Funding Fairness: Public Investment, Proprietary Rights, and Access to Health Care Technology William Sage Virginia Law Review i. Introduction R. Eisenberg – federal technology transfer policies should be reexamined in light of actual experience with patented technologies. 1980 Bayh-Doyle act outdated – allowed organizations to retain patent ownership of government sponsored research, a privilege which was later extended by executive memorandum to large businesses Nation in highly unstable climate for biomedical research and the applied technologies it generates. I. Medical Innovation and Health Care Spending a. Conventional economic analysis: no investment in knowledge without appropriation by investor i. Patent monopolies replace one form of market failure for another ii. Government funds basic research which is unlikely to be patentable iii. Bayh-Doyle act was meant to strike a balance between patentability and government sponsorship b. Different playing field i. Annual expenditures approaching one trillion dollars (~14% of GDP) ii. 15% of Americans uninsured; most industrialized nations have universal medical insurance programs iii. Rising health care costs 1. Spending too much on health care? 2. Are we getting the value (our money’s worth)? iv. No easy answer 1. most efficient health care system will only see short term gains 2. only a small percentage of medical innovations are “definitive” technologies that prevent or cure long term illnesses (e.g. polio vaccine displacing iron lungs) 3. most technologies are “half-way” v. Two conditions for worthwhile spending: 1. cost-effective 2. available equitably to potential users vi. AZT for HIV/AIDS 1. led to “reasonable price” requirement by the National Institutes of Health for inventions arising form Cooperative Research and Development Agreements (“CRADAs”) vii. AMA Council on Ethical and Judicial Affairs 1. unethical to patent procedures which could benefit a larger number of patients if performed without regard to ownership viii. Human Genome Project 1. NIH requires grant recipients to sign a written pledge assuring open access to research results II. Private and Public Sector Influences i. Private insurance and health care industries are being transformed by managed care ii. Federal and state governments have become the largest purchasers of health care services through the Medicare and Medicaid programs a. Managed Care b. Public Payers c. FDA Regulation III. Patent Incentives and Biomedical Research a. Supporting research through the promise of patent royalties is much like addressing poverty with a state lottery. IV. Linking Patent Policy and Health Policy a. Reassess the Bayh-Doyle Act b. Patents transferred to industry might contain recoupment provisions – obligations imposed upon patent holders that would serve to repay government for its initial investment in research and development. c. Recoupment provisions in technology transfer laws might help promote equitable utilization of expensive medical technologies. d. Revenues derived from patent holders might be used to verify the cost-effectiveness of new technology. e. Compulsory licensing might be instituted to allow broader “experimental use” of proprietary technologies and more rapid development of competitive alternatives.