NIH Director Dr. Francis Collins falsely asserts Bayh-Dole safeguards do not address excessive pricing abuses

In a hearing before the House Energy & Commerce Subcommittee on Health, Dr. Francis Collins, Director of the National Institutes of Health, explained the agency’s position on the Bayh-Dole rights and high drug prices.

In the hearing, focused on the implementation of the 21st Century Cures Act, Representative Jan Schakowsky (D-IL-9) questioned Collins on the role the NIH can play in making sure that the medicines developed through the work of the NIH are affordable to the public. “If we are spending billions to incentivize the development of new drugs, I think we also have to ensure that patients can afford those drugs” Schakowsky told Collins.

The Representative continued by remarking on the frustration patients feel when they pay twice for medications – first through their taxes, and then through high prices at the pharmacy. Dr. Collins claimed that the NIH has no ways to affect drug pricing after government funded inventions have been commercialized, which is simply untrue.

Publicly funded inventions are protected under 35 U.S.C. § 200 – 209, commonly referred to as the “Bayh-Dole” laws, whose stated “Policy and Objective” is:

“to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions”

Note, the Act refers to protecting the public from both “nonuse” and “unreasonable use.”

Under the Bayh-Dole laws, the federal government has three different mechanisms it can use to authorize competition and encourage lower priced drugs to enter the market.

  1. March-in and the obligation for practical application. Under 35 U.S.C. § 203(a), the government can exercise its “march-in” rights to license the drug to a third party. Among the several grounds for granting a march-in request is if the patent holder failed to bring an invention to “practical application.” Practical application is a legal term that is defined in the Bayh-Dole Act in 35 U.S.C. § 201(f) to include an obligation to make the benefits of the invention “available to the public on reasonable terms.”
  2. Royalty free right. In the event that a patent is government owned and licensed to a third party, the government under 35 U.S.C. § 209(d)(1) has a royalty-free license to authorize generic competition. If an invention was made with government funding, the federal government maintains this royalty-free right under 35 U.S.C. § 202(c)4.
  3. Termination and practical application. In the event that the patent is owned by the government and was licensed to a third party in order to bring the drug to market, the government has the right to terminate the license entirely under 35 U.S.C. § 209(d)(3). One of the grounds for terminating a license is if there is a failure to bring the invention to “practical application,” which, as noted above, requires making the benefits “available to the public on reasonable terms.”

Rep. Schakowsky in fact raised the issue of the Bayh-Dole rights during Dr. Collins’ testimony, and Dr. Collins claimed that the agency had rights only when the drug was “not available to the public under any circumstances.” The actual language of the law does not support Dr. Collins position.

The Bayh-Dole Act dictates the stewardship of publicly funded research, and demands that a private company which benefits from this research make it available to the public on reasonable terms. It is unreasonable that the American public pay the highest prices in the world for drugs which their tax dollars helped to develop, and unreasonable that an agency with the statutory authority to address this problem refuses to do so.

The exchange between Representative Schakowsky and Dr. Collins may be viewed in full:

Kim Treanor