This is a very good example of how, in the laboratory, the day-byday modifications of work do not seem important, but in retrospect, when you look at them as a package, you realize that they should have been reported.

Mr. SMITH. If you do not get the patent, does someone else apply? Dr. SHANNON. Not if it is published, sir. If it is in the public domain as a published bit of scientific knowledge, it is no longer patentable nor, indeed, will the Patent Office consider it. It is thrown out. I do not understand some of the new patent proposals that have been made.

Mr. SMITH. In the field of drugs and health research, the first-in and first-out proposal would result in the patenting by others of inventions paid for by the Government would it not?

Dr. SHANNON. We are looking at this now. I would rather not comment on it because there are certain aspects of it that trouble me. Mr. SMITH. The question arises under the assumption that whatever is in the public domain will result in lower drug prices. I do not know if that is justified or not. Is there substantial evidence that patented items are costing more than the ones that the Government paid for and released to the public domain?

Dr. SHANNON. Mr. Smith, I do not know what the Department's position is on this, but I will just repeat what I told Senator McClellan about 2 years ago. There are many areas in medicine where the lack of limited exclusivity retards the development and marketing of an important product. While under our patent guidelines, at the present time, it is possible to give limited exclusivity to an individual concern to exploit an invention, it is not possible under our guidelines to encourage an individual to enter the field on the assumption that if anything is developed he will indeed have some period of exclusivity. This obtains more rigidly for the medical area than for any of the other areas, and I think we do our Nation a disservice. I am not a patent expert, but I was in industry for 3 years and I know the value of patents. I know that when I was in industry we would not spend the large sums that are necessary for development into a product unless we were sure we would have some period of exclusivity. Given that period, we were willing to risk very substantial sums.

Mr. SMITH. To what extent, though, does the failure to have this information available to everybody retard some other invention or discovery? In other words, if it is patented by an individual, does not having this information available to some other research scientist retard discovery?

Dr. SHANNON. There are very few areas in our field where you find the thing that is so important in defense, so-called report literature that is not generally available. Report literature is important in the biomedical field in such areas as vaccine development, virology, and cancer chemotherapy. Consumers of that information are very knowledgeable of precisely where they can have access to that report literature in the Department of Commerce. These are largely the industrial

concerns.

Without being able to be precise, I would say that probably as high as 98 percent of our information appears in the open literature. We do not have large bodies of information not generally available. Although much is made of the explosion of information and the diffi

culty of finding it, I do not believe that that really obtains today. I think it is a hazard, if one looks forward 5 or 10 years. There are today very few developments that are relevant that are not very well known.

Mr. SMITH. I think you indicated-if I am misinterpreting, please say so before I proceed-I think you indicated that you did not believe that we were failing to patent very many discoveries that we paid for. Dr. SHANNON. No. I said we are patenting very few of them, but by putting them in the public domain we prevent their appropriation by others.

Mr. SMITH. Let us put it another way, then: In other words, it might be a patentable item which you put in the public domain, but you may not patent it; is that correct?

Mr. CARDWELL. In other words, every time a report of invention is submitted, a determination is made by the Department as to whether it is a patentable item or not. From that point, the decision is made whether to publish.

Mr. SMITH. From the public benefit viewpoint, you believe it is equally as good?

Mr. CARDWELL. That is correct.

Mr. SMITH. I have been intrigued by the fact that although some of the companies have a very substantial number of Government grants and do very little on their own in terms of dollars, all the patents happen to have occurred on the few projects they financed and very few on the ones under NIH.

Dr. SHANNON. We make no grants to profitmaking organizations. The work we support there is by contract for quite specific purposes. Mr. SMITH. I should have said "contract" where I said "grant." Dr. SHANNON. Our support of industry generally is small as contrasted to their own support. Industry supports its own work to the extent of about $590 million. Our contract program, largely limited to allergy and infectious diseases and cancer, is about $70 million. So, quite apart from the substance of what we support

Mr. SMITH. I am talking about basic research. What private companies are doing largely is taking knowledge that the Government paid for and using their money, as they properly should, to develop techniques to distribute, to market, and to get the product out. Is that not true?

Dr. SHANNON. I would not doubt that a good deal of fundamental research and fundamental knowledge discovered in medicine is applied by commercial concerns. They have to make the decision whether they are willing to take the developmental costs and whether there is sufficient uniqueness to it that they can develop some process that would give them a price advantage over their competitors. I am not aware of much in the way of new drugs or new devices where private industry has profited greatly by this device. Quite the contrary. I think the problem is that, as there is no incentive without exclusivity, some of the observations that are made are not being developed.

MANPOWER BUDGET

Mr. SMITH. It has been said that you are not proposing any big increases in fellowships, and so forth, but when one looks at the total amount of money under the total budget-you have some under the Health Professions Act and elsewhere-there is a very substantial increase, is there not?

Mr. CARDWELL. The emphasis in the Health Professions is on the training of manpower to deliver services, rather than research manpower.

Mr. FLOOD. That worried me. You are telling us you cannot set up regions because you do not have manpower. Yet you are cutting back on your training programs. How do you put that together?

Dr. SHANNON. These are for training of scientists rather than service personnel. When you talk about regional medical programs, you are talking about medical specialists for service-oriented programs.

I think there is some provision in other parts of the Public Health Service to enhance training grants. The main bottleneck in the shortage of personnel is that it will take a long time to develop new medical schools. The re-engineering of the function of physicians is, I think. the only immediate answer to the problem.

Mr. FLOOD. Mr. Hull.

Mr. HULL. No questions.

Mr. FLOOD. Mr. Casey.

Mr. CASEY. I do not believe I have any questions, Mr. Chairman. Mr. FLOOD. This is the end of Dr. Shannon's overall testimony. As the chairman of this subcommittee I am certainly very pleased to have Dr. Shannon in his capacity as Director of NIH. I will consider myself fortunate, indeed, if as long as, by the grace of God and the electorate, I serve as chairman, he continues in his present capacity. It will be a great service to the committee and to the Congress and to the country.

As we have done every year for the last several years, we will place several overall tables and statements in the record at this point. (The material referred to follows:)