The Biden administration recently rejected progressive activists’ calls to scrap critical patent licensing agreements between research universities and biotech companies.
President Joe Biden was right to resist this political pressure. Too many good-paying union jobs are at stake.
The activists had good intentions; they wanted to give patients cheaper access to lifesaving medicines by having the government relicense the patents to generic drug firms.
But their plan would backfire, as the Obama administration warned years ago when confronted by many of the same activists who unsuccessfully tried to convince Biden. Tearing up licensing agreements won’t result in sustainably cheaper medicines. In reality, it would chill research endeavors across the country, weaken America’s world-leading university system, and destroy thousands of union jobs.
But it’s worth asking: why were progressive activists inadvertently working against organized labor in the first place? Let’s rewind the clock.
By the late 1970s, government-funded research grants, mostly to universities, had led to nearly 30,000 patents. But under the laws of the era, the government retained title to any patents resulting from those grants. And the government struggled to find companies willing to further research those insights and develop usable products. Fewer than 5% of those patents were licensed for further development.
In essence, taxpayer dollars were funding discoveries — but the discoveries weren’t leading to real-world benefits for Americans.
To fix the problem, Sen. Birch Bayh, a Democrat from Indiana, and Sen. Bob Dole, a Republican from Kansas, worked to pass a transformative piece of bipartisan legislation in 1980. The Bayh-Dole Act transferred patent licensing authority from the federal government to the universities where the research occurred. Under this new model, university technology transfer offices could earn royalties by licensing early-stage discoveries to entrepreneurs hoping to develop the next world-changing technology.
This revamped incentive structure has greatly benefited American workers and consumers. Over the past 25 years alone, companies started under the Bayh-Dole framework have supported 6.5 million jobs and contributed as much as $1 trillion to U.S. GDP.
By sparking a renaissance in research and development, the legislation led to a revival in skilled American manufacturing, especially in the life sciences. In the 1970s, the four largest European nations developed just over half the world’s new drugs. Today, thanks to Bayh-Dole, the United States invents well over half of all medicines.
These boom times for the life sciences create quality union jobs. One study found that between 2015 and 2020, U.S. biopharmaceutical construction projects required at least 22 million labor hours from union workers, who earned more than three-quarters of a billion dollars in wages.
Unfortunately, those economic benefits could have evaporated had activists succeeded in convincing Biden to invoke Bayh-Dole’s “march-in” rights.
March-in rights allow the government to take patents away from licensees under certain rare circumstances, such as when a company has licensed a patent but refuses to commercialize it and make it available to the public.
However, no administration, Democratic or Republican, has ever invoked those rights as a de facto price control and taken away patent licenses on products that are already commercially available. Doing so would set a worrying precedent. No company, whether in the biotech industry or any other sector, would want to license the discoveries coming out of university labs if the government could effectively revoke the license on a whim. Such a move would stifle the life-science boom currently providing so many union jobs.
It’s exactly why union leaders have cautioned against the abuse of march-in rights, and presumably why the Biden administration rejected the most recent plea to do so.
But march-in advocates haven’t given up. Sen. Bernie Sanders, D-Vermont, is demanding that the National Institutes of Health add a “reasonable pricing clause” to licensing partnerships made between federal researchers and the private sector. This too would backfire, by driving innovative industries away from potentially lifesaving collaborations with the government, and killing jobs in the process.
When the NIH implemented a reasonable pricing clause in 1989, public-private partnerships cratered, forcing the agency to reverse course and revoke the policy. A year later, cooperative agreements had doubled. Repeating that mistake is not the answer.
The people behind these efforts may have good intentions — but their proposals would undermine our entire economic system, hurting startups, consumers and union workers in the process.
Democrats have long been the party of labor. Biden was right to heed the warnings of union leaders and reject calls to weaken federal licensing agreements.
Joseph Crowley represented New York’s 7th and 14th congressional districts as a Democrat from 1999 to 2019.
This article originally appeared on NorthJersey.com: Joe Biden’s decision on patent licensing agreements saved union jobs