In mid-July, the U.S. media lit up with a big story about the global race for a Covid-19 vaccine. State-backed Russian hackers, it was alleged, were poking around the vaccine trade secrets of U.S., Canadian, and British drug companies. This was framed as a serious national security issue, as if Moscow was seeking recipes for a Doomsday bioweapon and not data related to an urgently needed antidote to the pandemic. The straight-faced intelligence sources driving the story captured perfectly the Strangelovean heart of corporate vaccine nationalism: “We condemn these despicable attacks against those doing vital work to combat the coronavirus pandemic,” Paul Chichester, the director of operations for Britain’s National Cyber Security Center, told The New York Times.
When the story expanded to include allegations of Chinese vax hacks, it further distanced the U.S. media from what much of the world sees as the real issue: Why are rich nations allowing publicly funded Covid-19 research to be treated as objects of corporate secrecy and control in the first place? Why doesn’t everyone have access to this science as a global public good?
This question was closer to the center of the summer’s second big story involving Covid-19 and intellectual property. On August 4, attorneys general from 34 states and territories published a letter accusing the California-based drugmaker Gilead Sciences of abusing its monopoly on remdesivir, the only approved antiviral Covid-19 treatment. “Gilead has not established a reasonable price, nor has it met the health and safety needs of the public given the Covid-19 pandemic,” stated the bipartisan letter, whose signatories included Xavier Becerra, a California Democrat, and Louisiana Republican Jeff Landry. Citing the federal government’s crucial role in developing remdesivir, the attorneys general urged federal health officials to use the regulatory authority written into the 1980 Patent and Trademark Law Amendments Act, better known as Bayh-Dole. The law sets conditions on property rights on publicly funded research and related inventions and allows the government to “march-in” on those rights in the name of the public interest. The attorneys general were correct to invoke the government’s duty to push Bayh-Dole’s patent-override button, but it may first need some dusting off; in 40 years, it has never been used.
The attorneys general letter flipped the vaccine espionage story on its head. It describes a world in which the danger isn’t the intellectual property hoarded by drug companies falling into the hands of rival nations, but monopoly control over that I.P. here at home. It was California-based Gilead, not a foreign power, that developed remdesivir with funds from the U.S. Treasury, all while stashing its I.P. and profits in Ireland and the Bahamas to avoid paying U.S. taxes. It was the Nasdaq-listed Gilead, not an enemy state, that has priced remdesivir at $520 a vial—around 50 times the cost of manufacture.
Gilead’s production of the drug, meanwhile, is expected to result in national and global shortages through its stingy approach to licensing, designed to maximize profits during a global public health emergency. The strategy looks like a success. On the morning the attorneys general published their letter, a Motley Fool health care reporter explained, “Investors shouldn’t worry much about Gilead [which] expects full-year revenue will be between $23 billion and $25 billion.… What’s the main reason for this optimism? Remdesivir.”
The call from the 34 attorneys general to break Gilead’s remdesivir monopoly by licensing off-patent manufacture is the most serious political attack on the intellectual property rights of a U.S. drug company in memory. By spotlighting the broken intersection of patent law and federal science policy, this appeal has the potential to shift the politics around drug prices and drug development. The conflict at the center of these debates, between human needs and private profit, is also driving a global movement centered on the World Health Organization’s Covid-19 Technology Access Pool. This initiative was launched in May with a “Solidarity Call to Action” to make vaccine research and technology available on an open-science and open-license basis. The Pool’s 40 signatory states brought their entreaty to last month’s meeting of the World Trade Organization’s Council for Trade-Related Aspects of Intellectual Property Rights, where South Africa is leading a charge to activate and expand that organization’s I.P. opt-out clause for states during public health emergencies.
South Africa and other less developed countries have hard-earned experience in how I.P. barriers slow and restrict access to new inventions. Most notoriously, a 20-year I.P. lag separated the patenting of the first effective HIV drugs and the arrival of affordable generics in the global South, which only happened because a determined worldwide campaign spent years shaming companies like Gilead into submission. At the World Trade Organization meeting in July, South Africa’s representative described how the familiar script was already playing out with Covid-19, beginning with Gilead’s profit-driven handling of remdesivir. The representative said the company’s limited licensing strategy is “an attempt to contain competition by creating an oligopoly. Generic manufacturers globally that can contribute to expanding global supply have been excluded. The lack of transparency and accountability in the present dire times is extremely worrying and dangerous.”
For now, the process of moving the U.S. drug debate closer to the global one can be advanced by pursuing the attorneys general case against Gilead and demanding that federal health officials break its remdesivir monopoly. But while the attorneys general make a strong case based on the government’s role in developing remdesivir, multiple recent studies suggest the public’s claim on it and other drugs—and, crucially, a future vaccine for Covid-19—is far greater than generally understood. If a future Democratic administration were to be interested in breaking Big Pharma’s stranglehold on medicine, this is where it could begin.
The federal contribution to remdesivir’s
clinical development is well-known. The attorney generals evoke the $75 million
in government grants
 that spurred the drug’s inception as a Covid-19 treatment, from the initial identification of its potential by a Centers for Disease Control and Prevention scientist in 2014 to its Emergency Use Authorization approved by the Food and Drug Administration in May. Those grants, while significant enough to justify action under Bayh-Dole, likely represent but a fraction of the actual federal subsidy, according to recent research that challenges the accounting metrics traditionally used to measure the contribution of government science.
In a study published last month, researchers at Bentley University’s Center for Integration of Science and Industry examined the development process for drugs, using the timely case study of remdesivir. They found that breakthrough inventions generally only happen after an enormous body of foundational research reaches a “maturity threshold”—a process that can take 30 years or more. In the case of remdesivir, the authors tallied the total federal contribution to the matured foundational research related to the antiviral’s biological target (a class of RNA replicator proteins) and parent chemical structure. The authors estimated the U.S. government’s total financial contribution to the development of this research, upon which the invention of remdesivir rests, at $6.5 billion. These billions were dispersed through thousands of grants that altogether comprised some 6,800 project years, most of them running concurrently.
Fred Ledley, the lead author on the study, told me, “It is a fundamental flaw in our system that the critical role played by government funding in establishing the scientific and technological foundation for the products developed by industry goes ignored.”
He added, “There is currently no recognition of the decades of basic, foundational research that make remdesivir and other discoveries possible. The government was an early investor in research that produced antiviral drugs for HIV, hepatitis, and now Covid. We need mechanisms to ensure a more equitable distribution of the value created by these investments and ensure they are appropriately rewarded in public value.”
In two earlier studies, Ledley’s team used a similar methodology to demonstrate that all the new drugs approved by the FDA between 2010 and 2019 rested on an edifice of research built with $200 billion in government money.
The Bentley team is not alone in tracking the pathways through which government-funded science leads to breakthroughs in medicine. In June of 2019, a team led by Lee Fleming of the University of California at Berkley found the number of patents relying on public science has grown at a quickening pace in recent decades, doubling between 2008 and 2017. Corporate patents that grew out of federal research, Fleming and his co-authors found, are almost always “more important” than those that didn’t, as measured by future citations. “From a societal viewpoint, the discoveries from research are best distributed widely throughout the economy, rather than being kept in a single firm,” the authors concluded.
These findings support a simple and intuitive idea: The advance of medical science, like all forms of knowledge, is an incremental and cumulative project. It applies especially to drug and vaccine breakthroughs requiring enormous multi-decadal investments in research that gestates slowly. The pharma and biotech industries understand this very well, as evidenced by their alarmed reaction to the deep cuts to National Institutes of Health research budgets (later reversed) in early drafts of the 2018 federal budget.
The issue is not whether the government has legitimate claims on many of the drugs the public now pays for twice (first as a massive permanent research subsidy, then again at huge retail mark-ups that enrich investors and executives). The question is whether we can muster the political power and will to exercise these claims. Doing so begins with recovering a truth the drug industry has successfully consigned to the national memory hole: Medical monopolies, especially federally subsidized ones, were widely considered profoundly un-American for most of this country’s history. This was true up until the middle decades of the last century when today’s federal research infrastructure was being built.
Following the Second World War, advocates seeking to keep the fruits of public science under public control adhered to a view of scientific discovery as gradual and cumulative. The era was full of breakthrough vaccines and medicines, but this understanding of science underlay a view of patent policy that prioritized broad public benefit over the ownership rights of a single “inventing” person or institution. This is why the findings of Ledley and Fleming matter. The quickest route to break illegitimate patents and reduce the power of Big Pharma runs through the public-interest language in U.S. law and patent code. Expanding the definition of government support widens the road for state and federal patent challenges and dramatically narrows it for monopoly claims on medical inventions aided by public money. It also advances the argument for a public option in pharmaceuticals.
If lawmakers are looking for playbooks on how to connect these dots, they’ll find them in the fierce postwar debate over science and patent policy.
In the half-century leading up to the New Deal, Populists and Progressives waged an unceasing, multi-front war against the only legalized form of monopoly: the patent. The intensity of this war waxed and waned, tracking to shifting balances of forces in Congress and the courts. The executive branch became decisive with Franklin Roosevelt’s 1938 choice of Thurman Arnold to head the Antitrust Division in the Department of Justice. The appointment signaled a shift in New Deal economic policy: Competition, not just planning, was now a focus and antitrust law the tool.
Arnold and the New Dealers’ approach to patent claims was informed by a skeptical view on the idea of solitary invention. The classic New Dealer statement of this skepticism was an article published in the September 1940 issue of The American Economic Review called “Deficiencies of American Patent Law.” The essay, by an economics graduate student named Alfred Kahn, argued that the rise of the corporate research lab effectively severed the patent system from its original constitutional mandate to spur invention and produce widespread social benefits for the public good. “From the business standpoint [the great research laboratories] are patent factories,” he wrote. “Their product often is nothing but [a] basis for threatening infringement suit and scaring off competitors.”
Kahn further argued that the consequences of patent monopolies—retarding technological progress, further entrenching concentrated economic power—flow from the anachronistic fallacy of the lone inventor. “In order to look upon a single inventive contribution as patentable and exploitable,” Kahn wrote, “one must look upon each invention as an entity, self-contained and distinct from all others.” In an age of complex multidisciplinary technological advance, he argued, the act of invention more closely resembled an organic cooperative process containing “within itself the dynamic factors that make for constant cumulative movement … The man who brought to a certain stage of fruition the efforts of myriad predecessors may have made a great contribution. But seen in its proper setting and perspective, that contribution is something less than cataclysmic.… The individual does not construct new chains; he fills missing links.”
Just as James Watt struck upon his world-shaking idea of the modern steam engine while repairing Newcomen’s earlier design, the Gilead scientists who patented GS-5734—as remdesivir was known during the years it languished in the company’s offshore I.P. vault—were working atop 6,800 federally funded project years of research into RNA proteins and analog nucleosides. This process, Kahn believed, supported the vigorous application of antitrust law by Arnold’s office (which later hired Kahn) “to set up a cleavage between desirable essence and predatory excrescence” in patent law.
When the war ended, the definition of “predatory excrescence” took center stage in a five-year, front-page contest to determine the fate of intellectual property emerging from the nascent postwar federal research apparatus. On the side of public control were the New Dealers, led by West Virginia Senator Harley Kilgore. They wanted to extend the wartime policy of the Office of Scientific Research and Development, which retained rights on federally funded inventions for the government. Arguing for a more flexible policy was a Hooverite coalition of business associations, industrial trade groups, and influential conservatives who straddled the worlds of government, elite research institutions, and corporate boardrooms. The conservatives were led by the imposing chief of wartime research, Vannever Bush, who promoted the I.P. regime sought by drug giants like Merck, whose board Bush joined in 1949.
Reading the 75-year-old transcripts of Kilgore’s hearings, it’s striking to note how clearly the participants anticipated contemporary debates around federal research, private patents, and monopoly pricing. “It is really quite unthinkable,” said Horace M. Gray, a dean at the University of Illinois, “that the Federal Government should tax the citizens of this country to secure funds for scientific research, on the ground that such research promotes the general good, and then turn the results of such research over to some private corporation on an exclusive, monopoly basis.”
Gray went on: “This amounts to public taxation for private privilege and violates one of the basic tenets of our democratic faith.”
A speaker representing the Congress of Industrial Organizations made a similar appeal, saying the transfer of publicly subsidized science to industry control “offends American democratic principles.”
Two years later, in 1947, the issue was still unresolved when the Justice Department submitted the results of a four-year study on federal patent policy to Harry Truman. Justice officials recommended a strict policy of keeping public science under public control. Noting the wartime achievements of the Committee on Medical Research—which developed, among other things, industrial penicillin—the report warned that allowing private monopolies on government-funded science would restrict access to important discoveries and related research and would distort R&D agendas by incentivizing profit over the public good.
“The technological problems posed by our present civilization are of such magnitude … that only by pooling resources and information on a nation-wide scale can the challenge adequately be met,” the report concludes. “Inventions financed with public funds should inure to the benefit of the public, and should not become a purely private monopoly under which public-financed technology may be suppressed, used restrictively, or made the basis of an exaction from the public to serve private interests.” For good measure, the 1947 Justice Department report spends several pages countering that era’s version of Big Pharma’s standby argument, which hasn’t changed much over the ensuing decades: that without the lure of monopoly riches, scientists would not do science. The report concludes, “The weight of informed opinion, and the evidence of experience, establish that the ownership of patent rights is not a necessary form of incentive.”
Kilgore and the New Dealers lost the argument, and government patent policies remained “flexible”—that is to say, mostly determined by the federal contracting agency. The government often retained non-exclusive rights, but a rising pharmaceutical industry succeeded in beating back ongoing efforts to curtail its patent power. Aside from a short-lived attempt by the Kennedy administration to tighten up access to government drug research, the trend went continually in industry’s favor, culminating in the Reagan-era construction of a streamlined public-private tech-transfer conveyer belt.
The two main engines of that machine, Bayh-Dole and the Stevenson-Wydler Technology Innovation Act, both passed in 1980, were written with public-interest triggers attached to minimal and vaguely defined social obligations on the part of the patent holder. The Clinton administration stripped those obligations from Stevenson-Wydler in 1995. Bayh-Dole’s public-interest language is still there but remains a monument to four decades of industry’s joint conquest of our political system and the public’s understanding of its rights under the law.
Like every drug company that’s been targeted by a Bayh-Dole petition, Gilead is disputing the law’s applicability in the case of remdesivir. They are wrong on that point, but as all drug companies know, Bayh-Dole is only one of many sources of the government’s broad powers to break patents in the public interest. Although the attorneys general letter does not mention it, states also retain a version of “march-in” power and cannot be sued for patent infringement in federal court without their consent. A section of the U.S. Code dating to the early twentieth century, meanwhile, grants the government immunity from infringement claims so long as it gives the patent victim “reasonable and entire compensation,” as determined by the Court of Federal Claims. This is more than is required under the “just compensation” language of the Fifth Amendment’s takings clause, which the government can determine as it sees fit.
In the Constitution, the takings clause has power over the intellectual property clause because patent rights were established to serve the national interest, not the other way around. The architects of the patent system generally understood private property, intellectual or otherwise, to be “a creature of society, subject to the calls of the society whenever its necessities require it.” That, at any rate, was the view of Benjamin Franklin, who makes a good mascot for modern challenges to the assumptions and consequences of proprietary medical science. Though the country’s most famous inventor-scientist, Franklin never made use of the U.S. Patent Office and was always a bit cold to the concept. “That as we enjoy great advantages from the inventions of others,” Franklin wrote in his Autobiography, “we should be glad of an opportunity to serve others by any invention of ours, and this we should do freely and generously.”