Elimination of Further R&D Funding

Bayh-Dole’s (B-D) commercialization of federally-funded basic research is the bridge connecting annual $130+ bn. congressional funding to its congressionally intended public benefits of jobs, economic development and scientific progress. This B-D bridge’s on-ramp is controlled by federal grant agencies, each with its own mission. Life science’s on-ramp is supervised by NIH. Its off-ramp exit is policed by the FDA. Life science’s high-risk commercialization crossing to the off-ramp is difficult, long and costly. Its chances of reaching and using the FDA managed off-ramp are statistically slim.

Surrounded by B-D price-based march-In advocates last week, former AUTM President Ashley Stevens explained life science’s risky commercialization journey as a panelist during a high-level and polite, but somewhat unfriendly Knowledge Ecology International (KEI) Symposium marking the DC debut of KEI’s up-coming campaign to equip and /or direct NIH to impose medicinal product price controls and compulsory licensing of B-D price-based march-in. AUTM’s Steve Sasalka, past AUTM President Fred Reinhardt and I watched Dr. Stevens carefully describe how difficult it is for research universities to attract investment partnership to help them commercialize development of promising discoveries emergent from NIH funding, the purpose of which he explained is to support much-needed biomedical medicinal progress and training of the next generation’s life science investigators.

Refuting the casual emphasis of earlier panelists on compulsory licensing, Dr. Stevens persuasively argued that history has shown that even a single NIH exercise of price-based march-in’s compulsory licensing would curtail all private sector investment in the commercialization partnerships now supporting our nation’s “fragile” life science innovation ecosystem, describing its impact as “nuclear”. Carefully avoiding giving an opinion on the process of actually pricing biomedical products saying that was above AUTM’s “pay grade” (and by implication beyond NIH’s capacity) he focused on the historical failure of similar government efforts to impose pricing restraints including CRADA’s temporary intrusion into the process which later was cancelled. Dr Stevens was immediately rebutted by KEI CEO Jamie Love who accused NIH of deliberately misinterpreting B-D because of its alleged bias favoring investment. A short and spirited Love/Stevens colloquy followed. (see below) Significantly, Stevens stressed that R&D funding’s off-ramp support would shrink as private sector investment in life science commercialization partnerships withdrew because its high-risk uncertainty would then have the uncertainty “shadow ” of compulsory licensing. What no one discussed however was a new “elephant in the room”… the 115th Congress’ inevitable budget cuts. They threaten the R&D funding itself.

Increased defense spending, ACA and entitlement benefits, and tax reform decreases are only some of the disputed issues in what promises to be a chaotic congressional session. Virtually every existing budget dollar is in jeopardy, including R&D funding’s annual $130 bn. NIH and research universities who want them level-funded at the least are worried that they may not be funded at all ! Dr Steven’s emphasis argues that B-D price based march-in will cancel the need for the bridge’s exit ramp because the investment needed to cross the bridge will not be forthcoming if B-D march-in is invoked. We worry that the bridge’s entry ramp will not be needed. Here’s why

KEI asserts three basic arguments for price-based B-D march-in. Patents are a revocable privilege and thus are not entitled to the same constitutional protections afforded to real property. This issue of public vs. private rights is now in the courts. Mr. Love also has a long-smoldering distrust of NIH’s interpretation of B-D and what he sees as bias towards investors needed to implement its commercialization mission. These concerns are not new. What is new is Republican administration and congressional responsibility to resolve the budget issues and recent drug price abuses that understandably have aroused the press and public. And although everyone deplores market-enabled pricing abuse by certain drug makers, KEI believes that despite the congressional chaos on countless other issues, now is the time to impose a new pricing structure on biomedical products whose impact Ashley Stevens says would be “nuclear”. I specifically asked Jamie if he was worried that by beating up our present system he might further the aims of the many Hill interests now trying to divert present R&D funding levels to some other purpose. His answer revealed deep concern for patients in need of new discoveries, but he intends to stay the course and push the exercise of price based march-in  See the discussion at 425:40.

We sincerely believe that Loves congressional pursuit of B-D priced based march-in is too complex to crack though the disruptive din promised by this session. But we also sincerely fear that KEI’s pejorative arguments against patents, NIH and B-D commercialization will give impetus to other interests who wish to divert R&D funding’s low hanging fruit to their own threatened programs, eliminating the further need for any bridge at all. Once gone as Dr. Stevens said. They will not return. And that dear Reader, would be truly nuclear.


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