NCPA - National Center for Policy Analysis

Bayh-Dole Act: Moving Innovations From The Lab To Patients

May 13, 2002

In 2000, almost $48 billion was spent on basic research in the United States, with 58 percent of the funds coming from the federal government. The largest source of federal funding is the National Institutes of Health.

The purpose of the 1980 Bayh-Dole Act is to speed the movement of innovations from the laboratory to the marketplace. The Act gives universities and firms the right to exclusively license inventions made with federal funds and keep the profits. Previously, the government retained the title, giving the inventions away for free. As a result, universities and researchers had no incentive to commercialize the inventions.

Supporters say the Bayh-Dole has worked as intended, while critics say it amounts to a federal giveaway of valuable patent rights.

  • In all, from 1982 to 1998, yearly academic patents jumped from 464 to 3,151, a 579 percent increase.
  • In 2000, universities -- most of the large ones now equipped with technology licensing offices -- collected $1.26 billion on licensed inventions made with federal money.
  • If only 10 percent of yearly increases in life span arise from federally funded medical advances, taxpayers experienced a 15-fold return on their investment in the NIH, estimates the Joint Economic Committee of Congress, valuing that return at $240 billion.
  • However, last year, a look by the NIH at the 47 current "blockbuster" drugs with sales of more than $500 million found only four clearly linked to its funding -- Taxol, Procrit, Neupogen and Epogen, which had combined yearly sales near $10 billion last year.

This suggests private capital has been more productive. However, federal funds are generally directed at basic research that may be beneficial to the development of many specific drug treatments.

Source: Dan Vergano, "Scientific formula faces issues of money, ethics," USA Today, May 13, 2002.

For text


Browse more articles on Health Issues