Return on Federal Biotech Investment Working, NIH Says

Thirteen months ago, the General Accounting Office issued an unfavorable report on the licensing and royalty returns the National Institutes of Health (NIH) receive for commercialization of technologies resulting from federal funds (see: http://www.ssti.org/Digest/2000/081800.htm).



As the Administration and Congress look to increase the NIH budget significantly again in 2002, the issue surfaces again. What level of direct financial return can be expected from the federal investment in life sciences research?



To address Congressional demands to demonstrate a return on investments in research, NIH issued A Plan to Ensure Taxpayers' Interests are Protected this summer, declaring "its stewardship of the federal resources that support biomedical research has protected the taxpayers' interests." The NIH plan calls for little or no modification to the Institutes' existing efforts to capture royalties on federally-funded research.



NIH concludes:



"Current practices in technology transfer have yielded a dramatic return to the taxpayer through the discovery of new technologies that extend life and improve the quality of life and through the development of products that, without the 

successful public-private relationship, might not be available." And,



"Requiring direct financial recoupment of the federal investment in biomedical research can potentially impede the development of promising technologies by causing industry to be unwilling to license federally funded technologies...Such action would diminish the strides made under the Bayh-Dole Act and have the unintended consequence of removing the research from federal oversight, a particular concern when the research involves lines of investigation that are especially critical or sensitive."



In conducting the report, NIH found that only four of the 47 FDA-approved drugs with $500 million per year in sales were partly developed with NIH-funded technologies. NIH also sought research that "examined the impact of federally supported biomedical research and the return on investment that such research generates."



Identifying exactly what specific federal grants in basic life science research lead eventually to new products is a difficult issue, the report states. Requiring grantees and NIH to do so, as some have suggested, NIH concludes would negatively impact the tangible and intangible benefits society accrues from NIH-supported activities.



The University Working Group on Technology Transfer has praised the report, "Key among the NIH's conclusions is their finding that, two decades out from the inception of Bayh-Dole, the nation's system of biomedical discovery and technology transfer is working well." The Association of American Universities (AAU)-sponsored group adds, "The report illuminates the wisdom of Congress in 

crafting the seminal legislation that created our nation's system of innovation, education, and discovery."



A Plan to Ensure Taxpayers' Interests are Protected is available at http://www.nih.gov/news/070101wyden.htm  A complete statement 

put forth by the AAU working group also may be obtained by visiting http://www.aau.edu/research/NIH8.20.01.html