By David Williams, president of the Taxpayer Protection Union
From job cuts to fundraising freezes, the National Institutes of Health (NIH) controls headlines. The report focuses on the Trump administration, but there is a totally exposed notice of the farewell policy from former President Biden. A few days before his departure, the Biden administration quietly set the stage for the government to acquire the intellectual property (IP) of drugs researchers for drugs developed with the help of the NIH. This long-standing policy reversal means fewer life-saving drugs coming down the pike will lead to researchers thinking twice before partnering with the NIH. President Trump must reverse the drug’s fiasco and bring scientists back to the driver’s seat.
With a nasty trend, the departing president saves some of the most costly, most destructive and most controversial policies for his last day in office. Former President Biden provided a masterclass in creating these “midnight rules.” Researchers who partner with the NIH to develop drugs are usually needed to submit a Bare Bones plan on how to commercially develop the drug to obtain a patent, but the Biden administration wanted to go further. On January 10, the Biden administration sneaked into regulations in the NIH guidelines that development plans must address “standards of availability, affordability, acceptability and sustainability.” In other words, if the NIH doesn’t think the drug price is fair, it can tell the drug developer to fly the kite, even after holding the patent and investing a considerable amount of time and money in the treatment. And this Biden-era regulations could get a lot of use, as Robert F. Kennedy Jr., secretary of the Department of Health and Human Services (HHS), appears to like to use the heavy government’s hands to grab patents.
Underlying this policy is the vast and flawed interpretation of the otherwise claimable law. The Bayh-Dole Act, passed in 1980, paved the way for patent fuel growth by allowing individuals and private institutions to win the title of inventions that involve federal funding. Since 1980, patent generation rates for American universities have increased tenfold. According to figures cited by Economists, the institutions “utilise over 2,200 companies in their labs, creating 260,000 jobs in the process, and now donating $40 billion a year to the American economy.” Under this proposed system, institutions such as the NIH can partner with researchers to provide researchers with the IP they need to prevent innovation in the market.
Unfortunately, the law opened the door to “Martin” rights. This allows regulators to withhold this IP from researchers to “mitigate health or safety needs,” ensuring “practical application” of the product, provide domestic manufacturing, and maintain compliance with various federal regulations. These terms are lazy written in the law, but are not invitations for bureaucrats to correct prices. But Biden’s NIH guidance appears to be designed to do just that by allowing agents to reject drug pricing plans based on “affordable prices” concerns.
History provides an ominous preview of the outcome of this anti-IP policy. In the 1990s, NIH tried its hand at enforcing the “reasonable pricing” clause of licensees that partner with agents. As a result, the partnership collapsed as expected, and NIH director Harold Balmus was forced to backtrack. He acknowledged that “pricing clauses have driven the industry away from potentially beneficial scientific cooperation…without providing offsetting benefits to the public.”
Now is not the time to double down on this expensive mistake. President Trump needs to quickly remove this harmful guidance and enable the NIH to award the achievements of innovator creation. Protecting IP allows policymakers to ensure patients have adequate access to life-saving drugs.
David Williams is the president of the Taxpayer Protection Union.
