Researchers Fear ‘Unintended Consequences’ of Plan to Lower Drug Prices

President Joe Biden has touted a plan that would allow federal agencies to seize patents for products developed with federally funded research if the government deems those products too expensive.

The White House has framed the proposal, which would revise the guidelines of the Bayh-Dole Act of 1980, as part of the administration’s broader push to lower prescription drug prices. But advocates for research universities, which rely heavily on federal dollars, are opposed.

They argue that the proposed framework may not be an effective tool to lower drug prices and that it would weaken the powerful research partnerships between universities and the private sector that have resulted in bringing to market such inventions as the mRNA vaccine platform, e-ink displays for ereaders and internet browser algorithms.

“At a time when the U.S. academic research enterprise has never been more important to the future of U.S. national and economic security, public policies should support and enable—not undermine—public-private collaborations,” Barbara Snyder, president of the American Association of Universities, which represents 69 of the nation’s top research universities, wrote in a Feb. 6 letter to Laurie Locascio, director of the National Institute for Standards and Technology, which proposed the changes.

“Without rescission, the existence of this framework as potential agency policy will continue to create uncertainty and confusion for our member institutions and their private sector partners and weaken the powerful engine of innovation and research that is public-private collaboration in the United States.”

Between 1996 and 2020, academic technology transfers in the United States (universities often transfer inventions to industry partners for commercialization) contributed $1.9 trillion in gross industrial output, supported 6.5 million jobs and resulted in more than 126,000 patents awarded to research institutions, according to data from the Association of University Technology Managers, or AUTM.

But the public-private partnerships that have come out of university-led research weren’t always so robust.

Up until the 1980s, the federal government owned the intellectual property of any discoveries made with federal research dollars. The policy gave universities little incentive to find practical uses for inventions, and fewer than 5 percent of the 28,000 patents being held by federal agencies had been licensed for use, according to the U.S. Government Accountability Office. That changed when Congress passed the Bayh-Dole Act in 1980, which allows universities, not-for-profit corporations and small businesses to patent and commercialize federally funded inventions.

The legislation also includes a “march-in” provision, which allows the government to take control of a federally funded invention to alleviate health or safety concerns. However, no government agency has ever exercised its march-in rights. The NIST’s proposed changes to the framework specify “for the first time that price can be a factor in determining that a drug or other taxpayer-funded invention is not accessible to the public,” according to a December news release from the White House.

The public comment period for the revised framework closed last week; the NIST received more than 51,000 comments. The agency is in the process of reviewing the comments and may choose to finalize changes that would include price as a justifiable reason for an agency to march in on a federally funded invention.

Unintended Consequences

“Our opposition to this mechanism is not an opposition to thinking about access and affordability of drugs,” said Heather Pierce, acting chief scientific officer of the Association of American Medical Colleges, who questioned the efficacy of changing the guidelines of the Bayh-Dole Act to lower drug prices.

That’s because although a university may have used federal dollars to fund the discovery of one component of a marketable product, other patentable components may not have been produced using federal funds and therefore couldn’t be subjected to a march-in.

“Licensing one piece to a different company in the hopes that they would develop into the same drug but charge less is potentially speculative,” Pierce said. “The march-in rights themselves don’t have any teeth on the final price of the second company.”

Moreover, she said, the proposed framework could create unintended consequences for academic research institutions.

“This framework that could be based on price makes it riskier for a company to decide to interact with an academic institution, especially if there’s federally funded research involved,” Pierce said. “It creates a new incentive to either make sure that companies are licensing outcomes not based on federally funded research or not interacting with academia.”

The AAMC also joined the AAU, the American Council on Education, the Association of Public and Land-grant Universities, AUTM, and the Council on Governmental Relations in sending a letter to NIST on Feb. 1, which also highlighted the proposal’s potential negative consequences to academic research.

“This framework will not solve the identified problem,” the letter said. “Instead, it will cause far too much collateral damage to be justifiable.”

Kate Hudson, a lobbyist for the AAU, said that if the proposed guidelines had the feared effect of reducing federally funded research produced by universities, it would also create a gap in publicly accessible knowledge.

“When research is conducted on university campuses and it’s funded federally, it’s going to be published, with very few exceptions,” Hudson said, noting that that model creates a valuable knowledge base. “When the private sector funds research, that doesn’t happen. It’s hoarded by that company, and it’s proprietary knowledge. They are not looking to publish or share.”