E-drug: Letter from NIH Director, Harold Varmus
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WARNING: LONG MESSAGE
On September 3, 1999 Ralph Nader, James Love and Robert Weissman wrote a
letter to NIH Director, Harold Varmus, "asking for NIH to give the World
Health Organization, WHO, access to US government funded medical
inventions." Here is the url for the electronic version of this letter:
http://www.cptech.org/ip/health/sa/varmus-sep99.html
On October 21, 1999 Robert Weissman received Dr. Harold Varmus'
response.
begin letter
Mr. Robert Weissman
Essential Action
P.O. Box 19405
Washington, D.C. 20036
Dear. Mr. Weissman:
Thank you for your recommendation on how the National Institutes of Health
(NIH) could interact with the World Health Organization (WHO) to provide it
with commerical development rights to NIH-owned and -funded health care
patents. As we are both aware, the licensing of Government inventions has
received much attention in recent months from Members of Congress, patient
advocacy groups, representatives of industry and the press. The public
debate has been galvanized by concerns about the AIDS crisis in developing
countries and the role of anti-AIDS therapeutic drugs in addressing that
crisis.
This proposal, if implemented, would have powerful repercussions on the
current framework for drug development arising from federally supported
basic research.
I am concerned that your proposal that the NIH employ its "Government use"
license authorities to grant WHO standing authority to contract for the
production of Government-supported inventions so as to make anti-AIDS
drugs available for less cost than offered by pharmaceutical manufacturers
would put the current system at risk without necessarily resulting in
greater accessibility to these drugs. I am also troubled by the
implications of the NIH intervening on behalf of sovereign foreign
governments in a situation in which many of those governments have the
authority to achieve the same result and in which U.S. intervention on this
matter has not been requested.
Moreover, the AIDS crisis in developing countries is a public health
problem involving much broader issues than access to anti-viral drugs. The
question of the supply of drug products must be considered in the context
of the equally important issues
of medical infrastructure, public health programs, treatment monitoring and
compliance, and emergence of drug-resistant HIV strains. Unilateral action
by NIH with regard to NIH-supported patent rights would consequently be
ill-advised and unlikely to
succeed.
My specific thoughts on the intellectual property aspects of this matter
follow.
Programmatic Background
In the early 1980s, Congress enacted the Bayh-Dole Act and the
Stevenson-Wydler Technology Innovation Act (with later amendments,
including the Federal Technology Transfer Act of 1986) to encourage the
transfer of basic research findings to
the marketplace. The primary purpose of these laws is economic
development: specifically, to provide appropriate and necessary incentives
to the private sector to invest in federally funded discoveries and to
enhance U.S. global competitiveness. To implement these mandates, the
Department of Health and Human
Services (DHHS) has designated NIH as lead agency for technology
transfer for the Public Health Service (PHS).
While NIH respects and is sensitive to the economic development intent of
the authorizing legislation, it carries out this mandate in accordance with
its public health mission. For inventions developed within PHS
laboratories, NIH (and PHS) Patent and Licensing policies consider public
health needs as well as financial and market forces. For example, the PHS
Patent Policy states that patent
protection should be sought where further research and development is
necessary to realize a technology's primary use and future therapeutic,
diagnostic, or preventive uses. It is well documented that technologies
with potential as therapeutics are rarely developed into products without
some form of exclusivity,
given the large development costs associated with bringing the product to
the market. No benefit accrues to the public if the technology is left to
languish and no product reaches the marketplace.
In conjunction with the patent strategy, the PHS licensing strategy
gives preference to nonexclusive licenses so that market competition and
broad distribution are fostered. Exclusive licenses are granted when such
rights are believed to be necessary to ensure product development. As to
inventions developed with NIH
funding, the Bayh-Dole Act gives NIH grantees and contractors authority to
retain title patents and to license inventions that arise from the NIH
funding.
As you have pointed out, the Government has a royalty-free license to
practice and have practiced an invention it owns or has funded on behalf of
the United States and on behalf of a foreign government or international
organization pursuant to a treaty or other agreement with the United
States. This royalty-free license provides the Government with no-cost use
of a technology it invented or funded.
It does not provide rights or access to a licensee's final product. The
Government use contemplated by this provision has been interpreted
generally to include research use, although its full scope has not been
determined.
Providing the owner of the technology (licensor) freedom to do further
research is a common and reasonable provision of exclusive licenses. To
our knowledge, the Government use license has never been employed as you
propose, as a blanket measure to facilitate direct competition with a
commercial licensee.
Granting Rights to WHO
In principle, the U.S. Government can license patent rights to the WHO.
Even if the doubts regarding WHO's authority to practice inventions under
the Government use license could be overcome, I do not believe that the
lack of such a license from the NIH is inhibiting developing countries from
addressing their needs. As
you stated, many of these countries can issue compulsory licenses, and
those that have not enacted that authority to date can do so if they
choose. The economies of scale you mention could be achieved by
cooperation among these countries or direct interaction with WHO. The role
of NIH in these sovereign matters is, appropriately, extremely limited.
NIH can only license or otherwise grant rights to patents in countries
where the agency or its grantees have sought and obtained patent
protection. Presently, NIH holds patent rights in selected countries to
technologies that have contributed to the development of drugs reported as
AIDS/HIV-related treatments.
In those countries where NIH or its grantees have neither sought nor
obtained patent protection, NIH has no intellectual property rights to be
licensed or otherwise granted.
In addition, there is an important distinction between having rights to a
compound and having rights to the fully developed product. NIH does not
license drugs that are ready for marketing. NIH biomedical technologies
are early stage and, in almost all cases, require further research,
development, and testing, usually in combination
with other proprietary technologies, to bring a product to market. To
achieve this, NIH and its grantees license the early technology to
companies that are able to embark in the developmental and regulatory
aspects of drug development.
Without patent protection it is unlikely that the companies would invest
the resources needed to commercialize these technologies.
The distinction between final product and "raw technology" is important
because others may well have filed for patents on non-NIH technologies that
are required for the production of the final product. Therefore, even with
NIH-granted rights, WHO or a contract manufacturer of such products may
infringe patents
belonging to others. Because it is the rule rather than the exception that
multiple patents cover final drug products, NIH's granting of rights to the
early compound or invention would be unlikely to significantly improve
access to drugs.
Finally, I am concerned that granting rights to WHO for manufacture and
distribution does not address the aforementioned requirement that a
commercial entity develop early-stage compounds into safe and efficacious
drugs. As a practical matter, it is reasonable to assume that companies
will not undertake the development costs
of these inventions if they believe the Government will readily allow third
parties to practice the inventions.
On balance, I am not convinced of the benefit of the standardized
transfer of manufacturing and distribution rights to the WHO or any other
nonprofit organization.
Critical to successful technology transfer is the assurance that the
Government will exercise its intellectual property rights in a responsible,
prudent, and consistent
manner. Undermining licensed intellectual property rights would, I
believe, unnecessarily jeopardize the development of important therapeutic
drugs.
NIH and WHO Interaction
Not all technologies that would be of use to developing countries are
currently licensed. In the past, the NIH and WHO have worked together on
licensing joint inventions and in negotiating with third parties. In one
notable instance, NIH approached WHO with the
possibility of manufacturing certain vaccines important to developing
countries.
Unfortunately, limitations of resources did not permit WHO to take
advantage of such an offer. NIH welcomes, and is pursuing, further
discussions with WHO on what can be done to assist developing countries
with health care needs. I have directed my technology transfer staff to
engage WHO on the intellectual property
aspects of this matter. Discussions between my staff and WHO
representatives are currently being facilitated by Dr. Stuart Nightingale
of the Food and Drug Administration.
I appreciate the opportunity to explain our position on this issue.
Sincerely,
Harold Varmus, M.D.
Director
-end letter
Wilbert Bannenberg, SADAP Coordinator
Hallmark 938, P/Bag X 828, Pretoria 0001, South Africa
Tel work +27-12-3120374/5 Fax +27-12-3236745 Cellphone +27-82-5756249
Email bannew@hltrsa.pwv.gov.za (work)
Email WilbertBannenberg@compuserve.com (private)
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