The House coronavirus stimulus bill contains a troubling provision concerning the use of Other Transaction Authority to fund coronavirus diagnostics. The provision appears to authorize the Department of Homeland Security (DHS) to award $2.2 billion to private sector companies to develop coronavirus screening measures without assurances there will be the public interest protections that currently exist, even if under utilized, in the Bayh-Dole Act (35 U.S.C. § 200 et seq.).
Section 10809(a) of H.R.6379, the “Take Responsibility for Workers and Families Act,” states as follows:
Funds appropriated for ‘‘Department of Health and Human Services—Centers for Disease Control and Prevention—CDC–Wide Activities and Program Support’ ’’’ in title III of the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (Public Law 116–123) shall be paid to ‘‘Department of Homeland Security—Countering Weapons of Mass Destruction Office—Federal Assistance’’ for costs incurred under other transaction authority and related to screening for coronavirus, domestically or internationally, including costs incurred prior to the enactment of such Act.
Title III of the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 appropriates $2.2 billion to the Centers for Disease Control and Preparedness (CDC) for coronavirus R&D.
Section 10809(a) appears to redirect the $2.2 billion originally awarded to CDC to DHS for DHS to contract with the private sector to develop coronavirus screening measures. But, instead of leaving DHS to use traditional R&D funding mechanisms such as “funding agreements” within the meaning of the Bayh Dole Act, cooperative agreements, or Cooperative Research and Development Agreements (CRADAs), Section 10809(a) specifically references the use of Other Transaction Authority.
Other Transaction Authority or OTA refers to the authority granted by Congress to certain federal agencies and offices to enter into research and development agreements that are not government procurement contracts, cooperative agreements, or CRADAs, and which operate outside of traditional mechanisms.
Federal agencies, including DHS, have interpreted their OTA as allowing them to enter into contractual agreements with the private sector that are not subject to the safeguards of the Bayh-Dole Act, which, among other things, requires that federally-funded inventions are available to the public on reasonable terms, and reserves for the federal government a worldwide royalty-free license to practice inventions and march-in authority to address health needs and abuses of patent rights. In fact, DHS has a list of statutes that, in its belief, do not apply to OTA. The first item on that list is the Bayh-Dole Act.
The Bayh-Dole Act’s mechanisms to protect taxpayers’ investment in and access to government-funded technologies, such as march-in authority, the government’s royalty-free license, and the obligation to make inventions “available to the public on reasonable terms” are not required in the OTAs, according to DHS.
While we disagree with the DHS interpretation of the authority, there is at a minimum legal uncertainty as to the applicability of Bayh-Dole public interest safeguards for OTA. We infer from the specific reference to OTA in this bill and agencies’ stances on the authority that it will be used to circumvent the protections of Bayh-Dole.
The use of OTA in this manner, in this global health emergency, can lead to high prices, fiscal toxicity and restricted access to taxpayer-funded inventions.
With lives hanging in the balance, it is vital that coronavirus vaccines, diagnostics, treatments, and devices are as widely available to the public as possible.
We urge Congress to ensure accountability over coronavirus R&D funding agreements by requiring that all such agreements have, at a minimum, the public interest safeguards that exist within the legal framework of the Bayh-Dole Act.