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Derek Chipman, “Authors Alliance Signs Onto Letter Opposing the Pro Codes Act,” Authors Alliance, 05-11-2022, https://www.authorsalliance.org/2022/05/11/authors-alliance-signs-onto-letter-opposing-the-pro-codes-act/

On April 21, Authors Alliance joined 15 other organizations to express strong opposition to the Protecting and Enhancing Public Access to Codes Act, known as the Pro Codes Act. If passed, the Act would allow private organizations to assert a copyright interest in an “original work of authorship” that is “adopted or incorporated by reference, in full or in part, into any Federal, State or municipal law or regulation” so long as the work is provided “at no monetary cost for viewing by the public in electronic form on a publicly accessible website.” As this post will explain, Authors Alliance opposes this bill, as it limits access and dissemination of laws and regulations that are necessary and even vital for a functioning democracy and robust free speech protections.

Bhanu Dhamija, “Is American democracy dying? No!,” The Hill, 11-29-2023, https://thehill.com/opinion/white-house/4334002-is-american-democracy-dying-no/

An astounding 83 percent of Americans believe our country’s democracy is under threat. President Biden keeps reminding us that former President Trump poses an existential threat to democracy. Trump says the same thing about Biden. And, in a recent poll, a majority of both Democrats and Republicans says that “democracy is in danger of collapse.”

Michael Kremer and Rachel Glennerster, 2004, “Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases,” Princeton, https://www.jstor.org/stable/j.ctt1dr365r

An independent adjudication committee (IAC) would need to judge whether the eligibility conditions had been satisfied. The committee should (a) have some discretion to waive technical requirements other than regulatory approval; (b) monitor purchased products to ensure continuing safety and efficacy; and (c) have the power to discontinue purchase of a vaccine if it turned out to be less safe or efficacious than originally anticipated. The committee would also adjudicate whether second-generation vaccines are superior to the initial vaccine (see chapter 10). Having a committee, independent from the funder of the commitment and from other political pressures, that potential developers can trust, is key to providing the credibility needed to reassure potential investors that the commitment will not be reneged upon (see chapter 10). To guard against rejecting useful vaccines, the IAC would have the discretion to waive technical requirements for vaccines that seemed desirable but did not meet all the technical standards. On the other hand, the adjudication committee should not have authority to impose new conditions for acceptability. Otherwise, the committee could abuse its discretion by raising standards after pharmaceutical companies have sunk investments in R&D. If post-license clinical trials are needed to ensure that purchased vaccines remain safe and efficacious, the vaccine commitment contract should specify the committee’s monitoring powers and responsibilities. An adjudication committee should be structured in a way that insulates it from political pressure and gives developers confidence that the rules would be interpreted fairly. Methods would have to be devised to assure pharmaceutical executives that adjudicators would not abuse their discretion to lower the returns on research after the fact. Once a vaccine developer had sunk hundreds of millions of dollars into R&D, adjudicators might be tempted to offer a price for the vaccine that covered only manufacturing costs or to insist on excessive product testing and improvements. This is an example of what we previously identified as a time-consistency problem. The credibility of a vaccine commitment would be enhanced by appointing decision-makers trusted by vaccine developers and insulating them from political pressures through long-term appointments. It would also make sense to write the rules used for eligibility and pricing so as to put limits on the committee’s discretion.

Afschin Gandjour and Nadja Chernyak, October 2011, “A new prize system for drug innovation,” Health Policy, !

WTP = Willingness to Pay

Afschin Gandjour and Nadja Chernyak, October 2011, “A new prize system for drug innovation,” Health Policy, https://www.sciencedirect.com/science/article/pii/S0168851011001114?via%3Dihub#!

To provide sufficient incentives for innovation the terms of any award must be fixed before the informational asymmetry with regard to costs and benefits of research is resolved . The threshold value λ, which is used for monetary valuation of health benefits under VBP, may offer credible and time consistent incentives for medical innovation, particularly if based on the cost of palliative or nursing care. Of course, future WTP for health improvements may change due to government budgetary pressures. However, under current patent system there is also a risk of future modifications of patent law as well as enforcement of discounts by the government.

Michael Kremer and Rachel Glennerster, 2004, “Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases,” Princeton, https://www.jstor.org/stable/j.ctt1dr365r

A key step in moving forward is to design a commitment with sufficient credibility to provide investors with the reassurance they need before investing millions of dollars in research. We have discussed elsewhere various essential elements for building credibility—for example, having an independent adjudicating committee that developers trust. Another key element, however, is establishing a legally binding contract. The historical and legal record provides strong evidence that a suitably designed commitment will be interpreted by the courts as a legally binding contract (Morantz and Sloane 2001).1 Courts have ruled that publicly advertised contests are legally binding contracts, obligating sponsors to pay the winners according to their public announcements (Sullivan 1988). A contestant is judged to have formed a valid and binding contract with the promoter by performing the act requested by the sponsor. Sullivan cites a number of examples in which attempts to escape liability by changing the rules after a contestant has performed the desired act are treated as breaches of contract. Vaccaro (1972) notes that advertisements with certain specifications (e.g., identification of good, definite quantity of good) for the purchase of goods at specified prices have also been found to be legally binding. If the procedures in a contest stipulate the judge of the contest (the IAC in this case), decisions made by the judge are usually treated as final, if made in good faith. When the contest judge is an independent party, the courts almost universally hold the decision as final unless the decision was made in bad faith or the judges exceeded the authority specified in contest rules. A particularly interesting precedent was set in the 1960s, when the U.S. government used a contract offering to purchase manganese ore to stimulate domestic production. As part of the Domestic Manganese Purchase Program, the General Services Administration (GSA), a U.S. federal executive agency, issued regulations offering to purchase, at guaranteed minimum prices, “manganese ores that met the specifications detailed in the applicable regulations.” In Himfar v. United States (355 F.2d 606, Ct. Cl. 209 [1966]), the Federal Court of Claims enforced a unilateral contract under which the federal government agreed to purchase at the predetermined price all domestic manganese ore that met certain criteria specified in its contract. Morantz and Sloane (2001) note that this decision provides compelling evidence that a vaccine commitment would be readily enforced, even against the government.

Marhi Kim and Bryan Shwartz, 2006, “Economic Prizes: A New Model for Pharmaceutical Innovations,” Asper Review of International Business and Trade Law , https://www.canlii.org/en/commentary/doc/2006CanLIIDocs543#!fragment/zoupio-_Toc2Page1-Page10/BQCwhgziBcwMYgK4DsDWszIQewE4BUBTADwBdoAvbRABwEtsBaAfX2zgCYAFMAc0ICMjHvwEAGAJQAaZNlKEIARUSFcAT2gByTVIiEwuBMtUbtu-YZABlPKQBCGgEoBRADLOAagEEAcgGFnKVIwACNoUnYJCSA

Two of the strongest proponents of using rewards or market-based mechanisms are Harvard economist Michael Kremer and Rachel Glennerster, as described in Strong Medicines: Creating Incentives for Pharmaceutical Research on Neglected Diseases (2004).125 They believe that the use of pull programs will lead to a “faster, cheaper and more efficient research process that was open to new ideas.”126 In particular, they advocate the use of an “advanced purchase commitment” program as ideal to inspire the development of vaccines for diseases such as malaria, tuberculosis, and HIV/AIDS, that cripple the developing world. The commitment is a legally binding contract to pay a fixed subsidy per vaccine purchased from the developer, provided that the vaccine meets the technical requirements pre-specified by the administrative body. Technical requirements include proving clinical safety and efficacy and delivering the vaccine in market-ready form. This program would encourage innovation on commercially unviable diseases, enable access to the vaccine at a reasonable price, and avoid the waste of financing unsuccessful research endeavors.

Terence Chea, September 28 2001, “Government Grants Boost Biotech Firms,” The Washington Post, https://www.washingtonpost.com/archive/business/2001/09/28/government-grants-boost-biotech-firms/381f032f-3996-42dd-b85d-1a8e88cf1355/

At a time when investors are skittish and private capital is scarce, Panacea Pharmaceuticals Inc. is seeking help from an unlikely source: the government.

Afschin Gandjour and Nadja Chernyak, October 2011, “A new prize system for drug innovation,” Health Policy, https://www.sciencedirect.com/science/article/pii/S0168851011001114?via%3Dihub#!

However, the proposed prize system considers the cumulative nature of medical innovation and does not preclude approval of therapeutically similar innovations (me-too drugs) if they offer additional health benefits or cost savings. There have been concerns that therapeutic substitutes might crowd out drastic innovations by reducing the budget available for R&D. But different drug versions are often innovated in so-called R&D races, implying that therapeutically similar innovations are already in the ‘pipeline’ when the first drastic innovation enters the market [10]. Thus, increased competition because of the race to be the first might further stimulate innovation and possibly speeds up commercialization. Moreover, even drugs with the same effectiveness can provide incremental benefits because of reduced side effects or improved compliance [35]. In any case, the prize system considers as a comparator of a new drug the current treatment, which may be a recently approved drug or no treatment in case of market expansion.

James Love and Tim Hubbard, Summer 2009, “Prizes for Innovation of New Medicines and Vaccines,” Annals of Health Law, https://lawecommons.luc.edu/cgi/viewcontent.cgi?article=1111&context=annals

To some prize fund proponents, the most important benefit is the improved targeting of R&D incentives. Today, most R&D spending is wasted on products that offer almost no realistic chance of offering significant health benefits over existing products.8 3 The prize fund would dramatically reduce incentives for investments in medically unimportant products, while making it highly profitable to invest in products that truly improve health care outcomes.

Afschin Gandjour and Nadja Chernyak, October 2011, “A new prize system for drug innovation,” Health Policy, !

VBP = Value based pricing

Afschin Gandjour and Nadja Chernyak, October 2011, “A new prize system for drug innovation,” Health Policy, !

VBP = Value based pricing

The Regulatory Review, “Incorporating Private Standards into Public Regulations,” The Regulatory Review, 01-26-2015, https://www.theregreview.org/2015/01/26/series-incorporation-by-reference/

Effective this month, the OFR’s new rule amends the current incorporation by reference process and attempts to increase public availability or awareness of incorporated material. The OFR’s rule requires that agencies attempting to incorporate materials by reference add more information about the incorporated standards into the Federal Register notices accompanying their proposed and final rules. Under the new OFR rule, agencies must provide full summaries of the incorporated materials and discuss the steps they took to ensure that the materials are “reasonably available” to interested parties. Further, OFR’s new rule encourages agencies to work with copyright holders to increase public access.

Nina Mendelson, “Public Access to the Law Must Be Taken More Seriously,” The Regulatory Review, 01-28-2015, https://www.theregreview.org/2015/01/28/mendelson-public-access/

PHMSA, however, often did arrive at satisfactory arrangements with the other SDOs, ending up with free-access arrangements that covered 78% of IBR standards. This was apparently accomplished with no direct payment to the SDOs, even though agencies are permitted to contribute to SDO standards development. (Perhaps the prospect of some payment—which Congress would need to appropriate – would expand an SDO’s willingness to negotiate.)

Emily S. Bremer, “Technical Standards Meet Administrative Law: A Teaching Guide on Incorporation by Reference,” Notre Dame Law School Scholarship, https://scholarship.law.nd.edu/law_faculty_scholarship/1406/

The cost to purchase a copy of an incorporated standard varies. Although many are now starting to be available for free online, typically in a read-only format, many others are available only for a fee. For instance, a case study of standards incorporated by reference into federal pipeline safety regulations revealed that approximately 66% of the standards were available online for free, while the average cost to purchase a copy28 was $150.44, the median cost was $112.00, and the maximum cost was $630.00.29 The cost to purchase a complete set of the standards incorporated by reference into the regulations was $9,477.85.30

Peter Strauss, “We Decline to Define ‘Reasonably Available’,” The Regulatory Review, 01-26-2015, https://www.theregreview.org/2015/01/26/strauss-reasonably-available/

At issue in the recent OFR rulemaking was the continued practice of permitting the adoption of these incorporated-by-reference standards as legally binding regulatory requirements through a rulemaking process that leaves access to proposed standard and any supporting materials in the hands of the private organizations creating it. This effectively constrains access to the incorporated standards to two printed copies kept in Washington, D.C., or to such copies as the responsible private organization might provide – at the price and on such terms as it may set.

Emily S. Bremer, “On the Cost of Private Standards in Public Law,” Kansas Law Review, https://kuscholarworks.ku.edu/bitstream/handle/1808/20310/5-Bremer_FinalPDFSheridan.pdf?sequence=1

The cost analysis of PHMSA’s standards suggests that incorporation by reference’s public access problem is neither as uniform nor as egregious as some have suggested. A majority of the standards were available online for free, independent of Section 24’s requirements. Although this access is almost always read-only, that should be sufficient if the goal is to allow the general public to read standards that have the force of law. That standards developers generally require users to agree to an intellectual property license appears similarly reasonable if the goal is to further public access while still preserving the ability of standards developers to recoup the significant costs of the standards development process. Although the cumulative cost to purchase a full set of the standards seems quite high even when taking into account available free access, it is unlikely that members of the general public will often find a need to purchase a full set. More likely, they will be interested to see one or just a few standards in connection with a particular rulemaking. From this perspective, the average and median costs of PHMSA’s incorporated standards do not seem to be “excessive.” The most expensive standards are the sections of ASME’s Boiler and Pressure Vessel Code. In light of the significant costs of developing and maintaining that code, and its importance outside the pipeline safety context, it is not immediately clear that even its price is unreasonable. What is clear is that Section 24’s approach was too aggressive as applied to most of PHMSA’s incorporated standards.

Administrative Conference of the United States, “Administrative Conference Recommendation 2011-5,” Administrative Conference of the United States, 12-08-2011, https://www.acus.gov/sites/default/files/Recommendation-2011-5-Incorporation-by-Reference_0.pdf

Updating Regulations. Updating regulations that incorporate by reference is another challenge. Agencies are legally required to identify the specific version of material incorporated by reference and are prohibited from incorporating material dynamically.6 When an updated version of the incorporated material becomes available, the regulation must be updated if the agency wants the regulation to incorporate the new version. This can require the agency to engage in notice-and-comment rulemaking, which entails a significant investment of agency resources. For agencies that are statutorily required to provide rulemaking procedures beyond those required by Section 553 of the Administrative Procedure Act (APA), updating may prove to be an immense challenge. Nonetheless, agencies have successfully used a variety of techniques to reduce the time and cost constraints of updating rules. Some agencies have used enforcement discretion or “equivalency determinations” to avoid penalizing parties that comply with an updated version of an incorporated standard that the agency finds to be equivalent to or superior to the version still incorporated in the agency’s regulations. Other agencies have reduced the burden of updating by tracking forthcoming revisions through participation in standard-development activities.7 Still others have used direct final rulemaking to reduce the costs of updating an incorporating regulation. The recommendation encourages these timeand cost-saving techniques. This recommendation also proposes a statutory solution that would streamline the administrative process by which agencies can revise their regulations to account for updates to the incorporated material.

Emily S. Bremer, “Technical Standards Meet Administrative Law: A Teaching Guide on Incorporation by Reference,” Notre Dame Law School Scholarship, https://scholarship.law.nd.edu/law_faculty_scholarship/1406/

If the free access mandate effectively prevents agencies from using copyrighted standards that cannot be made freely accessible, how would that affect the agencies' ability to fulfill their respective statutory missions?

Emily S. Bremer, “Technical Standards Meet Administrative Law: A Teaching Guide on Incorporation by Reference,” Notre Dame Law School Scholarship, https://scholarship.law.nd.edu/law_faculty_scholarship/1406/

What kind of free access would be required? Incorporated standards must already be accessible to the public for free at the OFR and in agency reading rooms. 8 0 If the goal is to provide access beyond these existing public inspection requirements, the text of any new statute mandating free access must clearly state what is required. Possibilities here include: (1) publication of the full text of the standard in the Federal Register and CFR; (2) online access on the agency's own website; or (3) online access on the SSO's website. If online access is required, could it be read-only access, or must the document be available in an unrestricted format? How can the agency provide the required free access when the standards are copyrighted? Which option is most likely to address the SSO's concerns for protecting their copyrights and funding models?