“Many tech transfer offices, often under-resourced, particularly as it relates to back office operations, are ill-equipped to respond to this accelerated compliance landscape. There’s a lot at stake, and the timeline to catch up has shortened.”

The original motivation for the Bayh-Dole Act was to encourage the commercialization of academic innovation so that new technologies could be available for the benefit of all. Yet today, I feel compelled to call attention to a compliance landscape that is significantly different than that of the past four decades—one that could have dire consequences for institutions if they choose to be complacent.

Not only do sponsoring agencies have an interest in how tech transfer complies with Bayh-Dole regulations, other entities have entered the competitive landscape looking for opportunities to turn lack of compliance to their advantage. In just the past two years we’ve seen a spike in requests for the government to exercise march-in rights by a variety of non-governmental advocacy groups (NGOs). These NGOs are staffed by PhDs who are well-versed in the academic tech transfer ecosystem and they actively seek out pockets of non-compliance. An attempt is then made to extricate key technologies using non-compliance as a lever and the NGOs become the primary influence on how innovation is put into the marketplace. I would ask the question, “Who will pick up on these inventions?” If you follow this chain of events we may find ourselves in a situation where innovation is not freely available to all (the original intent of Bayh-Dole) but an endpoint where NGOs and their backers control how technologies get into the marketplace.

Today, tech transfer professionals are under siege. With the advent of new Bayh-Dole regulations amended last May, there is now no time limit in which the government can obtain title of a federally funded invention based on non-compliance with the required deadlines. The consequences of non-compliance are a possible loss of title at any time during the life of patent. We know that, even before the 2018 rule changes, many universities and medical research centers had a backlog of iEdison notifications, rooted in messy disclosure data, in some cases going back decades. Many tech transfer offices are under-resourced, particularly around compliance. The difference today is that Bayh-Dole is under scrutiny as never before.

Bayh-Dole and March-In Rights

Beyond the federal agencies, there is evidence to suggest that special interest groups with varying agendas are on the prowl for non-compliance. In an effort to influence policy, NGOs are monitoring whether academic tech transfer is compliant with disclosures of intellectual property. One prominent example of such scrutiny is by the public watchdog group, Knowledge Ecology International (KEI), which has filed multiple requests and even initiated legal action to push the National Institutes of Health (NIH) to exercise march-in rights for the first time. This group, founded in 1995 by Ralph Nader, was called the Consumer Project on Technology. Now, as KEI, its stated charter is to deal with issues related to the effects of intellectual property on public health, cyber law, e-commerce, and competition policy.

Two recent cases where the lack of Bayh-Dole compliance provided the basis for NGO action stand out. In both instances, the government has been asked to take title, or at least threaten to take title, to apply leverage for pharmaceutical companies to lower drug prices in the U.S. In one case, AIDS activist groups have called on Gilead and the National Institutes of Health (NIH) to end patent protection for Truvada, a drug that helps reduce the risk of getting HIV-1, in order to get lower cost generic versions of the drug onto the market. And in March of 2018, KEI asked the Secretary of the Department of Heath and Human Services (HHS) to investigate a failure by Gilead to report NIH funding in its patent for its blockbuster Hepatitis C drugs, with a similar objective.

The takeaway here is that if compliance regulations had been strictly followed, starting with the initial disclosures that track back to the tech transfer obligations of universities or medical research centers, these challenges would not be an issue. Yet, many tech transfer organizations, whether in universities, medical research centers, or even Small Business Innovation Research (SBIR) / Small Business Technology Transfer (STTR), find that they are on shaky ground, not only with the varying directives of agencies in implementation of the new Bayh-Dole, but also with disclosures that were not handled with precision in years past.

The Political Landscape

An additional factor to consider is that “unleashing American innovation” has become a stated imperative by our current administration. Suddenly, public awareness turns to this lofty goal that, by the way, is directly consonant with Bayh-Dole. Furthermore, attention has been drawn to the preference for U.S. manufacturing of new technologies, a requirement that has sometimes been overlooked in licensing agreements for federally funded research. It’s important to note that, for NIH in particular, the requirement to manufacture in the United States applies to grantees, not just to licensees. With Congress providing NIH a $37.3 billion budget in 2018, and approved legislation raising NIH funding to $39.1 billion in 2019, the potential impact is immense.

A New Model for Bayh-Dole Compliance

I would argue that many tech transfer offices, often under-resourced, particularly as it relates to back office operations, are ill-equipped to respond to this accelerated compliance landscape. There’s a lot at stake, and the timeline to catch up has shortened. The standard institutional setup in which grantees are structured in a manner that separates filing and licensing patent applications and tracking government contract and grant awards needs to change. Everyone who touches a government-funded invention should be considered a part of the compliance team and that brings in sponsored research—and certainly, the inventors—to make sure compliance is up to date and accurate. It is more important than ever that grant recipients resource compliance in a manner that supports the workload, and this means adequate bandwidth and expertise to collaborate across institutions, licensees and complex licensing structures. For smaller tech transfer offices, outsourcing the compliance function to experts can be an efficient and cost-effective solution to meet the challenge. The new model for Bayh-Dole compliance relies as much on new thinking around roles and responsibilities as it does on the resources and training to carry through the task.

As my colleague, Joe Allen, concluded in his recent AUTM keynote, “because of the enormous amounts of taxpayer dollars invested each year in federally-funded R&D, either we will continue to improve our system, or, at some point, the long arm of government will do it for us. If that ever happens, it won’t bode well for the continuation of decentralized technology management, free from bureaucratic micromanagement.” I concur with Joe that the best offense is a good defense. A laser focus on Bayh-Dole compliance by the institutions that are the bedrock of innovation will assure fidelity with the original goals of the legislation.

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