A Reply to the New England Journal of Medicine

Senator Bayh (right) and staffer Joe Allen (left), circa 1980.

In its August 29, 2013 edition the New England Journal of Medicine saw fit to print two “perspective” pieces attacking the Bayh-Dole Act.  The primary article is by Dr. Howard Markel entitled Patents, Profits, and the American People—The Bayh-Dole Act of 1980.  It repeats previously refuted charges that patenting and licensing federally funded inventions harms the public interest.  To give the author due “credit”, Dr. Markel does invent some new allegations as well which simply cannot go unanswered.

The Bayh-Dole Act was passed because Congress was rightly concerned that potential benefits from billions of dollars of federally funded research were lying dormant on the shelves of government. Government funded inventions tend to be very early stage discoveries—more like ideas than products—requiring considerable private sector risk and investment to turn them into products that can be used by the public.

Under prior patent polices government agencies took such inventions away from their creators and offered them non-exclusively for development. There were no incentives for the inventors to remain engaged in product development. Not surprisingly, few such inventions were ever commercialized even though billions of dollars were being spent annually on government R&D.  This failure spurred two Senators from opposing sides of the aisle, Birch Bayh of Indiana and Bob Dole of Kansas, to form a remarkable partnership seeking a remedy.

But here’s how Dr. Markel characterizes the impetus for Senator Bayh’s involvement:

In 1978, a group of constituents representing Purdue University lobbied Bayh to seek ways of reaping profits from government allocations for university-based research, arguing that although the United States spent billions of dollars annually funding more than half of all academic research and owned 28,000 patents, it had little to show for the investment.

Unlike Dr. Markel, I was actually in that meeting. Ralph Davis, who then ran Purdue’s technology transfer office, is no longer with us to defend himself. Neither Ralph nor anyone else present was looking for “ways of reaping profits from government allocations for university-based research.”  Quite the contrary, Ralph said that Purdue had made several promising inventions under Dept. of Energy grants which would never benefit U.S. taxpayers unless they were effectively licensed and developed.

This motivation was reflected in Senator Bayh’s statement on introducing the bill:

The bill addresses a serious and growing problem: hundreds of valuable medical, energy and other technological discoveries are sitting unused under government control, because the government, which sponsored the research that led to the discoveries, lacks the resources necessary for development and marketing purposes, yet is unwilling to relinquish patent rights that would encourage and stimulate private industry to develop discoveries into products available to the public.


The cost of product development exceeds the funds contributed by the government toward the initial research by a factor of at least 10 to 1.  This, together with the known failure rate for new products, makes the private development process an extremely risky venture, which industry is unwilling to undertake unless sufficient incentives are provided.

The consequences of our inadequate government patent policy have not gone unnoticed.  In the energy area, bureaucratic delays caused by case-by-case review of each patent application are now running behind by almost two years…

But nowhere is the patent situation more disturbing than in biomedical research programs.  Many people have been condemned to needless suffering because of the refusal of agencies to allow universities and small businesses sufficient rights to bring new drugs and medical instrumentation to the marketplace.  The exact magnitude of this situation is unknown, but we are certain that the cases we have uncovered to date are but a small sample of the total damage that has been done and will continue to be done if Congress does not act.

~ Dear Colleague letter from Senator Birch Bayh on the introduction of Bayh-Dole, Sept. 6, 1978.

Betsy de Parry had a rare form of cancer, but thanks to treatments invented and then commercialized as a result of Bayh-Dole she has been cancer free for a decade.

Senator Bayh’s wife was then suffering from a cancer which would later take her life. Senator Bayh was very grateful for the help she received from the doctors at the National Institutes of Health. His determination to enact Bayh-Dole to insure that new treatments for relieving human suffering were being developed was driven by a passionate concern for patients, not “reaping profits.”

Markel repeats the discredited allegation that technology licensing was more successful before Bayh-Dole than claimed by proponents of the law. This charge used to be widely circulated leading my colleagues Norman Latker and Howard Bremer to look up the actual source materials the critics cited.  Perhaps not surprisingly, they found the critics were misreading the data. See The Bayh-Dole Act and Revisionism Redux pgs. 9- 10.

Dr. Markel lightly dismisses as “[m]ore difficult to confirm” the meticulous work that Lori Pressman and her team (which included economists at the Department of Commerce) put into a ground breaking study estimating the significant economic impact of university patent licensing on the U.S economy.  Lori documented the methodology behind the study which until now, no one has challenged.  Perhaps Dr. Markel’s “difficulty” would be solved if he actually read the paper.  To make it easy, here’s the link: The Economic Contribution of University/Nonprofit Inventions in the United States: 1996-2010.

Adding insult to injury, Markel continues: “Indeed, the law’s many critics question how much it has actually benefitted the economy (as opposed to individuals and stakeholders) and the extent of its social costs.”

Here’s some data that may help Dr. Markel and the other critics:

  • Since 1980 more than 9,000 new firms have been created around university inventions, more than 4,000 of which are still in business. These companies tend to locate in the same state as the university, spurring economic growth.
  • 705 new companies were created by university patented inventions in FY 2012 alone, along with 591 new commercial products introduced for consumers to use.  Not a bad performance in an economy otherwise stuck in the doldrums.
  • There are now more than 40,000 active licenses and options in place on university inventions, the majority of which are with small businesses.
  • No new drugs were commercialized when the government took inventions away from universities before Bayh-Dole.  Since then at least 153 are now on the market fighting the scourge of disease world-wide according to a study published in the New England Journal of Medicine. See The Role of Public-Sector Research in the Discovery of Drugs and Vaccines.

A new Forbes magazine analysis calculates that it now costs $5 billion to develop a new drug— expenses that are borne by the private sector. If the critics ever get their way and succeed in undermining Bayh-Dole, we could return to the days when we again pull the plug on drugs developed from federally funded research.  One has to wonder where those suffering will then turn for relief. It’s unlikely the critics will be able to offer them much solace.

Betsy de Parry hugs Senator Birch Bayh at the Bayh-Dole 30th Anniversary celebration. Betsy had just said to Senator Bayh: “I am alive today because of you!”

While not in Dr. Markel’s article, publications covering it surmised from his characterization of its legislative history that enactment of Bayh-Dole was “fluke ridden” (University of Michigan Health.org) or a “rocky and somewhat inglorious road to passage by a lame duck Congress” (Tech Transfer News blog).  Such language reflects a fundamental lack of understanding of the legislative process.  Bayh-Dole passed on its merits in the full light of day, not through any legislative sleight of hand.

The bill not only went through all of the steps for passing a new law that you read about in civics class, it was subjected to additional scrutiny not normally required for legislation: it needed a unanimous vote of approval in the closing days of the Congress. Bayh-Dole was even attacked by its bureaucratic opponents after enactment who sought to undermine the new law by wrecking the regulations needed for its implementation.  See The Enactment of Bayh-Dole, An Inside Perspective.

Dr. Markel saves his “best” for last:

It’s time for Congress to recalibrate Bayh-Dole. Profits and patents can be powerful incentives for scientists, businesspeople, and universities, but new and ongoing risks—including high prices that limit access to lifesaving technologies, reduced sharing of scientific data, marked shifts of focus from basic to applied research, and conflicts of interest for doctors and academic medical centers—should be mitigated or averted through revisions of the law.  All Americans should be able to share in the bounties of federally funded research.

Oh my, where to begin?  Would Dr. Markel feel better knowing that a survey of academic researchers concluded that “patenting does not seem to limit research activity significantly, particularly among those doing basic research,” with only 1% of their random sample of 398 academic respondents reporting a project delay of more than a month due to patents on knowledge inputs necessary for their research, and none reporting abandoning of a research project due to the existence of patents?  See Final Report to the National Academy of Sciences’ Committee Intellectual Property Rights in Genomic and Protein-Related Inventions: Patents, Material Transfers and Access to Research Inputs in Biomedical Research (Sept. 20, 2005).

Would he feel better knowing that Bayh-Dole has not shifted the focus of federal R&D from basic to applied research? See The Bayh-Dole Act and Revisionism Redux, pgs. 11-12. This is hardly surprising as federal agencies fund research either in pursuit of expanding the frontiers of knowledge or to meet their mission needs.  With industry abandoning basic research, being able to partner with our unparalleled public research institutions is a tremendous competitive advantage for the United States.  Bayh-Dole makes this possible.

Perhaps Dr. Markel will feel better knowing that all Americans can only share in the bounty of federally funded research when embryonic ideas are taken from the lab and turned into new products they can actually use, while creating new jobs and companies where they can work.  The United States is leading the world in this regard—thanks to the Bayh-Dole Act.


EDITOR’S NOTE: For more on the success of Bayh-Dole, as well as the story of how Bayh-Dole saved Betsy de Parry’s life, please see: Intellectual Dishonesty About Bayh-Dole Consequences.


Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

13 comments so far.

  • [Avatar for Claude]
    April 27, 2014 05:20 pm

    Dear Gene – Your ignorance is only surpassed by your capacity to insult opponents of your biassed views.

    Patents stifle innovation – Read this informative and eye-opening investigation and while at it, give it your best shot to discredit this study. Please, if you can, use logic and some common sense to complete the serious task of tackling this myth – “that innovation will be spurred by the prospect of patent protection, leading to the accrual of greater societal benefits than would be possible under non-patent systems.”

    PATENTS AND THE REGRESS OF USEFUL ARTS by Dr. Andrew W. Torrance and Dr. Bill Tomlinson – Columbia Science and Technology Law Review, Vol. 10, 2009 pp. 130-168.
    SOURCE: http://www.stlr.org/html/volume10/Torrance.pdf


  • [Avatar for Gene Quinn]
    Gene Quinn
    April 26, 2014 03:16 pm


    Patents do not stifle innovation. There is absolutely no proof to support your asinine claim. You see, if you are right then you would expect to see run away innovation and extraordinary economic development in countries with no patent system. Of course, the exact opposite is what you see. In countries with no patent system or a weak patent system there is no innovation, and no real economy. This is just one piece of evidence. How anyone could hold such a ridiculous and provably incorrect opinion is mind-boggling. Inform yourself starting here:




    Bayh-Dole is regarded as the most successful piece of domestic legislation in the last 65+ years. It is so regarded because it works beyond anyone’s expectations. The facts are what they are, and they overwhelmingly demonstrate that you are wrong. Indeed, all of the facts support Bayh-Dole and no facts support your idiotic positions. Please educate yourself by starting here:







    These and many other articles on IPWatchdog.com should help you become better knowledgeable, that is if facts actually matter to you.

    Finally, I know you are new commenting on IPWatchdog.com, so allow me to explain something for your benefit. IPWatchdog.com is not a place where ridiculous, erroneous, conclusory commentary is allowed. If you would like to continue to comment on IPWatchdog.com, please refrain from false, misleading, ignorant and utterly nonsensical commentary. In other words, if you are going to comment on IPWatchdog you MUST be factual. If that is too much for you please go elsewhere. I know there are plenty of other Internet forums that will be glad to have ignorant commentary such as you have provided above.


  • [Avatar for Claude]
    April 25, 2014 07:04 pm

    This reply provides more evidence than required to expose someone who knows nothing about Higher Education and even less about the role of basic research in training recruits (Ph.D. candidates and postdocs).

    On the Bayh-Dole Act – What a disastrous and misguided piece of legislation, killing basic research – ex., wasting time converting little we know into applied research for corporate greed. What a pity is Joe’s and others’ mission to promote these falsehoods as a means of convincing some to turn a fabulous human endeavour of creating knowledge into a failed money-making machine: University Inc.

    This article leaves out (very convenient) all that is reported showing that patents stifle research and innovation.

    The recent Supreme Court decision (US Supreme Court ruling against Myriad Genetics, June 13 2013) will force changes that are long overdue.

    Our study (Canada) has shown these claims about a so-called return on investment of public funds to be totally false. In addition, the huge costs of collateral damages largelly exceed the “pennys” that University Inc could have generated..

  • [Avatar for CUTTO]
    September 24, 2013 02:20 pm

    Thanks for this commentary. We believe your points are solid, but also that it’s important to look beyond biotech’s patent-license paradigm to build support for (and understanding of ) Bayh-Dole:


  • [Avatar for Alvin Kwiram]
    Alvin Kwiram
    September 19, 2013 12:25 pm

    Of course the Bayh-Dole act has had some consequences that are problematic and have to be managed. But so has the use of fire. The benefits are overwhelmingly positive as other countries have affirmed by their response. Clearly there are a lot of people out there who need to be better informed about the real impact of Bayh-Dole, among them the editors of the NEJM. This was one of the most important legislative actions, in the last half century, that significantly advanced the cause economic development based on publicly funded research.

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 13, 2013 12:33 pm


    I’m doing what I can to get this article circulated, as are others. I recommend that you and everyone else try and personally send this article to a handful of people you know. Half the battle is letting folks know that there are actually those ignorant enough to advocate for the dismantling of what has been one of the most successful government programs in history.

    I hope all is well.


  • [Avatar for EG]
    September 11, 2013 12:02 pm

    To all:

    Patent Docs posted today report on Markel’s JNEM article bashing Bayh-Dole. I posted a comment linking to Joe’s article, and giving my “2 cents” as to how Markel’s views Bayh-Dole in this JNEM article should be treated.

  • [Avatar for MBT]
    September 11, 2013 08:28 am

    Great article and thanks for setting the record straight! Now if only key persons will listen…

  • [Avatar for S. Gorman]
    S. Gorman
    September 10, 2013 07:32 pm

    Excellent article.

  • [Avatar for Sean Flanigan]
    Sean Flanigan
    September 10, 2013 03:37 pm

    What a great insight on a piece of legislation that has become synonymous with efforts at creating the catalytic effect of transforming research into benefits to society and economic impact. Everywhere in the world governments are struggling with this challenge and in response this important legislative initiative keeps coming up as a solution. It’s not often we can peer behind the curtain and see how government gets things done but with this article, and your personal experiences, we are all made the wiser thanks to Joe Allen.

  • [Avatar for Joe's da man]
    Joe’s da man
    September 10, 2013 02:58 pm

    Beautifully done Joe. Shocked that the NEJM would print such a poorly argued piece – and shocked further that folks are circulating as if it provides fresh insight. Your response is compelling and much appreciated.

  • [Avatar for Moocow]
    September 10, 2013 02:38 pm

    I was perplexed that the NEJM would print such a poorly-informed opinion piece. I’m now waiting for them to publish the Kardashians’ views on the matter.
    At any rate, NEJM should reprint your post to give its readership a much-needed, well-supported counter-perspective. Thank you for putting this together!

  • [Avatar for EG]
    September 10, 2013 01:40 pm

    Hey Joe,

    Thanks for getting the facts out about what Bayh-Dole has done to benefit all of us. Unfortunately, some folks have no shame, and Dr. Howard Markel is obviously one of those.