So now Congress has launched a bidding war to see who can propose the largest subsidies to help elderly Americans afford prescription drugs under Medicare. If only our elected officials would take a look at existing laws on the books, they might notice that one already holds the potential to make pharmaceuticals significantly more affordable for all Americans and to reduce the inflated costs for these proposed subsidies.
It is called the Bayh-Dole Act. Unfortunately, no one is enforcing it.
Bayh-Dole is a provision of U.S. patent law that states that practically any new drug invented wholly or in part with federal funds will be made available to the public at a reasonable price. If it is not, then the government can insist that the drug be licensed to more reasonable manufacturers, and, if refused, license it to third parties that will make the drug available at a reasonable cost.
The idea behind Bayh-Dole is to protect taxpayers' investment in drug research and development. After all, the American public pumps more than $20 billion a year in taxpayers funds into health-related research and development, making it the single largest investor in the pharmaceutical industry. These dollars have led to the development of numerous new drugs.
Consider cancer research, for example. As of 1997, 54 of 84 anti-cancer drugs approved by the Food and Drug Administration were the products of federal funding. The percentage is even higher with respect to AIDS drugs developed with federal funds. The pharmaceutical giants make profits averaging three times the rate of any major industry -- spending twice as much or more on advertising and marketing as they claim they spend on research.
Meanwhile, prescription drug costs continue to soar at a rate of 19 percent per year. We've already paid for the cost of research. Why, then, aren't we seeing lower drug prices?
The federal government is supposed to manage the public's investment in the pharmaceutical industry, but it doesn't. Although Bayh-Dole has been in place for 20 years, the government has never enforced it -- not even once. That, despite the AIDS crisis at home and abroad, despite the millions of elderly and chronically ill Americans in need of affordable prescription drugs and the 40 million others who have no health insurance coverage whatever -- and despite the general hand-wringing over the skyrocketing costs of pharmaceuticals.
Why is the federal government such an irresponsible investor of public funds? First, the government agencies responsible for implementing Bayh-Dole either do not understand the law or are reluctant to exercise their responsibilities. In particular, the National Institutes of Health prefers to avoid pricing issues and to remain within the loftier realms of research. Some of NIH's repeated public statements over the years indicate an astonishing and continuing ignorance of the Bayh-Dole provisions.
Second, there has been no leadership on this issue. Since its enactment, Bayh-Dole has never been publicly discussed by any administration. Small wonder that the law has been so grossly misunderstood by government bureaucrats. The recent stem-cell patents came from government research. Government labs should have the right to use those patents for free, but the government has not even insisted that they be subject to the law. Instead, the Bush administration used its Bayh-Dole leverage behind the scenes for short-term political goals, getting the patent owners to agree to antiabortion restrictions on stem cells in exchange for dropping the rights to intervene. As a result, we may end up paying again for use of these patents.
Third, the drug companies have successfully cast Bayh-Dole as an anticompetitive price-control measure that they claim will strangle new R & D. But Bayh-Dole is not about price control. It is about ensuring that pharmaceutical manufacturers live up to their bargain with the public when they accept the public's money. The pharmaceutical manufacturers say federal funding is critical to the development of new drugs. This may be true. But they can't have it both ways. If the drug companies want the public to invest in their research, they must provide the agreed-upon return on investment in the form of reasonable prices.
All Americans deserve relief from the high costs of prescription drugs. The federal government has the means to help them without spending another dime of taxpayer money. Bayh-Dole should be enforced.
Peter Arno is a professor of epidemiology and social medicine at the Montefiore Medical Center, Albert Einstein College of Medicine, Bronx, N.Y. Michael Davis is a professor of law at Cleveland State University in Ohio.