December 23, 2002
Innovation's Golden Goose the title of this fantastic piece in The Economist. It discusses the Bayh-Dole act of 1980, which (with amendments and expansions during the Reagan years) was the catalyst for much of this country's technological growth.

The focus of the piece drives a stake into the heart of the argument that the government is not getting enough of a return for the money spent on research, particularly in the pharmaceutical industry. The article points out that the reverse was true:

Before Bayh-Dole, the fruits of research supported by government agencies had belonged strictly to the federal government. Nobody could exploit such research without tedious negotiations with the federal agency concerned. Worse, companies found it nigh impossible to acquire exclusive rights to a government-owned patent. And without that, few firms were willing to invest millions more of their own money to turn a raw research idea into a marketable product.
The result was that inventions and discoveries made in American universities, teaching hospitals, national laboratories and non-profit institutions sat in warehouses gathering dust. Of the 28,000 patents that the American government owned in 1980, fewer than 5% had been licensed to industry. Although taxpayers were footing the bill for 60% of all academic research, they were getting hardly anything in return.

Some time back, Jane Galt had a discussion on this subject at Live at the World Trade Center (before she moved over to her new site). Several of her regular posters, including Brad DeLong, argued that the government was giving away money to pharmaceutical companies that conducted research using federal grants. This article should be required reading for any who still cling to such a view.

posted on December 23, 2002 07:11 PM


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