petition misrepresented the legislative history by combining two unrelated parts of the Senate Judiciary Committee’s report in an effort to buttress their theory.

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July 29, 2004

NORVIR MARCH-IN REJECTION

In the first of many rejections of the Arno/Davis theory, the NIH denied the Norvir petition, finding that the medicine had “reached practical application because it is being utilized and has been made widely available for use by patients with HIV/AIDS.” That ruling upheld the legislative intent as stated by Senators Bayh and Dole.

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September 17, 2004

XALATAN MARCH-IN REJECTION

The Norvir decision was shortly followed by another rejection of the Arno/Davis theory as the NIH rejected the Xalatan petition, finding that the medicine had “reached practical application and met health or safety needs as required by the Bayh-Dole Act.”

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August 2, 2010

FABRAZYME MARCH-IN PETITION

On August 2, 2010, C. Allen Black, Jr., an attorney for three patients, petitioned the government to march in and grant an open license on Fabrazyme. The factory making the only approved therapeutic treatment for Fabry disease had been forced to shut down because of quality control problems. The petition was filed under the second march-in trigger, alleging the action was necessary to meet health and safety needs.

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December 1, 2010

FABRAZYME MARCH-IN REJECTION

On December 1, 2010, the NIH rejected the petition because it felt that the manufacturer, Genzyme, would be back online faster than a new licensee could receive the necessary approvals to begin production. The NIH pledged to monitor the situation to ensure that was the case. Fortunately, the drug was soon back in production. This case illustrates the importance of giving agencies discretion about marching in. If the petition had been granted, patients would have had to wait much longer to receive the drug.

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June 6, 2011

Stanford v. Roche

What started out as an invention ownership dispute, escalated into an issue that landed before the U.S. Supreme Court: whether universities automatically owned federally funded inventions without needing to have employee agreements in place assigning rights to the institution. The Court rejected that argument.

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After Stanford v. Roche: Bayh-Dole Still Stands

One week after the Supreme Court’s ruling in Stanford v. Roche, Joseph P. Allen, a former Senate Judiciary staffer for Sen. Birch Bayh (D-IN), and Howard Bremer, a technology transfer legend and patent attorney for WARF with more than 50 years of experience, penned an analysis of the decision, explaining its background and why the Supreme Court’s ruling reaffirmed that Bayh-Dole works as intended.

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October 25, 2012

NORVIR MARCH-IN PETITION

As we will see, those seeking to utilize the Arno/Davis theory often refile previously rejected petitions. Thus, on October 25, 2012, the American Medical Students Association, Knowledge Ecology International, U.S. Public Interest Research Group, and the Universities Allied for Essential Medicines petitioned NIH Director Francis Collins to march in and re-license the patents on Norvir “…on grounds that Abbott private sector prices for ritonavir are higher in USA than in other high-income countries, and Abbott’s refusal to license patents for non-Abbott fixed dose combinations of HIV drugs.”

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November 1, 2013

NORVIR MARCH-IN REJECTION

On November 1, 2013, NIH rejected the petition, concluding that “the extraordinary remedy of march-in is not an appropriate means of controlling prices of drugs broadly available to physicians and patients.”

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March 2, 2016

LETTER FROM HHS SECRETARY SYLVIA BURWELL ON BAYH-DOLE ACT

On March 16, 2016, Health and Human Services Secretary Sylvia Burwell sent a letter to Representative Lloyd Doggett (TX-37), responding to his request for the agency to develop guidelines on the use of Bayh-Dole’s march-in authority. Sec. Burwell declined the request, writing, “…we believe the statutory criteria are sufficiently clear and additional guidance is not needed.”

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January 14, 2016

XTANDI MARCH-IN PETITION

This was the first of a series of petitions on Xtandi, a prostate cancer drug, again utilizing the Arno/Davis price control theory. On January 14, 2016, Knowledge Ecology International and the Union for Affordable Cancer Treatment submitted a request to Health and Human Services Secretary Sylvia Burwell, Defense Secretary Ashton Carter, and NIH Director Francis Collins asking the government to either “use its royalty ­free rights in the relevant patents, or to grant this request for march-in rights” to authorize the generic production Xtandi, because of its “excessive” price.

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June 20, 2016

XTANDI MARCH-IN REJECTION (NIH)

On June 20, 2016, NIH Director Francis Collins rejected the requests, noting that “Xtandi is broadly available.”

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August 5, 2016

XTANDI MARCH-IN REJECTION (DOD)

Because the underlying patents had received funding from both NIH and the Department of Defense, a price control march-in petition was also filed with DoD. On August 5, 2016, Alejandro Lopez-Duke, Defense Secretary Ashton Carter’s the Chief of Staff, rejected the requests, noting that “Xtandi has achieved practical application as the DHHS and DoD understand that term.”

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April 19, 2017

XTANDI MARCH-IN APPEAL

On April 19, 2017, Knowledge Ecology International and the Union for Affordable Cancer Treatment submitted a request to Health and Human Services Secretary Tom Price and Defense Secretary Jim Mattis asking them to “reevaluate” their January 2016 Xtandi petition for the “excessively-priced, blockbuster” prostate cancer medicine.

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June 7, 2017

XTANDI MARCH-IN REJECTION

On June 7, 2017, NIH Director Francis Collins rejected the appeal, writing that “the broader issue of drug pricing would be most appropriately addressed through legislative channels.”

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April 12, 2021

XTANDI MARCH-IN PETITION RE-FILING (DOD)

On April 12, 2021, Robert Sachs sent a march-in petition to the Department of Defense for Xtandi, the second time a march-in petition was filed for the drug. Sachs, stating again that since the underlying patents received funding from the DoD, argued that “the U.S. government has the right to permit generic competition to drive down the price” of Xtandi because the current price was “excessive and unreasonable.”

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September 8, 2021

WASHINGTON POST: THE CLAIM THAT THE U.S. GOVERNMENT ALREADY HAS THE POWER TO LOWER DRUG PRICES

On September 8, 2021, Washington Post fact-checker Glenn Kessler explored the claim that the government already has the authority to lower drug prices using the Bayh-Dole Act, writing, “In the two decades since march-in was identified as a way to control drug prices, advocates of this approach have struck out every time they have sought to advance it. No administration or court has ever accepted this reasoning. For now, it remains just a theory.”

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November 15, 2021

The NIH Experience with the Reasonable Pricing Clause in CRADAs FY 1990-1995

Proponents of the failed “reasonable pricing clause” which was forced on NIH cooperative R&D agreements (CRADAs) and exclusive licenses, causing them to collapse, later argued that the apparent increase in CRADAs after the provision was rescinded was caused by a new way of counting agreements, not because the provision had driven industry partners away. NIH issued this paper rebutting that assertion.

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November 18, 2021

XTANDI MARCH-IN LETTER TO HHS SECRETARY BECERRA

On November 18th, 2021, Clare Love and Robert Sachs, with backing from Knowledge Ecology International, sent a letter to HHS Secretary Xavier Becerra, asking HHS to adjudicate their second march-in petition for Xtandi sent to the Department of Defense. They sent this letter to further the Arno-Davis argument, saying that “…HHS is now willing to consider the merits of a march-in request, when the basis is that the price is demonstrably unreasonable.”

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March 21, 2023

XTANDI MARCH-IN REJECTION (NIH)

After HHS Secretary Becerra referred the November 2021 letter to the NIH, the NIH rejected Love and Sachs’ march-in petition for Xtandi on March 21, 2023. Acting NIH Director Lawrence A. Tabak noted that Xtandi was made “widely available” to the public, so the patent holder, UCLA, did not fail to bring the drug to practical application under the Bayh-Dole Act’s march-in rights.

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February 5, 2024

Xtandi March-in Appeal Rejection (HHS)

Following the rejection of their march-in petition for Xtandi in 2023 by NIH, an appeal was filed to the Secretary of HHS seeking to overturn the ruling. On February 5, 2024, Secretary Becerra rejected the appeal, agreeing with NIH that Xtandi was made widely available to the public in the marketplace, and using Bayh-Dole’s march-in authority wouldn’t be an effective means to lower Xtandi’s price. Sec. Becerra added that the Interagency Working Group for Bayh-Dole, overseen by the Department of Commerce, would consider whether price could be a contributing factor in the application of march-in rights consistent with “the use of march-in authority as laid out in the Bayh-Dole Act.”