Abstract: Before Bayh-Dole: Interactions between NIH Grantees and Pharmaceutical Firms from 1945 to 1962
Several sources argue that until 1962 pharmaceutical firms screened for biological activity the molecular compounds identified by NIH grantees, and did so for free and without any preliminary agreement over prospective patent rights. However, contemporary congressional debates concerning NIH patent policy suggest that the prospect of exclusive licenses over NIH-sponsored inventions was a necessary incentive for pharmaceutical firms to collaborate with NIH grantees. The evidence indicates that during the period 1945-1962 the Department of Health, Education and Welfare asserted only rarely its rights of ownership over NIH-sponsored inventions, which were for the most part dedicated to the public domain. Furthermore, the licenses granted on the few patented inventions were non-exclusive and royalty-free. This finding is consistent with existing literature, which suggests that leading pharmaceutical firms relied upon patents chiefly as a means to exclude from the markets for prescription drugs those firms that—having eschewed making large investments in R&D and marketing—could only produce patented drugs under license from innovative firms, or non-patented drugs. Accordingly, it is proposed that the demand for exclusivity terms on NIH-sponsored inventions emerged only after the growth of public biomedical research funding threatened to undermine the competitive structure of the industry.