Hello to our listeners, and welcome to the Votes and Verdicts podcast, hosted by the policy and litigation team at Bloomberg Intelligence, the investment research platform of Bloomberg LP. Our podcast series examines the intersection of business policy and law. I'm one of your hosts for today, Tishwalker. I'm an analyst with Bloomberg Intelligence covering patent pharma litigation, and.
I'm dwain Right, a senior healthcare policy analyst at Bloomberg Intelligence.
On today's episode, Duayne and I are revisiting the Biden Administration's proposal to update martian rights under the BIDOL Act to include a specification that price can be a factor in determining that a drug is not accessible to the public.
You'll recall that Duayene and I discussed this topic on our January eighteenth episode with doctor Aaron Kesselheim of Harvard Medical School, who is very much in favor of the administration's proposal, and as we noted on that episode, we see this effort by President Biden as part of a broader conversation on drug pricing ahead of the November elections, setting up a contrast with the likely challenger Trump, who sought to prohibit the exercise of marching rights on the
basis of price alone. To help us round out our discussion on this topic, we've invited Joe Allen, who was the lead staffer for Indiana Senator birch By when the by Doll Act was enacted back in nineteen eighty. Joe is now the executive director of the Bidel Coalition, which seeks to preserve the underlying framework of the law. Joe will talk with Dwayne and I about his work as a staffer developing the legislation and how his efforts now
and his efforts now leading the coalition. Joe, Welcome to the Votes and Verdicts podcast, and thank you so much for joining Dwayne and I today.
Well, thank you very much for inviting me. I'm really looking forward to our conversation.
Well, Joe, can you tell us about your background, starting with your work on the US Senate Judiciary Committee for Senator By, which ultimately led to passage of the Bidule Act.
Sure, I was actually a very junior staffer. Actually, Senator By inherited me. I actually worked for a Senator named John Tunney on Judiciary Committee. You ever saw the movie The Candidate with Robert Redford and Dustin Hoffman. It's about Senator Tunney, and after he lost, Senator By inherited me. I was, like I said, I was a junior member. I was basically a research assistant, and they were very
gracious they took me on. I think probably because I was cheap, but anyway, I was doing some work for Senator Bye and actually got him into another topic which was unrelated to the Senate Judiciary Committee on making alcohol fuel out of corn, which was a big deal in the seventies because we had a gas embargo and Senator By got excited about it. But I was on Judiciary Committee, so another staffer took it away from me once the
Senator got interested. So my general counsel nels Ackerson knew I was pretty crushed, and he said one day, Hey, we've got Purdue coming by to talk about some patent thing.
Would you like to sit in And I said sure.
We had no idea what Purdue was going to talk about, but they mentioned that they were having They made it a mentioned with Department of Energy funding and under current policies in place, then it was going to be taken away from them and never utilized. So we thought, well, that didn't make any sense, and they actually had with them the General Council from that institute National Institutes of Health, who said, this is a big problem across the government.
So long story short, my General counsel asked me to look into it.
I did, and we.
Also found out that Senator Dole, who was a Senator birch By was a liberal Democrat. Senator Bob Dole was a conservative Republican. They didn't agree on hardly anything. It would be sort of like today if Ted Cruz and Elizabeth Warren suddenly joined forces on something. But we found out that Dole was interested in the same issue, said well,
let's work together. It'll be bipartisan. And about a month later we were invited to make My general counsel was invited to make a talk to the universities and he hurt us back, so he asked me if I would go. So I'd never spoke, never spoken in public before. I was going down to talk to a group of university technology transfer people who knew more about this than I did. But anyway, it turned out that actually I wound up taking over the issue. So it was serendipity, and I
guess it's best. But I've been actually working on this ever since.
So that's great history. And we'll dig into the mechanics of the Bidual Act, specifically the marching provisions in a second, but can you fill us in now? Fast forward to twenty twenty four. You're the executive director of the Bidal Coalition. What's the goal and the function of this group.
Well, that's also a story of serendipity.
In nineteen we were coming up on the fortieth anniversary of by Dole. Bid Dole was passed in nineteen eighty and twenty twenty would be the fortieth anniversary. So somebody called me. Hans Souer from Bio called me and said, you know, we had to do something to actually recognize the fortieth anniversary. And I said, yeah, that I was actually doing doing some consulting then, and I said, well, that makes sense, because you know, we got to really
celebrate what Bidole has done. Because the by Dole Act didn't create any new bureaucracy, didn't create any new funding.
So it's kind of invisible.
It's like the little train that could sort of working here in the background, and it doesn't really get much recognition. So we said let's put something together. And you know, we talked to some other university people, some industry folks, and we were just going to do a program at the National Press Club. Well, a thing called COVID happened after in the end of twenty nineteen, so it turned
out we couldn't do our press event. We wound up doing a webinar and it actually went very well, and we started actually doing some events throughout the year because by Dole has been under attack and a lot of people don't know the history, which we'll talk about today.
So again another long story short. You know, we actually started putting out the real history of by Dole, how the law was passed, what it does, et cetera, et cetera, trying to counter some of the misrepresentations, and that went so well that people said, well, you know, we got to keep the same going. So actually last year we actually turned it into a five oh one c four. Before that was kind of like a club. You know,
we basically had no real budget. We were just kind of going along from from month to month, but the issues kept coming up. So actually it is now a real organization. We have members across the spectrum industry, members university members, venture capitalists associations, and the purpose of the of the coalition is is pretty simple. We tried to explain the history of by Doll, what it's done, and why it's important to make sure it works as intended.
And so you mentioned that BI Dol is under attack, and we'll talk about that a little more in some of our later questions. But what's your general experience been in how the act has functioned over the last forty years since it's been passed.
Well, you know, by Doll was an experiment because before by Doll, going back to World War Two, the government's policy was that if the government funded any research, an invention was made, the government would take that invention away from whoever created it, take it to Washington, and make it available basically that anybody wanted it, which was it
was kind of like a Marshall Plan of technology. And that seems really laudable because again, in nineteen forty five, the United States is one of the few economies still standing. Europe was devastated, Japan and China were devastated, and so
that seemed like a nice thing to do. But what happened was in the seventies, Japan and Germany got back on their feet and they started taking taking technologies away from US steel, automotives, electronics, c And so the time we started by Dole, the American economy was really in a tail spin. So that's one of the reasons we started. You know, it was an experiment. We said, it doesn't make any sense for the government to take things away
and they're not being commercialized. We need to make sure that we reverse at and give people incentives to actually step in and turn these into real products, which takes a lot of industry investment. But I think the best thing I've seen that actually shows how it's worked is the Economist Technology Quarterly, which is not even a US publication, said the bi Dole Act is probably the most inspired piece of legislation over the past half century. More than anything,
it helped reverse America's precipitous slide into industrial irrelevance. So it's the basis for public private sector partnerships, and that's a big deal. That's one of the reasons we've actually reasserted our technology leadership. Really starting with the passage of Bidole in nineteen eighty that we were in danger of losing.
So I think it's been a tremendous success, but like I said, it doesn't have any bureaucracy, it doesn't have any cheerleaders, and so a lot of people that don't like that policy, they want to go back to the pre by Dole policy of the government, you know, basically micromanaging things and giving things away serve and we can
use them. Have created an alternative history, and that's one of the reasons that we want to make sure that we're going back and really explaining what bi Doll does, how fundamental it is to the US economy, and how important is to keep that going.
You know.
Now, particularly we're being challenged by China, which is actually adopted by Doll to compete against.
Us, and you know, so one of the things that by Doll did though, was sort of preserve the ability for the government to go in and recapture, let's say, recapture an invention. And so maybe we can set the stage a little bit for our listeners here. I mean, we talked about this on our last podcast, but can you remind us sort of what are the laws four key pillars that would open the door for the government to come back in and exercise what we call march in rights under the bi Dola Sure.
Basically I mentioned before that even before by Dole, the government would take inventions away and take them to Washington and they would sit there. Well, it soon became a parent that that really was not working because the government's funding early stage inventions, you know, things like out out of basic research or mission research, neither one of which is leading to a commercial product. So when the government has when a patent comes out of government funding, it's
more like an idea than a product. And what happened was before by Dole, the Cumptroller General found there were twenty eight thousand inventions sitting on the shelf in Washington basically being unused. So even as far back as the as nineteen fifties and the Truman administration, the government recognized, hey, you know, there might be cases where we need to let the inventing organization own the technology so they can
commercialize it. And even when they did that, they said, but we want to make sure you're really making a good faith effort to turn it into a product. So if you're not, even if we wave you the rights, if you're not turning into a product, the government can march in and either take the invention back or license it to somebody else. And so President Kennedy expanded on that actually made it easier for people to get their petitions granted, and President Nixon did the same thing. So
marching rights precede by Dole. But the purpose has always been to make sure that good faith efforts are being made to turn a federally funded invention into a useful product. So when we passed by Dole, we build on that, and in fact, we took some of the same language going back to the Kennedy administration and the Nixon administration into the by Dole Act. Now, the other thing I should mention is By Dole, as I said, changed forty years of government.
Policy so overnight.
Literally under by Dole, what we said was that a university or a small company making an intervention with government funding can own it, they can license it for commercialization. The university has to give a preference for a small company and people that make it. In the United States, but before by Dole, most universities had never managed a
technology before. So we have four march in triggers. As you mentioned, the first one only applies to the university, to the patent owner, and under Bidole, it's typically a university, and it says that you need to make sure that the technology has been made into it is being turned into a product. In other words, it's practical application. It's being made something useful, and we define that is making sure it's available to the public on reasonable terms. And
that's really what the debates centered on. Well, what we meant by that, and what's clear by reading the statute was we didn't want the university putting crazy terms in the license agreement, like for example, you have to hire the chancellor's daughter is a CEO, where you have to build.
Us a new football stadium.
We also wanted to make sure universities were actually putting terms in there where they're monitoring it to make sure a company is turning us into a product. Because one of the fears before, one of the criticisms of by Dole was well, what of the giant company licenses technology from some university to suppress it because maybe it competes with an existing product. So we want to make sure that the universities had milestones in their agreements to make
sure it's being turned into a product. So that's the first first trigger. A practical application again the burdens on the university to make sure you're licensing unto reasonable terms and also that you're monitoring commercialization. The second one was to make sure that the product can meet public health and safety needs. In other words, you're producing.
Enough of it.
If you have a COVID pandemic or something like that, you know, make sure that there's enough quantity going out. The same thing for meeting the needs of government regulations. And as I mentioned before, Bia DOLE gives a preference in licensing to people that will make the product in
the United States. So if somebody reneges on their agreement and you're making the product in Bolivia as opposed to New York, and the government finds out, it can march in and it can force the university to either license other people or the government can do it itself. And the other thing I should say is when my Dole uses the phrase reasonable terms issues twice in the statute,
both referring to the terms of a license. So if the university refuses, if the government marches in and says you have to license another person, the losses has to be done on reasonable terms.
In other words, you.
Can't have your nose out a joint and make it impossible for the next person to commercialize it. So that's what marching rights do, and by Dole was passed in nineteen eighty. Marching Rights was, by the way, not a big contention of the by Dole. We can talk about the debate of her by Doole. Marching rights was not an issue. People understood that, and for twenty years there
was no there was no debate about it. But then what happened was I should also mention there were people that didn't like by Dole, and it was criticized on two bases. One of which was she had people like Ralph Naders Group Public Citizen and Admiral Ricover who liked the old policies that the government would take inventions away
and put them in the public domain. The second debate was, and the more serious attack, was that by Dole only applied to universities and small companies, and a lot of people said, well, we should put big business in there, and we didn't do that because we said the promise is really more focused on universities than small companies. So anyway, twenty years after by Dole passed, we were sitting around
mining our own business. A couple of law professors put out this article claiming they'd found a secret meaning in by Dole. You know, again, we don't leave you don't leave secret meanings in a statue like the da Vinci Code. Don't you don't write bills like the da Vinci Code. We have like secret meanings in there. So I when I actually got a copy of the article, I actually I was actually running a thing called the National Technology Transfer Center, which is funded by Congress to help people
commercialize technologies. And at first I was stunned because I actually put together the hearings on by Doll. I wrote the Senate Judiciary Committee report, I staffed it through the Congress, and I actually oversaw the Department of Commerce. So I'm reading this paper and it has in there, you know, alleging to be the debate over by Dole, all about marching rights. And I don't recognize what they're talking about.
So I look at the footnotes and I found that what they've done is the legislative history of the bill is the debate on that bill, you know, the committee report on that bill. What these people had done is they'd gone back and look at other committee debates over patent policy. There were bills before by Dole or people that didn't like by Dole, So it was actually I actually laughed once I realized what they did.
I said, well, no one's going to believe this.
I mean, you know, I guess anything can get through an academic publication. But then they then the two authors got a wrote an op ed in the Washington Post called paying Twice for the Same drugs, And what it was alleging was that the government could march in and force force university as to license another person if somebody thought that a product wasn't reasonably priced. Now, there's nothing in the statute about that. There's no definition of reasonable pricing.
So I hadn't worked for birch Buy for twenty years, and I actually.
Called him up on the telephone.
We didn't really have PCs back then, in the ancient days, and I got him on the phone he was at a law firm and explained what was going on. I said, Senator, this is really serious now, because this is in the Washington Post and this completely misrepresents how your law works, and it actually undermines it. Because one of the bases of by Dole was we decentralized technology management from Washington to the people creating the technology. There's a few things
government can do, but basically they get out of the way. Well, this was an attempt to reinsert Washington micromanagement, in other words, to turn the whole bill on its head, because now government can decide whether a product is reasonably priced or not. And so after I talked to Senator Buy, he said, let me call Bob Bob Dole, and so they immediately wrote a rebuttal.
To the Washington Post.
Now, when you're writing, when you're writing an article in the newspaper, there's an ed which is longer. They wouldn't give us an op ed. They would only give us a letter to the editor. So Buy and Dole wrote a rebuttle back saying that's not how the law works. And anyway, nevertheless, after that, the people that that uh, the Ralph naderfolks, started filing a series of petitions to the government alleging that the law allows the government to march in if a price was if a product isn't
reasonably priced. And you know, it started its start of the whole thing which is which is existing to today. We can get into a little a little bit later. But that's that's really how we got into this debate again. It wasn't a fight. We saw it again for twenty years, the law work as intended, and all of a sudden you had people come up with a you know, a
manufactured alternative history to buy Dole. So one of the things we've done in the Bi Dole Coalition to counter that is we put the original documents on our website. We have a thing called a virtual library, a digital library, so you can actually read the real history of Baidol and you'll see there's nothing in the statute about reasonable pricing.
So that's a helpful history which I was not aware of. So I appreciate that. And I think when I reflect on your comments and our previous podcast, I think there is a bit of an insinuation that, well, Joe, you worked for the Senator, you were part of this effort to put this bill into law. Now you're kind of a hired gun of sorts. So of course your attitude or your views changed, and the legislative history shows that price was always meant to be part of this discussion.
Seems like you're saying, no, it was never part of the discussion. Hence all that we've done is part of the coalition. But can you just expand on that a bit.
I'm really happy to because you said it very nicely. It's actually worse than that. They've actually attacked the integrity of birch Buy and Bob Dole, who can't defend themselves. So, as I mentioned before, Senator By and Dole immediately responded to the Washington Post saying price is not a factor in by Dole, and they started filing marching petitions shortly after that, basically on this false premise that by Dole allows people to mark the acause the government to march
in if a product isn't reasonably priced. So there's only been one public meeting in twenty years on marching petitions, and that was held by the National Suits of Health on the on the first one on price control. And they didn't call it a hearing, they called it a meeting because under the marching rights, the way it works is, first of all, somebody files a petition like they did, the agency looks at it and says, okay, do you meet one of the four triggers we talked about earlier.
If you didn't meet the four triggers, it's dismissed. If you do meet the four triggers, it starts a whole series of administrative hearings and you can actually appeal to the Court of Claims. But what NIH did was when this first came up, they had a public meeting and had invited the critics in, and they also invited Senator By, and I went out with Senator Bye to Nih and what he did was and this this is on our website.
His statement is in there. The paper that I mentioned before that misrepresented the Congressional history only quoted two parts of the actual hearing of by Dole, one of which was they lauded Admiral Rickover, who again, as I mentioned before, was opposed to by Doll. So you know, you always when you have a hearing, you have somebody out, you have people on both sides, and Admiral Ricover was the father of the nuclear Navy, and Senator By was very respectful,
but his views were rejected by the committee. By Dole passed I think it was ninety five to four, so it had overwhelming support. The other thing they did was I wrote the Senate Judiciary Committee report. So when the petition went to Nih. The smoking gun they had was actually referencing the Senate Judiciary Committee report, And what they did was he took two things out of context that had nothing to do with marching rights, combined them and to imply that we were actually saying that you could
march in for price control. So if you read Senator buy statement, he actually showed specifically in the hearing record how they took those things out of context. And we weren't even talking about marching rights. We were talking about other parts of the law. So what happened was Nih dismissed the petition, as actually every petition has been dismissed
even up into the Biden administration. So about five or six years after that, the people pushing this narrative came up with a new theory and they said, well, you can't listen to birch Buy and Bob Dole because their law firms represented drug companies, and therefore you should dismiss everything they said, including the statement for Nih and also the op ed, And they implied that By went to that meeting representing drug companies. Well, I can tell you I was there. I know why birch By.
Went to that meeting.
I know why he went to the outbed not because of a drug company, because I contacted him, and I was running the National Center for Technology Commercialization, which was funded by the government, had nothing to do with drug companies, and Senator by and I rode the metro out there. You know, if he was representing some well healed drug company, we would have gone in a limo like some of the other speakers did. But you know, it's a slur on both of them. They cannot defend themselves. So what
happens is every time they're proven wrong by facts. And again this is not Joe Allens of this. We showed the actual legislative history, the actual you know, the actual the actual committee language. You know, this is not things we're just misremembering. And the other thing that that cuts against their narrative is no one can show at any time or any of us involved in by Dole ever said the law was tould be used for price control.
So so every time they're.
Proven wrong, rather than admitting it, they come up with a new story, either casting expersions on people like Bob Dole was a nineteen year old second lieutenant Italy a few weeks before World War iiO was in it and had his right arm shattered by a German machine gun. He went out and reinvented himself, went back, he had PTSD, basically went back to Kansas. The folks at his town rallied around him with the guy. He reinvented himself and
became a public citizen. Birch By was the same. I mean, I've never heard when I worked on birch By staff, never heard anybody attack his integrity. So I got to tell you, actually, it actually frosts me. And this is putting it mildly to have people attack the integrity of Bob Dole and birch By on something where we're talking about the actual legislative history, and we're actually showing in writing how this is not factually true. This is not I feel this way, and this is not suddenly we
were reversing ourselves before. We've been consistent throughout the whole debate, and the where you look at this you realize it doesn't hold up. And the evidence of that is every marching petition on price control has been dismissed by every administration. The most were dismissed under the Obama Biden administration. The Biden administration itself had one of the strongest denials of a price control marching right in March of last year. So it's not just Birch Buy and Bob Dole and
Joe Allen say this. Republican Trump administration, Obama administration, Clinton administration, and Biden administration all said this is not how the law works. So it just exasperates me, as you can probably tell from my tone here, that we keep having the same debate because clearly the law does not say that.
And the final thing I'll say.
Is Senator Joe Biden voted for by Dole he was on the Judiciary Committee, and reasonable pricing is not in the statute. In fact, Senator Bernie Sanders, when he was on the House, tried to act, actually put into legislation a basis for reasonable pricing that was voted down, and one of the people that voted against it was Senator Joe Biden.
So yet again that's helpful context for this discussion because we are hearing comments from both sides about what was meant. And since you were there, this provides some helpful framing for the discussion moving forward. And I do want to go back to this question of reasonable reasonable terms and just generally reasonable, because that's where this price discussion or
where they're trying to insert price into this framework. What I've seen, we've seen you say that this is a bit of a poison pill, and we've spent the last several minutes talking about that. Your feelings on how this came to be iministration, where to move forward? What issues can you foresee happening as a result.
Well, that's a great question, because what's happening is this is playing out in real time right now, and just to close the loop for your listeners, as I mentioned before, well let me go back one other step. So remember there's there's four triggers of marching rights. Where we talked about practical application, which means that which is defined as the products made available on reasonable terms. That only applies to the university, the patent owner, not the licensee, the developer.
And as Senator By said, if we had intended this for price control, I should actually add this also, there's four triggers. The first one only applies to the university. The triggers on you know, meeting public health and safety needs, meeting needs of government regulation, and also making sure you're going to make the product in the United States, if you agreed to apply to the patent owner and the licensee the developer. So the first one they were arguing
about only applies to the university. And as Senator bi said, if if Congress had intended that to be price controlled, universities don't set prices, the companies do. So if we had intended that to be for price control like the other three, it would have had industry the licensee in there, not just the patent honor. So what happened was as I mentioned before, and actually the Biden administration makes that distinction when they dismissed the petition for extanding, which is
a prostate cancer drug. And by the way, there's only been a handful of petitions filed. More than half of them have been filed on extending. They keep filing the extending petition. It's been filed at least six times, it's been dismissed six times, and they keep refiling it. That's what this fight is really about. It's one of the few drugs where the where the patents actually were made
by the federal were funded by the federal government. So what happened was in March of twenty twenty three, the Obama administration, I'm sorry, the Biden administration, like every other before, it has dismissed a price control marching petition. But when they did it, you had people like Senator Sanders and Senator Warren basically, you know, we're apoplectic that their pet
project has been dismissed again. So the Biden administration said, okay, well, we're going to have an interagency group look at developing a marching framework and actually look about.
Price as a possible term.
So that was just released on December seventh, twenty twenty three, which, for those of us who are history people, is Pearl Harbor Day. So on this Pearl Harbor Day, rather than being bombed by a foreign entity, we basically bombed ourselves. The Biden administration now said, even though this dismissed the same marketment in March, well maybe price could be a factor in marching rights. And so that's been pending now and they have a sixty day period for making comments.
It's a draft guideline. By the way, the sixty day comment period is very unusual because that also in those sixty days include Christmas hu New Year's. Martin Luther King Day, So you're really short circuited people's ability to get comments in and they put up this draft framework. So what's happening now is people are actually looking at this and
realizing what the impact would be. The other thing that's happened is right before the Marching Framework came out, there was a study done by a group called Vital Transformation and they actually looked at the drugs have been commercialized between I think twenty thirteen and twenty twenty to see what the impact of marching rights would be, and what they found was that ninety nine percent of them could
not be marched in on For a simple reason. Bidle only applies to federally funded inventions, and drugs have a number of patents around them. Maybe at the most maybe one or two are bi Doole inventions. The rest of them are made by industry, so to copy that drug, you have to have access to all the inventions, not just the bidole inventions. As it turned out is this is all being done. This is being hyped as a new weapon to control drug pricing.
Well it's not.
It's clearly not, because ninety nine percent of the drugs are not susceptible to it. In fact, you're in your last podcast, doctor Kesselheim admitted that he said, well, it really wouldn't do much to control drug prices.
It wouldn't do anything to control drug prices. But here's the.
Other thing that people forget. By DOLE doesn't just apply to the National Suits of Health. It applies to all federal agencies and are under by DOLE. Seventy five percent of inventions of universities are licensed to small companies. Small companies drive American innovation, even in the life sciences, even in things like immunotherapy mRNA. It was actually small companies that took those licenses from universities years before big companies
wanted to wanted to actually be interested in them. So now if you introduce price as a factor, anyone can file a marching petition. And the other thing is that we should mention to youar your listeners, is there's no definition in the in the in the law because we never intended it or in these guidelines. What do you mean by a reasonable price? So just imagine this you want to start a startup company. We actually formed three new startup companies every day of the year under by DOLE.
Energy technology companies environmental companies whatever, and they are formed around university inventions. So you go into license of technology and suppose this guideline is in place, and you ask the university, well, what do you mean by a reasonable price, and they can't tell you, well, no one is going to commercialize that. And we're seeing this already because here's the way the system would work under where the critics are trying to set up. You go ahead and commercialize
the technology. Now that's an easy thing to do. If you're talking about a new drug, you're talking about probably at least ten years of your life and two billion dollars in funding. Or even if you're talking about a battery technology or an environmental technology, these are early stage inventions, so you're really talking about five to seven years ten years at the best the actually come up with a product, and you're going to have to get venture funding to
do that. So suppose you actually come up with it, and you have a product on the market and somebody says, well, Dwayne, I don't think your product is reasonably priced, and there's no definition of that. Well, a large company can always a copier, can always make things cheaper than the innovator. You didn't have any costs, You didn't.
Do any R and D.
So you can always make the argument that I could make it cheaper than you did, particularly a large company. So what's happening. This is happening right now under this draft guidelines. David Capos was Obama's Director of the Patent Office, And actually I was just on a program with him last week, and David Capos is advising major corporations and major fenantciers, and he said, as of now, under these guidelines, federal funding is toxic. I'm telling my clients stay away
from it. In fact, he said he had a major under ask him, hey, should I put any money into a startup company? And Campos said I have to advise him, no, you should hold off on this because this is chilling the whole American innovation system. And the other thing I'll say is this is retroactive. So suppose you commercialize the technology ten years ago under the old region, under the way Buidole had work for forty three years. You're in
the market right now. Anybody can file a marching petition and say, hey, I don't really like I don't think Trici's prices is reasonable. There's no definition of that. So if I can make it cheaper than you, maybe the government's going to give me a license to actually copy what you just did. So if you want to give a gift to the Chinese, this is it. In one shot.
They've knecapped American innovation. It's not going to lower drug prices, but it's having an impact right now because people have to assume this is how the system's going to work, and they've turned forty three years of law upside down. The final thing I'll say on this is this is a blatant attempt to change a law without the consent of Congress. There is nothing in bi Dole that justifies this.
For forty three years, not just Joe Allen saying this, we can show the legislative history and actually the march impetition denials of every administration or on our website read them for yourself. The Biden administration is the strongest one. So for forty three years, this is not how the law worked. And then suddenly we wake up one day and for some reason which I can't explain, the Biden administration is now pretending like, yes it is. So this
is throwing our whole system up in the air. It's not going to have any impact, minimal impact on drug pricing, but it's chilling right now. And you know, any the Bidol Act covers funding like under the Chips Act, the Cancer Moonshot, Department of Agriculture, Interior, I mean, name your agency, NASA.
Any invention made by those now falls under this and people are scared to death to commercialize it or actually probably now regretting they ever did, because now you have a target on your back and no one can tell you how you're going to be judged. No one can tell you what are reasonable prices. That's made up after the fact. So if some GS fourteen and some agency decides, you know, we could make this product cheaper by a copier, you're now in trouble, you know.
I to me, that's a it's an interesting discussion because you know, I think when we're talking about drug prices, it seems right now that patents right are the enemy to drug pricing, and we certainly see that here with the march in right petition wanting price to be a factor to be able to march in on patents, and as you said, it seems like that's going to be a really small scenario. Maybe I standy's the only one where all the patents are going to have you know,
government funding. But it's you know, are patents the problem? I mean, what what is the issue right now? Do you think in your view that people are so focused on patents and drug pricing? And you know, because I think that's kind of the underlying theme that we see in all of these things, whether it be trying to update the framework for marching rights or you know, I know you're not a drug pricing expert, but we see the IRA which comes into lower prices for medicare ahead
of certain patent expirations. And then you know, we've even seen an introduction some bills about trying to deal with patent thickets. So you know, patents really right now are a hot topic. So I mean, what's your sort of initial take on that, like, are patents the problem? Like what's the issue here?
Well, you know, again, actually that's a that's a great question. The whole issue of healthcare is very complicated, and you know, everyone wants to reduce the cost of health care, but it's a you know, the more you look into it, and this is way above my pay rate, it's hard to get your hands on because there's so many moving parts of it. So I think patents are an easy target. But what you find is actually I didn't mention this.
One of the things that we actually had the US Controller General Elmerstatz testify at the Bidole hearing, and what we found was before by DOLE, when the government took the rights away. According to the Controller General and NIH, not a single drug was developed from an NIH funded invention when it was taken away by the government. So this whole theory that if stuff just is in the public domain, somehow magically is going to turn into a
new drug is not true. And in fact, if you look at who creates drugs, the US is far and away the leader of that. And we're the only country in the world where fifty percent of our new drugs come from small companies because again the bi Dole Act gives small companies the incentive to take risks that other people can't. I've actually mentioned aminotherapy. Immunotherapy was it was invented in the University of California, Berkeley. It was a
revolutionary new way of doing cancer therapy. For ten years, they could not find a single company and should in licensing it, and this typical universities. People think that companies are just lined up tonse government funded at inventions. If you find one company, you're lucky. So for ten years they couldn't find a licensee. They finally found a small company licensee and the same thing with mRNA. They would start the work going and eventually that got taken up
by other companies. But without patent incentives, these things are not being developed. I mean, there's no socialist country that develops drugs. So I think it's a simplistic argument to say, well, maybe we just confiscated these but we just took these things away from people and gave them to copiers, we would solve the whole system. Well, socialism doesn't work as far as as innovation goes. And I think it's a simplistic argument. But the same people attacking by doll are
attacking the patent system. They're actually asking the administration to give away all of our COVID therapies under the what's called the Trips Waiver, which was supposed to be an international agreement to have a certain platform of patent ability. And basically what they're talking about is, well, any any country that wants to copy one of our technologies related to COVID can.
Do so if it's a developing nation.
Well, developing nations includes China and India, so you know, it just staggers my imagination to think about America is the most innovative country in the world, frankly because of our patent system. But attacking the patent system is not going to solve healthcare. It's a much more complicated issue, and I think the fact that people can't come up with any other solution than taking other people's stuff away just shows it's really really hard to do. So again,
I'm not an expert on drug development. I couldn't develop a drug if my life depended on it, but I'm very thankful that people do because the only thing worse than expensive drugs would be no drugs at all, and I think that's the alternative. So we need to find ways of, you know, de risking drug development. It's one of the highest risk and longest term things you can do. You know, more than ninety percent of the drugs going
through the pipeline fail. And the other thing I should mention under bay Dole when these products fail, it's a company that takes the hit the government. No one, No one is laid off at NIH or University if one of their inventions it's license, doesn't make it in the market.
But companies, especially small companies, bet the farm. And that's what's so nefarious about this price control debate is because it puts a cloud over those small entrepreneurial companies that put everything they have, all their livelihood into creating a company. And now you're saying, if you succeed, we can take it away from you, if somebody can make that cheaper. So it's it's it's not it's certainly not the solution
to the healthcare issue. And I think it's one of those things where people, you know, people that that that have been looking at this for for years and years and having a hard time, you know, figuring out because just by its very nature, it's expensive to develop a new drug. I mean, that's just that's just the way the system is, and that there's there's hard to work around that. But I think one thing we should be, one thing we should be able to agree on is
killing killing the American innovation engine. Killing the law that the Economist Technology Quarterly said was the most inspired statute in fifty years is certainly not the way of doing it. I'll add one other thing. When I was at the
Department of Commerce actually oversaw BIDLA. At the Commerce Department in the early eighties, I was in a CIA briefing, a classified briefing, and they showed us the ten technologies of the future, and of those, we'd already lost five to Japan, and the CIA was saying, we're going to lose at least three more, just the way the trends were going.
We didn't lose.
Now a couple of years later, we lead in every field of technology because of our public private partnerships. So this is not just a drug development issue. This is a clean technology issue, an energy issue, and agricultural issue. It's our small entrepreneurial country companies that carry our system. And again, imposing price control is not going to have any impact on drug development for the very reason we
said before. The patents aren't covered by federal funding. In fact, it's really funny now it's actually not funny.
It's tragic.
The same people pushing this narrative are now conceding that marching rights won't control drug prices. So you know what they're asking for now they want the government just to confiscate the private, private inventions, private patents, and then private know how so they can copy it then, so you know clearly their theory doesn't work. They're acknowledging that themselves.
You actually heard from your last broadcast people are saying, well, marching rights wouldn't really lower drug prices after all, but it's going to have a devastating impact on other fields of technology because once you open this up, you release the furies on everything. And here's my other prediction, and this is going to happen very soon. You're going to have shakedown artists start filing marching petitions against small companies and they're going to say, hey, Dwayne, really a shame
if somebody filed a marchin against you. Now you're trying to get venture funding. Maybe you should make it worth my while to go away, or maybe should let me copy it. So this is going to become a cottage industry. You're turning Bidle on its head. For forty three years, it worked like a charm. There's no bureaucracy. Everyone understood
how it worked. Now you've turned the whole system upside down where no one can tell you what a reasonable price is and the consequences are are foreign competitors, your brother in law who doesn't like you, or a shakedown artist can now file a marching petition and even if they're not successful, if I know you're out looking for another round of venture funding, no one is going to fund you with this hanging.
Over your head.
So it's just one of those things that the more you look at it, the dumber it is. And I think what's happening now is you're having a bipartisan reaction on the Hill realizing first of all, this is an attempt by the executive branch to change a statute without the consent of Congress, which they can't do. And secondly, it's not going to have any impact on drug price control,
but it's having a huge impact on American innovation. Things like the Chips Act are covered by by DOLE, So Congress is putting billions of dollars now trying to get us competitive. As in other fields, clean energy, battery technologies, environmental technologies, all of them fall under by DOLE, and all of them under this cloud now. So it's you know, it's really it's catastrophic. I mean, this is this is a major This is Pearl Harbor on American innovation, but we bombed ourselves.
Yeah, and it sounds like I mean, I think, you know, if the framework's going to pass, you have to think about, Okay, well, what's the impact going to be on licensing and collaboration agreements, especially between let's say academic let's say sticking in the realm of drugs. But it sounds like this is going to apply across the board to different technologies, you know, between academic medical research centers and biotech companies. I mean, you sort of hinted on this, but we talked about
a little before. I think it was out of you know, mRNA vaccines in COVID. Huge innovation in one of the patents sort of underlying that technology is out of the University of Pennsylvania with you know has you have Drew Weissman and Kaitlyn Carrico and this patent on modifying a residue that modified you in the RNA and that is a subject invention. But it doesn't cover the entirety of the COVID vaccines.
Right.
The COVID vaccines are protected by a large amount of IP that covers changes you make to the RNA, how you deliver it, what the sequence is, and so. But who's going to bear I guess the burden of this risk. I mean, our manufacturer is going to price this in whenever they're contracting with universities. Is this really going to impact universities and tech transfer offices more than it's going to impact sort of the big pharma.
That's a great question.
Actually, we had a briefing on Capitol Hill last week and we had I mentioned David Capos, the former Patent commissioner under the old of Administration, and Kate Hudson. Kate Hudson is with the Association of American Universities. Kate said, this kills academic tech transfer. And here's the other thing.
Remember this is a guideline people are assuming now that this is and what we're asking you buy the Administration to the bi Dole Coalition, we're saying this should be rescinded because this is having an impact on our system right now. And David Capo said, it's you know, right now, if a company decides the license university technology, you're doing
it now to protect yourself against infringement. He said, the value of that that that patent has gone way down now because it's toxic, you know, again, just because of all the reasons we talked about, you're opening yourselves up now for somebody claiming they can make the product cheaper than you, and if they can, then the government should take it away. So this takes us back to the pre by Dole errors where companies didn't want to work
with universities. You know, before by Dole, you didn't find a bunch of startup companies coming out of universities across country. We form three startup companies every day of the year and commercialize three new products every day of the year from academic invention licenses, seventy five percent of which go to small companies. So all that's in danger right now.
And it just boggles the mind to think that that we're doing this under the guise of drug price control, which for the very reasons you talked about, can't possibly work. The people that have been pushing this for twenty years now are finally having to concede when people look at it, well, no, this really wouldn't lower drug prices because you can't get all the patents. So rather than that they were wrong, they're trying to push us further into swampsea. Well, now
the government sho just confiscate private property. You know, we've heard that one before. If that work, Venezuela would be the most innovative country in the world. But you know, you're really these people's motive is being more and more apparent because they're what they really really want is and they've even talked about this decoupling R and D from markets, which means the government should fund development. And the other thing, the other falsehood is what they're telling people is the
government's funding research and development. Remember what I mentioned that the two people that wrote the law review article there oft in the Washington Post was called paying twice for the same drugs. So the implication is, well, the government's actually funding not only early stage research but development. Well
that's clearly, clearly, clearly untrue. You know, companies are taking a huge risk on any any family funded invention, and most times at risk doesn't pay out, and when it doesn't pay out, people lose their jobs, not at nih but in the companies. So the genius of by Dole is the risk is put on the private sector. We gave them incentives, but the benefits to the public are
you're funding early stage research. Now it's being turned into products like Google came out of by Dole, Barcodes came out of by Dole, Honey crisp apples came out of by Dole, Immuno therapy came out of by Dole. It's literally, it's literally revolutionized how people live here and around the world, and all that's being put in jeopardy now on a
theory which is first of all not legally sound. And now it's turning out that once people look at it, it's not even a good policy because it can't possibly work in the field they were talking about, but it's going to be devastating to other fields. So, you know, the more that people look at this, I think it's actually falling apart under its own now. And like I said, we're having bipartisan people on Capitol Hill looking at this and it makes less and less sense to where you
look at it. But unfortunately, until the Biden administration pulls this thing back, it's having a huge impact right now and that's only growing because now people are aware of it.
There's a thing called this.
Small Business Innovative Research Act, which every agency has to give under law a percentage of their funding to small companies. Before a by Dole innovative small companies didn't want to take government grants because if you made an invention that was taken away from you. Well, SBR has changed that. So I was actually talking to one of the people
that started the sbi R program. And for years I've been telling people, listen, this marching thing is not just going to hit It's not going to hit drug companies, It's going to hit everybody else. So when I explained that the SBIR program is under by Dole, that's the basis of it, this guy said to me. He says, So what you're telling me is this is not the drug companies problem, this is my problem. And I said exactly.
The National Adventure Capital Association wrote a very strong letter to President Biden directly urging him to pull this thing back again because it's chilling their interest and funding new companies.
So this is a big deal.
This is not some obscure little patent thing. This strikes at the foundation of American innovation. It's what made us competitive. It was driven the American industrial renaissance, which started in nineteen eighty with by Dole. He continues to today. But again, if you wanted to give gift to the Chinese, this is it because in one fell swoop, the administration now has put a cloud over the whole innovation system, has
made us that the wonder of the world. Bidele is a recognized best practice South Africa has adopted by DOLE as a way to actually start commercializing their own technologies. So this really is a big deal. It's not some little small thing, and it's all based on a false premise which the more you look at it doesn't stand up legally and doesn't stand up as a policy.
Thanks Joe. That in mind. What's the outlook for the next several months. Do you think the administration moves forward with this?
That is a billion dollar question, and actually a billion is a low estimate. I don't know. I think this was imposed.
By political operatives in the White House.
It was imposed on the on the agencies, because if you actually look at the framework, a lot of the framework actually contradicts going forward on using reasonable pricing as a margin criteria. But the danger is this is having an impact right now. It's not like this is a rule that's going into effect. They didn't make it a regulation
and it's a guideline. So I'm really hoping that as more and more people weigh in again on a bipartisan basis, that growing ups in the White House are realized that this is really a disaster and we'll pull it back, because the worst thing is if you just let this sing linger. Okay, we've made a mistake, but we don't want to admit it's legislative linger. Well, it's chilling. It's
having an impact right now. People are not investing in companies, people are not licensing technologies, and that's only going to grow because remember this has only happened, this has only been a month old, where the word is just getting out now people are just understanding. Like I said, my friend that did SBR, all of a sudden, he realizes, hey, this is not hitting drug companies, it's hitting my SBR companies.
So I'm really hoping.
That the administration will realize, as President Biden said, you know, as Senator Biden did, bideal works and price control is not part of the statute. So I'm really hoping they'll hold this thing back because just letting this linger out there is really have an impact. But the deadlines for making comments on February six is rapidly coming up. But I'm just praying and hoping that that wiser people will prevail and realize that this is a This is a
huge risk and the consequences are catastrophic. I mean that's may sound like hyperbole, but it's catastrophic and it's damage we're inflicting on our own system that will won't do any good to anybody. So I'm just hoping as we get the word out to more and more people, that folks in the administration will realize, hey, this doesn't make
any sense. Maybe it sounds like a good talking point, but even that doesn't hold up because, like I said, even the people pushing him into this are now having to concede it won't control drug prices, So you know, what have you really benefited from? So we'll hope and see. I'm hoping things like this this brought this broadcast help get the word out. But this really is a big deal, and it's it's so disheartening because this is not something
the Chinese launched on us. This is not some cyber attack. This is something that we did to ourselves. You know, no one forced us into this. This is an unforced error, kind of like the guy yesterday from Detroit who fumbles the ball right across before the goal line. You know, this is an unforced error, and the consequences, unlike a
football game, are going to be very very serious. People are going to lose jobs, We're gonna lose competitiveness, and once people lose confidence and the government is a reliable partner, that's very very hard to restore. By Doll didn't just take off overnight. It took us years to convince people that the policies really changed, that the statutes works as we talked about, and you really can trust the government can be a reliable partner. All that's gone out the
window with this because who can trust? Who can trust the administration that in March says this is not how the law works, and then December said, well, actually.
Yes it is.
Yeah.
I think, you know, this is going to be a topic. I think that we keep hearing talking points on and you know, I think, as Dwayne and I said in our last one, we'll have to maybe revisit this in a year and really see what's happened. Has there been sort of a change in how the administration views this, what happens with the election, and also if it moves forward, is there really this chill that we're seeing in innovation and the implications. But Joe, thank you so much for
joining us today. I think this really helped round out our discussion on March and rights. And thank you the listener for joining us today on our Woods and Verdicts podcast and we hope you listen in on our next episode. Thank you