House Oversight Committee Chairwoman Carolyn Maloney recently pounced on Gilead Sciences, claiming the biopharma innovator is “charging an unconscionable price for a drug developed with millions in taxpayer-funded research.” Sen. Debbie Stabenow struck the same chord: “I intend to continue working to put an end to this and other practices that allow the drug industry to gouge families for life-saving prescription drugs.”

But Rep. Maloney and Sen. Stabenow have been loose with the facts. A Government Accountability Office report counters what the lawmakers imply about federal fingerprints on the highly effective COVID-19 treatment Remdesivir.

The truth is that Gilead spent more than a decade and significant private monies on drug discovery and development before federal agencies devoted a dime to the drug candidate. Gilead had begun patenting Remdesivir-related inventions years before a federal agency coughed up a penny. Private investment in Remdesivir is about 10 times what the government has put in.

Gilead began its privately funded, applied research in 2000. This led to Remdesivir. Between 2009 and 2013, Gilead synthesized and screened the chemical compounds in this drug candidate.

GAO reports that “. . . Gilead did not rely on any federal contributions in conducting its own research that led to the invention of remdesivir and invested $786 million in remdesivir R&D from 2000 through December 2020. Gilead representatives also told us that the company made substantial contributions to the research performed in the collaborations with federally funded scientists, which was corroborated in our interviews with others. For example, principal investigators of the NIH-funded coronavirus research told us that scientists at Vanderbilt University and the University of North Carolina at Chapel Hill worked in close collaboration with Gilead scientists. A principal investigator also noted that Gilead had dedicated substantial resources and maintained a coronavirus research team for several years prior to the COVID-19 pandemic when few others were interested in studying coronaviruses.”

The government has zero rights to the intellectual property associated with Remdesivir because Uncle Sam’s involvement led to no inventions. GAO says “remdesivir research supported or conducted by CDC, DOD, and NIH has not resulted in government patent rights, because, according to agency and university officials, the federal contributions to the research did not generate new patentable discoveries, and Gilead already had existing patents on remdesivir.”

The Defense Department’s analysis is instructive. GAO reports that DOD “determined that scientific work performed by USAMRIID scientists did not rise to the level of co-inventor status on any of Gilead’s remdesivir patents. MRDC officials told us that they reached this determination based on the following factors: (1) Gilead invented the remdesivir compound and determined that it had antiviral activity against hepatitis C virus prior to the company’s collaboration with DOD; (2) Gilead entered into its collaboration with DOD with rights to all remdesivir and other compounds it provided, and told USAMRIID scientists what the compounds should be screened for; and (3) when USAMRIID scientists performed antiviral testing of remdesivir against Ebola virus, they used standard tests and screening methods and did not come up with new types of tests or screenings.”

How much money did federal agencies put into Remdesivir’s preclinical research and clinical trials? Just $161.5 million between 2013 and 2020. Of that, the National Institutes of Health provided $109.2 million to underwrite three clinical trials. Of the NIH monies, it has provided $88.6 million over the past year for a phase 3 trial of Remdesivir’s use for COVID-19.

What did Gilead invest in development of Remdesivir? About 10 times what the government spent. “Gilead estimated its overall investment in remdesivir, as of December 2020, at $1.3 billion. According to the company, of the $786 million in R&D costs, Gilead spent $215 million on the discovery and development of remdesivir prior to 2020, of which $175 million is attributable specifically to R&D costs and $40 million to costs of supplying remdesivir for use in NIH clinical trials and other clinical and research settings. Gilead told us that in addition to the R&D costs the company spent $147 million to supply remdesivir for use in clinical and research settings and $318 million to expand remdesivir manufacturing and distribution capabilities, as of December 2020.”

The truth about Remdesivir tells us a lot about the lonely beginnings of inventive activities, the long road to invention, the years-later involvement of federal agencies, and the far greater sunk costs of private sector innovators compared with relatively modest government funds.

The real Remdesivir story illustrates how you get a quick success in a crisis. You spend a decade or so pouring in sunk costs and pursuing dead ends. Then years later, if the circumstances make it appear so, you have an “overnight” solution. In Gilead’s case, the past as prologue on COVID-19 involved tremendous private-sector investment in potential medicines for hepatitis, Ebola, SARS and MERS viruses.

The facts, which GAO ferreted out but demagogic politicians twist to fit their preconceived talking points, prove enlightening — and shed favorable light on Gilead and Remdesivir.

The late Sen. Daniel Patrick Moynihan famously said, “Everyone is entitled to his own opinion, but not to his own facts.” One wishes more lawmakers of today were as intellectually honest as Sen. Moynihan was.

In the 1990s, an all-out assault on property rights was well underway, led by a radical environmental movement, resulting in massive federal land grabs in the name of conservation. Courts across the nation were flooded with cases of people attempting to defend their property rights from government takings.

In the state of Washington, one of the major targets for such programs, the state Supreme Court, realized it didn’t have an adequate definition of property rights to use in considering such cases. That’s when state Supreme Court Justice Richard B. Sanders wrote a “Fifth Amendment” treatise that included the following definition of property rights:

“Property in a thing consists not merely in its ownership and possession, but in the unrestricted right of use, enjoyment and disposal. Anything which destroys any of the elements of property, to that extent, destroys the property itself. The substantial value of property lies in its use. If the right of use be denied, the value of the property is annihilated and ownership is rendered a barren right.”

“Use” of the land is the key. Using the land in a productive way beneficial to the owner is what gives the land value. Simply paying the taxes and mortgage while some undefined government entity can rule and regulate how the property is used, according to Justice Sanders, is a “barren right” that annihilates its value.

When you purchase property, how much of the land do you own? What is the depth of the soil? Do you own the water on the land? Do you own the air above it? As property rights expert Dr. Timothy Ball wrote, “All these questions speak to political issues that transcend private, regional and national boundaries. Nationally and internationally, lack of this knowledge is being exploited by those who seek control… .”

In the beginning of the nation – after the Declaration of Independence and the American Revolution, and the signing of the Treaty of Paris with Great Britain – the American people became complete, sovereign freeholders in the land with the same prerogatives as the king once had. In this new nation, the English king had no further claim to the land and could neither tax nor otherwise encumber it.

From that point, the U.S. government acknowledged private ownership by issuing land patents, also called “letter patents.” They were signed by the president of the United States and recorded in the county record. The land then became the owner’s property in a “true land title.” There were no other claims on the land. Land patents or “allodial titles” were one of the major motivators of the American Revolution, providing rights to the land, free and clear of the liens and encumbrances of the king of England.

A land patent is a contract or “document of title,” issued by a government or state for the conveyance of some portion of land from the public domain to private individuals. According to Black’s Law Dictionary, a land patent contract means the complete and absolute ownership of land; a paramount and individual right of property in land.

But as property expert Ron Gibson has written, the enjoyment of free and clear title allowing owners to “own” their land without interference from any government, including the U.S. government, didn’t last long. Today, our government has largely ignored this history.

Instead of a land patent or allodial patent issued when one buys property, we are issued a “warranty deed.” That is not a true title, but rather a “color of title.” That means you have a partner in the ownership of the land. The partner is the state, which encumbers the property with taxes and liens and all of those things, rendering you a tenant on what should be your own land.

Writes Gibson, “As a result of generations of constructive trust fraud perpetuated against the American people … we’ve been conned into believing we are ‘owning’ property, when in fact, and by law, we’re only in ‘possession’ of property[,] utilizing it as a renter or tenant would. So long as we pay our rent (i.e., taxes and mortgages), get the licenses, pay the fees, have it insured, regulated, zoned and permitted, we can still remain ‘in possession.'"

And therein lies the root of the misconception that property is just the place where we live. The government’s refusal to acknowledge true property rights has led to a massive destruction of the American system, and is at the root of the creation of the largest reorganization of human society ever attempted.

Tom DeWeese is president of the American Policy Center

Updated: Mar 30

The National Institute of Standards and Technology is completing something begun in 2018 under its Return on Investment Initiative. The ROI Initiative undertook examination of federal policies, practices and processes related to transferring technology to private-sector partners. Conservatives for Property Rights has filed comments on NIST’s final recommendations. Part of this review has focused on the Bayh-Dole Act.

The Bayh-Dole Act has now entered its 41st year, having marked a rare success story of a law that achieves what it set out to do. Bayh-Dole opened the floodgates for bringing inventions discovered under federal research funds to practical, commercial benefit. It makes the private property rights in patents an asset universities own and thus able to transfer the technology to attempt commercialization.

By 1980, federal research had amassed 28,000 federally owned patents. But the U.S. government applied command-and-control from Washington. Central government control’s failure is reflected in private-sector entities undertaking less than 5 percent of those patents to attempt commercialization for practical use.

Bayh-Dole put decisionmaking over tech transfer and commercialization in the hands of the many institutions whose patents the basic research produced. This clear title and predictability have yielded a boost of $1.7 trillion to the U.S. economy, 4.2 million new jobs, plus startups, patents and new products — and that’s just in the past 20 years of Bayh-Dole.

Fast-forward to NIST’s ROI Initiative. Most of its recommendations for revising the regulations for tech transfer stay true to Bayh-Dole’s property rights-centered foundation of its success. But one proposal would open pandora’s box.

It’s axiomatic that anything successful will be attacked by those set on weakening or destroying it. Activists who want federal tech transfer to dictate resulting products’ prices have for years tried to twist Bayh-Dole’s very narrow “march-in” rights provision into a government price control weapon.

It’s important to understand that the law’s authors decidedly rejected this. The bipartisan senators avered, “Bayh-Dole did not intend that the government set prices on resulting products. The law makes no reference to a reasonable price that should be dictated by the government. This omission was intentional . . . .”

In its latest iteration, NIST proposed revising its march-in rule as such: “March-in rights shall not be exercised exclusively based on the business decisions of the contractor regarding the pricing of commercial goods and services arising from practical application of the invention.”

CPR and many other commenters have objected to this phrasing. In trying to downplay pricing in considering whether to exercise march-in, the proposal strays from the statute. No where does the law authorize consideration of the pricing of commercialized tech transfer’s product — again, by intentional omission.

CPR and others discuss the lack of a statutory basis for mentioning price in its regulations, how this errs and veers from Sens. Bayh’s and Dole’s original intent, the great risk of upsetting the clear, reliable property rights Bayh-Dole democratized, the refusal of bipartisan administrations to use march-in based on pricing, and the National Institutes of Health’s “reasonable pricing” backfire in the 1990s. CPR points out that “the pricing reference . . . as proposed . . . is highly likely to have a chilling effect on private firms that otherwise want to pursue commercialization of federally funded inventions.” The NIST proposal directly threatens what have been secure intellectual property rights.

NIST has done a fine job with the ROI Initiative. Most of its recommendations are constructive. But the march-in proposal could really backfire even worse than NIH’s nightmare. If this provision remains in the finalized rule, Bayh-Dole’s brilliant success may dim.

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