It’s Not Rocket Science, or Is it?

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It seems to me that the older I get the more things I don’t understand. This is not a new phenomenon; I think every generation since the beginning of time has felt this way, but it seems that things change so fast that it’s tough to understand how these new things will affect my life.

For instance, what the heck are cryptocurrencies? Is it really money that you can mine from a computer and put it in a wallet that only exists in the cloud or inside your computer and then the value changes depending on the whim of some mystical complicated marketplace? I’m still mad that the country went off the gold standard, and now you want me to have faith in something that I can never hold in my hand? Am I missing a big investment opportunity?

These are things that I don’t understand completely, but they have the power to have a big effect on my world. In both cases our lawmakers are themselves trying to understand them and are wrestling with what they should do. Do they need to regulate how cryptocurrency is handled? Since we are governed by a representative democracy, we count on those who represent us to understand these complicated processes and do what’s best for us.

I’ve often discussed in my blogs how complicated healthcare has become. There’s providers, insurance companies, manufacturers and others that all have to work together to discover and administer these complicated but life changing and life-saving treatments. What’s the best way to encourage innovation while maintaining broad access to each new discovery?

This was the question in the minds of two Senators, Bob Dole and Birch Bayh, in the late 1970s. The United States was lagging behind the rest of the world in medical innovation and these two men thought of a way to help bring ideas and discoveries to the marketplace. While our government awarded grants to universities and scientists, their resultant discoveries were not being developed into final products. It’s not surprising since it costs about 100 times more than the basic research to bring a discovery to the marketplace. These two senators, a Democrat, and a Republican, introduced the Bayh-Dole Act which would allow universities, small businesses, and non-profits to retain the patents on their discoveries and work with private entities to develop, manufacture and distribute the resulting medicine or product. The bill passed with huge bipartisan support and was signed into law in December of 1980.

The bill jumpstarted a tremendous increase in innovation and the development of critical medicines and products in America. The Economist Technology Quarterly opined that the Bayh-Dole act was “[p]ossibly the most inspired piece of legislation to be enacted in America over the past half-century… (it) unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money. More than anything, this single policy measure helped

to reverse America’s precipitous slide into industrial irrelevance.” It is exceedingly rare that the normally stodgy Economist Technology Quarterly gives such glowing praise to any government legislation.

So, for 43 years the Bayh-Dole Act worked… until politicians decided they could twist the language of the Act to help enact price controls on drugs. They proposed to do this through a provision in the Act called march-in rights. This provision allowed the government to march-in and reassign the patent if the commercial entity chose to not aggressively move toward the commercialization of the product or they chose to sit on the patent to block a competitor’s access to the discovery. As clarified later by the original authors, Bayh and Dole, this language was never meant to be used to set prices. Any attempts to use march-in rights as a reason to control prices have been rebuffed, in 1994, 2002 and 2004, yet, President Biden, who, as a senator, voted in favor of the Bayh-Dole Act, is now supporting a renewed effort to use march-in rights to control drug prices. From my perspective, this move by the present administration goes against a myriad of acceptable and constitutional rules.

First, what right, and I mean constitutional right, does the administration have to insert its own interpretation into a law for its own purpose? Where are the checks and balances in this approach? If I can interpret law to match my own whims, then there is no need for a Congress or Judiciary. As with many of the actions taken by this, and past, administrations, this approach will most certainly be challenged in court.

Second, why does our government seek to mess with successful government programs? This is eerily similar to what happened with Medicare Part D, a program that has worked and been popular for 17 years, but our government suddenly decided to fundamentally change it to the detriment of innovation. The government seeks to change the function of the Bayh-Dole Act, that has worked efficiently for 43 years, once again to the detriment of innovation.

Third, I can’t help but point out that drug manufacturers net revenue has fallen in each of the last 5 years and, when adjusted for inflation, fell 8.7% in 2022. I don’t know of any other healthcare cost that has decreased, yet attacking drug companies remains politically popular, especially in election years.

Why, when it’s so hard to understand what actions to take in response to the new and complicated changes in our healthcare system, does our government revert to changing proven and popular healthcare laws. Many of the life changing and life-saving medicines were developed because our government embraced the public/private partnership of the Bayh/Dole Act. There are ways for seniors to engage on this issue. Tell those that represent you in Washington that you want to continue the innovation made possible by the Bayh/Dole Act, tell them you and your family deserve the hope represented by the new medicines that are just now appearing on the horizon.

Best, Thair

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