Effective Biomedical Public-Private Partnerships Are About Innovation, Not Lower Drug Prices

By David Beier and John Osborn

David Beier

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Health Affairs published this article on June 15, 2022

There is fascination of late with the prospect of exercising Bayh-Dole Act “march-in rights,” primarily as a means of reducing the price of expensive drugs that have been discovered or developed with federal funds. In recently published pieces in Health Affairs Forefront and elsewhere, some contend that the intended public health benefits of biomedical public-private partnerships will be realized only if the drug prices paid by consumers are reduced prior to patent expiry.

We believe that this rather narrow characterization is wrong. It ignores both the extraordinary impact on innovation that Bayh-Dole has spurred over the four decades since its passage and the price reductions that occur with the introduction of generic drugs following a period of market exclusivity.

Before addressing the controversy over march-in rights, it is important to recognize the inherent value of biomedical public-private partnerships. These collaborations often are the best way to make meaningful scientific and clinical progress in challenging areas such as treatments for neurodegenerative disorders. But they must be structured properly to establish clear goals from the outset that reflect the respective skills and resources of the parties. This should include aligning incentives, operating under transparent governance and reporting procedures, and ensuring mutual accountability.

Some believe that you can have your cake, and eat it too, as there is no definitive proof that innovation will be harmed if prices are substantially reduced. If one or two drugs were made available at lower prices following the exercise of march-in rights, this would establish a worrisome precedent; it would not, however, have the deleterious impact that would follow widespread price cuts in the United States, as would occur under a version of House Speaker Nancy Pelosi’s HR 3. While it is impossible to know precisely the adverse impact on innovation that would follow price cuts (draconian or not), we do know that biopharmaceutical companies earn the vast majority of their profits in the United States, that…

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David Beier

Managing Director, Bay City Capital, San Francisco, CA. Previously Chief Domestic Policy to Vice President Al Gore. Senior corporate officer DNA and Amgen