Promoting Innovation in Healthcare through the Patent System: The Bayh-Dole Act and the Orphan Drug Act

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1 Promoting Innovation in Healthcare through the Patent System: The Bayh-Dole Act and the Orphan Drug Act Dominic Keating Office of International Relations United States Patent & Trademark Office Washington, DC October 1, 2004

2 Overview Benefits of Patent System Limitations on Some Patent Systems Licensing of Patents from Government Funded Research Lack of Incentives for Research and Development in Rare Diseases Solutions Bayh-Dole Act Orphan Drug Act

3 Benefits of the Patent System Provides Incentives to Promote Research and Development Disseminates New Ideas Creates Competition Provides Incentives for Investment Facilitates Technology Transfer

4 Limitations on Some Patent Systems Licensing Government funded research not reaching the market Neglected Diseases No incentive for research and development related to orphan diseases

5 Limitations on Some Patent Systems Prior to 1980, Federal Government retained ownership of patent rights and would not grant exclusive licenses; only non-exclusive available Rationale: Public tax dollars paid for the invention, it should therefore be freely available for anyone to use

6 Limitations on Some Patent Systems Many printed publications were created but few products In 1980, the government held title to approximately 28,000 patents. Fewer than 5% had been licensed. Few of those licenses related to commercial products.

7 Limitations on Some Patent Systems Companies could not obtain exclusive rights Companies were reluctant to invest in developing new products and markets; competitors could later acquire licenses and then manufacture and sell the same products

8 Limitations on Some Patent Systems Taxpayers paid for federally funded research effort, but the public did not benefit from useful products or the economic activity resulting from the manufacture and sale of new products.

9 Limitations on Some Patent Agency Kept Title Spent $ on Labs Systems Agency Agency Kept Title, Granted $ to Universities Federal Labs University Articles Few Patents No Products Non-Exclusive Licenses (Few) Few Products Few Univ./Business Collaborations No Significant Return on $

10 Limitations on Some Patent Systems Also, lack of incentives for R&D related to rare diseases such as such as Huntington's disease, myoclonus, Lou Gehrig's disease, Tourette syndrome and muscular dystrophy

11 Solutions: the Bayh-Dole Act In 1980, Congress enacted Bayh-Dole Permitted universities and small businesses to elect ownership of inventions made under federal funding and to become directly involved in the commercialization process. Permitted exclusive licensing when combined with diligent development and transfer of an invention to the marketplace for the public good.

12 Solutions: the Bayh-Dole Act Encourage collaboration with industry Preference for small businesses Report patenting and use Government retains license

13 Solutions: the Bayh-Dole Act Prior to 1980: less than 250 patents issued to Universities per year Since 1993: Universities averaged more than 1,600 patents annually Prior to 1980: About 24 Universities engaged in technology transfer By 2000: About 200 Universities engaged in technology transfer based on AUTM membership

14 Solutions: the Bayh-Dole Act By 2000: 417 new product introduction; 18,617 active licenses; 4,000 licenses (25% of active) associated with product sales

15 Solutions: Orphan Drug Act In 1983, Congress enacted the Orphan Drug Act Provides incentives for research and development into rare diseases

16 Solutions: Orphan Drug Act Established 7 year exclusivity for drugs to treat rare diseases or conditions Rare is defined as a disease affecting 200,000 or fewer persons in the U.S. Protects drug for the approved orphan against all other competitors, including second New Drug Application

17 Solutions: Orphan Drug Act The ODA has been very successful - more than 200 drugs and biological products for rare diseases have been brought to market since 1983 In contrast, the decade prior to 1983 saw fewer than ten such products come to market

18 THANK YOU! Contact Information Office of International Relations USPTO (703)

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