On its way out the door, the Biden Administration just released new guidelines  for those seeking to license inventions made at the National Institutes of Health (NIH) that could lead to new “drugs, biologics (including vaccines) or devices for the prevention, diagnosis or treatment of human disease.”

The administration has claimed this is being done “to expand patient access to products that emerge from NIH-owned inventions.” The guidelines apply to all licenses, exclusive and non-exclusive.

New Requirements

While the Bayh-Dole Act requires potential licensees to submit “a plan for development and/or marketing of the invention” to show they are serious about commercialization, the new guidelines require applicants to address additional topics demonstrating how resulting products will be available, affordable, acceptable and sustainable. Each category has an extensive list of aspects to be addressed.

The administration apparently believes licensees are receiving a valuable benefit from the government so they will be willing to jump through additional hoops for the privilege of investing their own time and money developing NIH inventions against staggering odds they will ever become successful products. And when they fail, it’s the licensee who takes the hit.

Reading the guidelines, you might think that NIH has long lines of supplicants jostling for the chance to bid on their inventions. But as those familiar with licensing federally funded inventions know, there are usually between zero and one companies interested in the technology. When those potential licensees turn away, the odds are high the patent will just waste away, benefiting no one.

As the guidelines acknowledge: “NIH does not develop, distribute, or commercialize technologies itself; it relies on partners, including licensees, to turn inventions into new products and services that can directly impact people’s lives.” Indeed.

A recent study “found that over the 20 years leading up to Food and Drug Administration (FDA) approval of 18 innovative new therapies, the funding contribution from industry to the development of these therapies was 66 times higher than the public funding from all linked NIH grants.”

You might think that the guidelines would acknowledge that companies are spending their own hard earned time and money to commercialize NIH inventions, but you would be wrong.

Further, most licensees are small companies which “bet the farm” when they license federally funded inventions. They must raise venture capital every step of the way during the development process, which is significantly more expensive and uncertain in the life sciences. Even when they beat the odds, it may take a decade or more for any returns to be realized.

While no one at NIH suffers any consequences when one of their licensed technologies dies, startup companies often fold, investors lose their shirts and employees their livelihood. If you’re looking for a way to get rich quick, licensing NIH inventions isn’t it.

Burdening Licensees Won’t Solve the Broader Problem

What the guidelines are trying to address is a larger issue:

“NIH also recognizes that all too often patients across the country and across the globe may be unable to access products they need—for example, a treatment for their disease may not yet exist, or it might exist but be out of reach because it is too expensive or difficult to administer. “

That’s a serious problem but it is too heavy a burden to place on a licensee. Access and affordability are complex issues. The United States is far and away the world’s leader in the life sciences, with our universities and federal laboratories (like NIH) performing much of the high risk, basic research leading to medical breakthroughs.

Before the Bayh-Dole Act, resulting discoveries languished because the necessary incentives and authorities required to transform government funded inventions into useful therapies was lacking. Bayh-Dole changed that, encouraging companies to assume the risks and expenses of commercialization, which benefits patients here and around the world.

A Wall Street Journal story  “Trump Says World Is Free-Riding on U.S. Health Spending. He Has a Point” says:

“How much medical innovation does the world need, and how should it be funded? U.S. spending has long made this calculation easier for other countries. Now, it might be America’s turn to run the numbers.”

But that’s not the direction of the guidelines. Suggested approaches for licensees to include in their plans to NIH on issues such as affordability are listed. One is “Committing to keep prices in the U.S. equal to those in other developed countries.”

As NIH knows, those seeking to sell new medicines abroad are subjected to government mandated price controls. How many licensees, large or small, can commit to selling a drug that hasn’t been developed at the same price in the U.S. that a foreign government will allow them to charge, which they have no way of knowing when they sign the license?

A Gamble Not Worth Taking

The Biden Administration is taking a big gamble in its last days in office. Are NIH inventions so compelling that companies will go through a burdensome process to get a license—even if it’s non-exclusive? Or will entrepreneurs look at an already risky venture now made more bureaucratic and just walk away?

That’s  what happened 25 years ago when NIH tried to insert language into their licenses mandating that resulting products must be sold at an undefined “reasonable price.” Prices didn’t decline but NIH licensing nosedived.

Those throwing the dice gambling that companies will accept the new licensing guidelines will be long gone if it turns up “snake eyes.” The new guidelines risk returning us to the bad old days when NIH inventions gathered dust on the shelf.

Let’s hope the incoming Trump Administration quickly revokes this threat. If not, patients here and around the world hoping someone will alleviate their suffering could pay the price. To them, this is no game.

Image Source: Deposit Photos
Author: Darkves
Image ID: 5952333