University Licensing and Biotech IPRs Good for the Economy

Senator Birch Bayh (retired), primary sponsor of the Bayh-Dole Act.

Earlier today the Biotechnology Industry Organization (BIO) released a report on the significant economic impact of university and non-profit patent licensingon the U.S. economy.

“This report provides further evidence that America’s technology transfer system established by the Bayh-Dole Act of 1980 is a key underpinning of our innovation economy,” stated BIO President and CEO Jim Greenwood.

Bayh-Dole enables the patenting and commercialization of federally-funded university and non-profit institution research.  Bringing these discoveries from the lab to the marketplace creates new products, new jobs and new companies that expand the economy and improve the nation’s health and quality of life.  The BIO study documents the significant return on investment that U.S. taxpayers receive by funding basic scientific research in the academic and non-profit worlds through the Bayh-Dole Act, which The Economist has referred to as the most significant and successful piece of domestic legislation since the end of World War II.

Between 1996 and 2010, the economic impact of university and nonprofit institution patent licensing included:

  • The impact on U.S. gross industry output is as much as $836 billion.
  • The impact on U.S. GDP is as much as $388 billion.
  • University and nonprofit licensing supported as many as 3 million jobs.
  • In 2010 alone, academic and nonprofit research institutions spun out 651 new companies.

“The ties between biotechnology and university research have always been critical.  Most biotech companies license technologies from nonprofit organizations,” Greenwood continued.  “The continuation of this relationship – along with a strong, dependable patent system and flexible licensing practices – is essential to maintaining America’s global leadership in biotech innovation.”

The basic science that led to the development by the biotech industry of many life-saving medicines began with federally-funded research, including vaccines against hepatitis B and cervical cancer, cancer medicines, and human growth hormones.

“Federally-funded research and the incentives of Bayh-Dole lay the foundation for these successes, but turning basic discoveries into breakthrough medicines, cleaner energy, and enhanced crops takes years of hard work by entrepreneurial companies and investors willing to risk billions of dollars to fund that development,” Greenwood concluded.

Earlier in the week BIO also unveiled another report it commissioned and which was authored by Meir Perez Pugatch, David Torstensson & Rachel Chu..  This report, titled Taking Stock: How Global Biotechnology Benefits from Intellectual Property Rightsdiscusses the role of intellectual property rights in encouraging upstream research and development as well as downstream commercialization of biotechnology.  More specifically, the report outlines how intellectual property rights and technology transfer mechanisms encourage collaboration and lead to the research and development of new biotechnologies, particularly in emerging and developing economies.

“This report is further proof of the positive impact of intellectual property rights in both established and emerging economies, and will be a useful tool as we work with the many countries seeking to grow the biotechnology industry,” stated Joseph Damond, BIO Senior Vice President of International Affairs.  “We felt it was important to provide empirical evidence and case studies for a more informed discussion on the role of intellectual property in global economic development and in commercializing innovative products for patients and other consumers.”

The key findings emerging from the Taking Stock  report include:

1. IPRs, especially patents, are actively facilitating and contributing to upstream and downstream biotechnology activities in both developed and developing countries.

2. Today, not only mature economies but also major emerging economies are making growing use of the patent system to facilitate biotechnology research and commercialization.

3. Accordingly, biotechnology alliances for research and technology transfer have increased markedly since the early 1990s.

4. Case study analysis suggests that strengthening IPRs and introducing technology transfer frameworks based on IPRs in combination with other reforms can have a positive and sustained impact on innovation, economic development and growth, biopharmaceutical R&D and access to biotech products in emerging economies.

Based on these findings the Taking Stock report makes the following recommendations:

1. Understanding the relationship and interaction between IPRs and the upstream phases of biotech R&D is as important as discussing the role of IPRs in the commercialization of these technologies and products. Therefore, attention should also be devoted to upstream processes, not least in international discussions.

2. It is necessary to deepen our understanding of the mechanics and mechanisms by which IPRs can be used strategically in order to enhance the R&D process.

3. Policymakers should consider the architectural setting and how the use of IPRs during the upstream process can be optimized.

4. Given the growing positive impact of IPRs in emerging and developing economies, there is a real need to increase our awareness and body of knowledge about frameworks, best practices and specific experiences with the use of IPRs during the upstream phases of R&D.

5. Creation of an international observatory that maps both knowledge as well as instruments that could help galvanize entities around the world to make greater use of IPRs during the upstream phases of biotech R&D.

 “There is a growing body of evidence suggesting a positive link between economic development and growth, technology transfer, increased rates of innovation and the strengthening of intellectual property rights. This is particularly promising in certain knowledge-intensive sectors, such as biopharmaceuticals,” said Meir Pugatch, Managing Director and Founder of the Pugatch Consilium.


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