King Amendment a Commercialization Killer

While pro-patent advocates worried last week about troll-hyping clap-trap oozing from a House hearing managed by big tech’s slick salesman Rep.  Issa, Bayh-Dole was blind-sided in the Senate. An Angus King commercialization-killer amendment to its must-pass Senate Defense authorization now looms over already shaky biotech investment. How dangerous is this Armed Services Committee Report language? Based on a historically-discredited and persistently rejected interpretation of B-D’s march-in provisions, it automatically imposes compulsory licensing product price caps on “any drug arising from DoD-funded research” if the drug is priced “higher in the United States than the median price charged in the seven largest economies that have a per capita income at least half the per capita income of the United States.”  Huh?

Imagine a commercialization meeting with a putative private sector partner regarding promising parasitic research re Alzheimer’s disease. You are offering to license your promising patented proof of concept now ready for further development. She sadly explains that since its projected nine-year development will cost more than 100 times the amount expended on your university’s primary research, her investment is blocked because her lawyers need to be confident that it has in no way “arisen” from any research funded by a DoD grant. You and they both know that inventions “arise” from past research. The lawyers fear that if this research results in a cure they will be in a court fight over the meaning of “arise,” and they must be assured that DoD funding has not been involved somewhere along the line. Worse she adds, even her quants are unable to reliably predict what the mandatory cockamamie calculation may be nine years and $5 billion dollars from now. Even if the end product is approved by FDA, its patent and price will be legally challenged. You say demand surely will be overwhelming. But she says “that is exactly the problem, the more desired the drug, the more likely its patent and now its price will be challenged and capped in calculations irrevocably tied to foreign price cap freeloading off of US drug research, manufacturing and distribution.

In a short white paper, Biotechnology Innovation Organization (BIO) explains why this imagined conversation’s outcome is so bleak. BIO asks, “What venture capitalist would fund or invest in a life science start-up built around a federally funded invention if the King amendment passed?”
To comprehend the parlous relevance of BIO’s question, please read more.

BIO’s paper outlines the congressionally-confirmed legal and common sense consequences of uncertainty sure to arise from an unpredictable mandatory pricing formula that surrender’s US sovereignty, jobs and war-fighter safety to the drug pricing caps of foreign countries. The King Amendment imports foreign price controls while jeopardizing our global economic advantages of our life science innovation. We just cannot allow this camel’s head now in B-D’s tent to permanently knock down B-D’s beneficial structure.

Please read the short white paper to equip and communicate your concerns to your congressional delegation.

Senator King's amendment is bad law and bad policy FINAL

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