Biden's patent plan threatens innovation

While the press frets about Donald Trump establishing the Fourth Reich, President Joe Biden is rewriting laws to arrogate sweeping power for himself. Last week, the administration threatened to seize patents of drugs and other innovations, which could be its most economically destructive executive act to date.

The Commerce and Health and Human Services Departments are proposing new guidance on "march-in" rights under the 1980 Bayh-Dole Act. The law was meant to encourage cooperation among industry, research institutions and government to bring innovations to market. Biden's patent grab would do the opposite.

Bayh-Dole attempted to solve the problem of tens of thousands of government patents that were collecting dust. Government had taken the position that inventions stemming from federally funded research belonged to the government. But why develop a product if you won't be allowed to profit from it?

Under Bayh-Dole, research institutions receiving federal funds were allowed to patent inventions and license them to companies to commercialize them. It worked. Only in limited circumstances can government "march in" and confiscate a patent — namely, when a company hasn't made a good-faith effort to commercialize the research.

Progressives for decades have wanted to use march-in rights to seize patents on drugs they claim are too expensive. Health and Human Services Secretary Xavier Becerra led the charge last decade in Congress. Yet administrations of both parties have demurred until now because they understood its destructive impact.

Under the proposed Biden guidelines, march-in rights would be used as price controls. Government agencies could seize patents if "the price or other terms at which the product is currently offered to the public are not reasonable" or "unreasonably limit availability of the invention to the public."

As Biden National Economic Council Director Lael Brainard explained, "We'll make it clear that when drug companies won't sell taxpayer funded drugs at reasonable prices, we will be prepared to allow other companies to provide those drugs for less." Translation: That's a nice medicine you have there ... shame if something happened to it.

Did the White House consult with the National Institutes of Health or other scientific agencies? The NIH this year rejected a petition by a left-wing group to exercise march-in rights on a prostate cancer drug by Pfizer and Astellas Pharma. NIH knows that seizing patents would dampen cooperation between research institutions and industry, harming innovation and patients.

That's what happened 30 years ago when NIH briefly required companies exclusively licensing its inventions to pledge to sell the byproducts at a reasonable price. Private industry walked away. In rescinding the NIH policy in 1995, director Harold Varmus said "the pricing clause has driven industry away from potentially beneficial scientific collaborations with PHS (public health service) scientists" without offsetting benefits to the public. He called it "a restraint on the new product development."

Former Sens. Birch Bayh and Bob Dole in 2002 explained that their law "makes no reference to a reasonable price that should be dictated by the government. This omission was intentional; the primary purpose of the act was to entice the private sector to seek public-private research collaboration rather than focusing on its own proprietary research." They stressed that "the purpose of our act was to spur the interaction between public and private research so that patients would receive the benefits of innovative science sooner."

Alas, the Biden administration cares more about expanding government control over the private economy than accelerating life-saving treatments. The president's cancer-moonshot initiative boosts funding for research institutions, but his threat to seize patents will discourage companies from building on future discoveries. Does the administration's left hand know what its far left hand is doing? This will compound the damage from the Inflation Reduction Act's Medicare drug price controls.

Progressives say government deserves paternity rights to drug patents because it plays an outsize role in funding their development. But of 18 medicines that have been approved by the Food and Drug Administration with patents linked to NIH grants in 2000, total private investment exceeded government funding 66-fold. Profits and intellectual-property protections drive American innovation. Biden's patent heist undercuts both and will embolden China to seize U.S. patents.

Note, too, that the administration's plan would let the government seize patents of other products such as semiconductors, artificial intelligence, nuclear energy and lithium-ion batteries, and any inventions that result from the $200 billion in funding from last year's chips bill. Stealing IP is now part of Bidenomics.