Bayh-Dole law can stop drug company rip-offs

Presidential and congressional candidates have the perfect issue to begin the process of limiting and eliminating the crushing control that drug companies have over life-and-death drugs. The overwhelming greed of the pharmaceutical companies has Americans boiling over with anger. The exposés of drug consumers being pushed to travel to Canada and Mexico to get the same drugs that are too expensive in the United States is a story that runs in every newspaper and commercial television network.

Our government must and can act

If there was ever an issue that can allow federal elected officials to reassert the power of our own government, this is it.

A key issue that can be a catalyst for that struggle has surfaced in regard to Abbott Laboratories. It seems that their product Norvir, a drug that helps AIDS-related drugs to work better, is now being marketed by Abbott at four times its previous price. Why? Because, it seems, Abbott believes in the “divine right of drug companies” like the old “divine right of kings.” Under Bush, they can do as they please.

But there is a little-known federal law that can allow the federal government to take action. If the manufacturer of a product developed with government funding fails to make the product “available to the public on reasonable terms,” the federal agency under whose funding agreement the invention was made has the authority to grant a license for the manufacture of that product to a responsible new applicant. The Bayh-Dole Act of 1980 also allows the federal government to exercise this “march in” provision if “action is necessary to alleviate health or safety needs which are not reasonably satisfied by the current manufacturer.”

Although drug companies cry that they need to charge exorbitant prices for drugs to conduct their research and development, the fact of the matter is that a very large percentage of drug company R&D funding comes from the federal government.

The key patents to many drugs now on the market were filed by universities, and then licensed to private companies, according to David Halperin, author of a report prepared for the Consumer Project on Technology. “In many cases, these private corporations have provided only a small fraction of the overall R&D investment in the products, but charge high monopoly prices,” Halperin writes.

Once a new drug has been researched and developed, for-profit drug companies come in and take over the new drug’s production and distribution, often moving production to low-wage locales. In Puerto Rico, for example, a full strip of drug manufacturers produces drugs for U.S. pharmaceutical companies. The American people pay twice for the drugs, says Halperin, “first through taxpayer funding for R&D; and today, through higher Medicare and other government program expenditures, higher insurance premiums and higher patient out-of-pocket expenses … associated with the exorbitant prices.” This is the current government policy idea for a public-private partnership. Sound familiar? The public pays both ways.

Enforce the law and make a pledge

For now, a newly-elected White House and Congress could enforce the Bayh-Dole Act to deter drug companies from demanding excess profits from drugs produced via taxpayer dollars. It would be a great precedent to start. Up to now, no federal agency has ever asserted its march-in rights with respect to a patent conferred to a private corporation as a result of federally funded research. If drug companies refuse to lower their monopoly prices on life-saving drugs like Norvir, developed with federal research dollars, our national government has the authority and ability to produce these drugs themselves. And they should.

The author can be reached at pww@pww.org.

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CONTRIBUTOR

Phil E. Benjamin