Another view: New NIST framework threatens Texas' innovation excellence

Everything is bigger in Texas, including life science innovation. The Lone Star State is responsible for one in five clinical studies throughout the country – and spends $6.6 billion on research and development annually.

But while Texas' innovation ecosystem is currently thriving, a new guidance proposal being considered by the National Institute of Standards and Technology (NIST) would destroy patent protection for all federally funded research discoveries whenever Washington officials believe the resulting product is too expensive. If adopted, this framework would gut investor confidence in licensing such patents for development, preventing the new and exciting technologies of tomorrow from ever reaching consumers and businesses.

Yes, the danger is that great. The Biden administration is proposing to repurpose by fiat the 44-year-old law at the heart of our innovation economy.

The Bayh-Dole Act of 1980 empowered universities and research institutions to license federally funded research to private partners capable of developing the patented discoveries into new technologies, products, and medicines. Since then, Bayh-Dole has propelled scientific innovation.

The law's contribution to American industry speaks for itself. Bayh-Dole has enabled close to $2 trillion in gross industrial output, supported 6.5 million jobs, and resulted in the development of more than 200 vaccines and drugs. Licensing revenue has also enabled the creation of matchless lab facilities at our nation's leading universities, where top scientists thrive conducting their own research while training up successor generations.

This monumental legislation also contains a minor provision that has never before been exercised, known as "march-in" authority. It allows the government, in certain hypothetical circumstances, to relicense the patents on government-funded research – primarily if a company is purposefully sitting on those patents or intentionally failing to commercialize them.

Under the administration's newly proposed framework, however, the government could invoke this unprecedented authority if officials deem that the price of a commercialized product isn't "reasonable." The text does not define what a reasonable price looks like, nor does it spell out how officials will make such determinations. But regardless, it is a gross distortion of the letter and intent of the Bayh-Dole Act, which does not include price as a trigger for march-in.

Investors take very seriously the threat of government confiscation of intellectual property they believe is lawfully theirs – especially when the government leaves the grounds for doing so as unclear as they are here. This is true across all industries – but nowhere more so than in life sciences, where financial risk is very high. Bringing a new medicine to market can cost billions and take more than a decade. Only 12% of candidate medicines make it through clinical trials.

New drug development is completely dependent upon patent rights. The possibility of the government "marching in" to relicense rights to generic manufacturers is enough to make any sensible investor steer clear. That's a tragedy for patients hoping for new medicines.

This concern isn't conjecture. When the National Institutes of Health (NIH) implemented a similar "reasonable pricing" clause in research contracts with private companies in 1990, new partnerships plummeted. After five years, the NIH had no choice but to strike the clause – and partnerships quickly returned. The potential for government to dictate prices is a massive deterrent to investment.

The administration's proposal isn't just a problem for drug development. The new march-in authority applies to all federally funded research across all technologies and all industries – from robotics and quantum computing to agriculture and clean energy. It isn't a stretch to worry that tech transfer offices, which craft licensing deals between university researchers and private companies, will struggle to find commercial partners.

In formal comments to the Biden administration urging withdrawal of the march-in framework, the University of Texas System detailed why this framework will "divert resources from both universities and licensees, further stifle innovation, and harm the public by preventing access to the benefits of federally funded research."

Texas benefits from the patent protections of Bayh-Dole.Since 2018, the state's R&D complex has been among the fastest growing in the country. To ensure innovation continues, the Biden administration must drop this proposal.

Victoria Ford, MPA, is President and CEO of the Texas Healthcare and Bioscience Institute (THBI).

This article originally appeared on Amarillo Globe-News: Another view: NIST framework threatens Texas' innovation excellence