National Defense Authorization Act For Fiscal Year 2018

Floor Speech

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Madam President, I would like to express my support for the ongoing deliberative process to address the very valid concerns raised with sections 881 and 886 of the fiscal year 2018 National Defense Authorization Act. Earlier today, I filed an amendment that seeks to clarify the committee's intent with respect to open source requirements and intellectual property rights and protections for U.S.

technology vendors who collaborate with the Department of Defense. I want to be clear that this language does not represent the ultimate fix, but rather a step in the right direction as we embark on a longer policy discussion in conference.

I want to thank the chairman, my colleagues on the Senate Armed Services Committee, and my counterparts on the House Armed Services Committee for their commitment to continue this conversation in conference. It is essential that we provide both the Department and industry the proper tools, protections, and incentives necessary to continue these mutually beneficial partnerships on the commercial off- the-shelf and the custom-developed software side. I am confident we can reach consensus and send the President language that clearly articulates a fair and sustainable model for existing and future contracts.

Madam President, as chairman of the Senate Armed Services Subcommittee on Personnel, I would like to make a statement for the record about an item of special interest related to the Department of Defense's use of its intellectual property rights in certain drug products within the committee report on the National Defense Authorization Act for fiscal year 2018.

The committee report contains language that directs the Defense Department to exercise its rights under the Bayh-Dole Act ``to authorize third parties to use inventions that benefited from DOD funding whenever the price of a drug, vaccine, or other medical technology is higher in the United States'' as compared to prices in foreign countries.

This language is of concern to me for several reasons. The DOD and other Federal agencies face significant obstacles such as low procurement quantities, high regulatory risk, and complex Federal contracting regulations when working to attract the top vaccine and drug developers as partners in medical countermeasure development to protect the warfighter and America's citizens. Diluting intellectual property protections as a means of price control will not only fail to meet its objective, but it could significantly hamper the government's efforts to develop these critical medical capabilities. The report language could lead to decreased investments in medical countermeasures development and a drop-off in industry partnerships with DOD that can ultimately result in few new drugs, vaccines, and diagnostics.

Bayh-Dole has created a fragile ecosystem of collaboration among Federal agencies, public research institutions, and private industry, resulting in the commercialization of inventions for use by the American people, especially in the area of medical countermeasures often developed specifically for our servicemembers and veterans. The idea of regulating the price of a commercialized invention was never contemplated by Congress when passing the Bayh-Dole Act.

I have concerns that the committee report language could chill medical innovation by raising the risk of a Federal partnership to a level that is unacceptable for many private entities. This is problematic for small businesses that have less capital to risk on products subject to unpredictable price controls. While the availability of medical innovations to the American public remains an area of great interest to me, I strongly believe that we should pursue more appropriate and effective ways to achieve this goal without stifling innovation or discouraging public private partnerships.

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