House Coronavirus Bill Provision Could be Used for COVID-19/Coronavirus-Related R&D without Public-Interest Safeguards

A House coronavirus stimulus bill contains a provision concerning the use of Other Transactions Authority to fund COVID-19 diagnostics. The provision appears to authorize the Department of Homeland Security (DHS) to award $2.2 billion to private sector companies to develop COVID-19 screening measures, without requiring that the contracts implement the public interest protections that exist, even if under utilized, under the Bayh-Dole Act (35 U.S.C. §§ 200-212).

Section 10809(a) of H.R.6379, the “Take Responsibility for Workers and Families Act,” states, in pertinent part:

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 COVID-19 R&D.

Section 10809(a) appears to redirect the $2.2 billion originally awarded to CDC to DHS for DHS to award contracts to the private sector to develop COVID-19 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 (35 U.S.C. § 201(b)), Section 10809(a) specifically references Other Transactions Authority.

Other Transactions Authority refers to the authority granted by Congress to certain federal agencies to enter into research and development contracts and other agreements which are not government procurement contracts, and which operate outside of traditional mechanisms.

Federal agencies, including DHS, have interpreted their Other Transactions Authority to allow 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. See 35 U.S.C. §§ 203(a)(creating march-in authority, and authorizing march-in for failure of the contractor to achieve practical application), 201(f)(defining “practical application” to include making an invention “available to the public on reasonable terms”), and 202(c)(4)(requiring that funding agreements reserve the government’s license). In fact, DHS has a list of statutes that, in its belief, do not apply to Other Transaction Agreements (OTAs). The first item on that list is the Bayh-Dole Act.

While we disagree with DHS’s interpretation of Other Transactions Authority, there is at least legal uncertainty as to the applicability of Bayh-Dole public interest safeguards to OTAs. We infer from the specific reference to Other Transactions Authority in this bill and from agencies’ stances on the authority that it may be used to circumvent the protections of Bayh-Dole for COVID-19. The use of Other Transactions Authority 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 COVID-19 vaccines, diagnostics, treatments, and devices are as widely available to the public as possible.

We urge Congress to protect the public interest in publicly-funded COVID-19 technologies by requiring that all COVID-19 R&D contracts, at a minimum, contain the public interest safeguards that exist within the legal framework of the Bayh-Dole Act.