Trump Administration Adopts Innovation-Killing Biden NIH Licensing Guidelines

To say that we live in strange times doesn’t do justice to the absurdity of these days. Just as Secretary of Commerce Howard Lutnick was saying that the government should seize 50% of academic royalties resulting from licensing federally funded inventions because otherwise the feds get “zero” return, the Administration adopted Biden Administration guidelines that imperil the most successful patent licensing agency.

On October 1, 2025, guidelines for licensing National Institutes of Health (NIH)-made inventions, designed as the Biden team was headed out the door, went into effect. Despite warnings to the Trump Administration, they were adopted virtually unchanged and threaten to undermine NIH partnerships with U.S. industry, which generate the majority of royalties the government receives from patent licensing under the Bayh-Dole Act.

Politically-Driven Guidelines That Will Undermine Innovation

When the Biden Administration unveiled its “Promoting Equity Through Access Planning” guidelines last year, House Energy and Commerce Committee Chair Rep. Cathy McMorris Rodgers (R-WA), Health Subcommittee Chair Brett Guthrie (R-KY), and Oversight and Investigations Subcommittee Chair Morgan Griffith (R-VA) said they were “‘woke,’ politically driven, and will undermine biomedical innovation by discouraging private sector partners from working with NIH.”

They added:

“The NIH’s role is to conduct research and transfer promising discoveries to the private sector so that lifesaving treatments can be developed for patients. By injecting progressive social policy priorities into licensing decisions, NIH is overstepping its authority and putting ideology over science.”

These guidelines are even worse than the infamous “reasonable pricing” language which NIH forced on licensees and CRADA partners in the 1990s that collapsed partnerships with industry. The new guidelines require applicants to describe how they will promote “equitable access for underserved communities in the U.S. and for populations in low- and lower-middle-income countries, as defined using the World Bank classification system.” That is done by providing strategies for ensuring the availability, acceptability, sustainability and affordability of resulting products. Each category has vague descriptions and suggestions for how they can be met. For example, meeting the affordability requirement could be done by “Pricing products at the lowest sustainable level or connecting product prices to marginal production costs.” None of these factors are sanctioned by the Bayh-Dole Act, which governs how inventions made by government employees are to be licensed.

Licensees must now provide an “Access Plan” as part of their application which will be updated during the product development process. They must also provide a “non-confidential version of their Access Plan within three months after Food and Drug Administration (FDA) approval of the licensed product (or a foreign equivalent) that NIH may publish or otherwise make available to third parties.”

This has long been a goal of the opponents of the Bayh-Dole Act, which specifies that licensees’ utilization plans for commercializing federally funded inventions must be treated as confidential documents, not releasable to the public. You can bet the farm that the critics will be combing through the publicly available plans looking for any pretext once a product is commercialized to pressure NIH into revoking the license so resulting products can be copied.

Warnings Unheeded

During the public comment period, many of us wrote NIH warning of the dangers of adopting this wrong-headed policy. The Bayh-Dole Coalition, which I lead, also wrote President Trump flagging the NIH intramural licensing guidelines along with several other attacks on Bayh-Dole left behind by the Biden Administration. President Trump strongly supported Bayh-Dole in his first term. We received an immediate response from a high level at the White House thanking us for the heads up.

Imagine the surprise when I, along with all the others who had commented on the draft guidelines, received an email from NIH in August saying: “Please be assured that no changes have been made to the substance of the policy, and it is still scheduled for implementation on October 1, 2025.”

Startups—and the Government—Will Suffer

So, who’s likely to suffer (in addition to patients hoping for new therapies to relieve their pain) under the new NIH policy? Near the top of the list will be entrepreneurial small companies, which drive the U.S. life science industry.

According to NIH: “For the past several years, over 50% of the NIH’s license agreements and nearly all of the product commercialization deals have been with small businesses”

And commercializing an NIH invention is no easy lift. In testimony before the House Judiciary Committee, Mark Rohrbaugh, then Director of NIH’s Office of Technology Transfer, stated:

“NIH support is usually for the earliest stages of research. The cost of developing a product for patients is borne almost entirely by the private sector. It is not unusual that the investment needed to develop a product is ten to one hundred times greater than the cost of the basic research that led to the invention.” (“The Bayh-Dole Act: A Review of Patent Issues in Federally Funded Research” House Judiciary Committee, Subcommittee on Courts, the Internet, and Intellectual Property October 30, 2002)

Most times, despite the best efforts, commercialization fails, and the licensee eats the costs. That’s why it’s very difficult to find even one company willing to take a license to an NIH invention.

Who’s going to provide the necessary rounds of venture capital funding that startup companies require to develop new products under these guidelines? What larger companies will want to acquire them knowing they contain poison pills that are likely to be utilized if the product is successfully developed?

Another loser will be the federal government. While Secretary Lutnick worries about the government making money from inventions it helps discover,  this policy undermines the biggest federal money maker in the system. In FY 2024, the NIH brought in $210.6 million in royalty income. A 2019 report estimated that NIH accounts for 73% of the total licensing income generated by federal laboratories. The new guidelines put all this in peril as most companies are more likely to walk than to accept these new burdens.

Lesson Not Learned

The most tragic part is that we’ve been down this path before but apparently learned nothing. After being forced to include a “reasonable pricing” provision in its exclusive licenses and Cooperative R&D Agreements (CRADAS) in the 1990s, industry partnerships cratered. After five years, then NIH Director Harold Varmus rescinded it, saying):

“An extensive review of this matter over the past year indicated that the pricing clause has driven industry away from potentially beneficial scientific collaborations with PHS (public health service) scientists without providing an offsetting benefit to the public… Eliminating the clause will promote research that can enhance the health of the American people.”

The new NIH guidelines not only include pricing but other equally vexing provisions as well. It’s a good bet it will have the same impact its predecessor inflicted 30 years ago.

An anonymous but very wise person once said: “You can never make the same mistake twice because the second time you make it, it’s not a mistake, it’s a choice.”  

We just made a very expensive choice.