Transcript Yale: the d4T story • 1966: compound synthesized under a National Cancer Institute grant at the Michigan Cancer Center • 1984: Yale scientists.

Yale: the d4T story
• 1966: compound synthesized under a National Cancer
Institute grant at the Michigan Cancer Center
• 1984: Yale scientists prove that d4T is potent against
HIV in cell cultures
• 1986: Yale files for a patent
• 1988: Yale issues BMS exclusive worldwide license
• 1994: FDA approval
• 1994 - 97: BMS takes out process patents
The Money Trail
• BMS made $443 million on sales of d4T in 2002;
$515 million in 2001, $578 in 2000.
• We don’t know what exactly BMS profits are from
d4T, but according to the BMS 2002 Annual
Report:
“In 2002, our company earned $2,034 million
from continuing operations on global sales of
$18.1 billion, putting us among the most
profitable companies in the Fortune 500.”
The Impact of d4T for Yale
•In 1999, Yale
earned $46.12
million in
royalties.
• About $40
million of this
was from d4T.
• (But almost
none of this
comes from
developing
countries)
MSF’s request; Yale’s response
• Feb 14, 2001: MSF request to Yale:
– Asking Yale if they “would consider the importation of
generic versions of stavudine for use in providing treatment
free of charge to people with HIV/AIDS unable to afford
treatment an infringement of your intellectual property
rights,” and if so, if Yale would “issue a voluntary license to
allow the importation and use of generic stavudine in South
Africa.”
• March 1: Yale replies:
– Yale denies the request, indicating that they have granted an
exclusive license to Bristol-Myers Squibb (BMS), and cannot
legally respond to MSF’s request without BMS’s permission.
MSF’s Reply
• March 9: MSF responds:
– MSF suggests to Yale that their own policy states that
a key objective is “the benefit of society in general,”
and that they should follow their policy
– MSF points out that d4T is not reaching those who
need it in South Africa, and suggests that Yale has
the ultimate power over their patent, and could
breach their contract with BMS if need be.
• March 11: NYT story “Yale Pressed to Help Cut Drug
Costs in Africa”
• March 16: GESO hands over petition and issues press
release
March 14th: Concessions!
“EMERGENCY PATENT RELIEF”
• “The Company will ensure that its patents do not prevent
inexpensive HIV/AIDS therapy in Africa. The patent for
Zerit, rights to which are owned by Yale University and
Bristol-Myers Squibb, will be made available at no cost to
treat AIDS in South Africa under an agreement the
Company has recently concluded with Yale.”
• In June, 2001, “agreement not to sue” signed with Aspen
Pharmacare.
PRICING
• BMS will sell its two ARVs at one dollar per day (15 cents
per day for d4T and 85 cents per day for ddI) throughout
Africa
• This is later extended to private sector.
What’s happening at other
universities?
•
•
•
•
•
•
U Minn: Abacavir
Emory: 3TC
Duke: Fuzeon
Columbia: Cotransformation patent
U of Washington: Hep B Vaccine
Michigan State: Cysplatin and Carboplatin
Proactive vs. Reactive:
How can universities ensure that their IP
helps those who need it most?
• What can a university do when it is deciding where
and if to patent an invention?
• What can universities do when negotiating licenses
with industry?
• What can be done if a university invention has
already been patented and licensed to industry?
Working Toward an Answer:
Development Timeline
•Yale AIDS Network Founded, April 2001
•Workshop at Yale, September 2002
•Universities Allied for Essential Medicines
(Student workshop, Spring 2003)
Back up: How does university tech transfer work?
Then: How should it work? How can it be changed?
Who funds university research?
Yale School of Medicine FY 2002 Research Funding Sources:
Revenue from licensing
patents makes up only 2-4% of
university research budgets on
average.
Currently, what do universities do with the
products of research?
PATENT  LICENSE  $$$
• If they think an invention can be commercialized, they patent it
(usually just domestically).
•
Universities then license the patent to industry, which will further
develop and market the invention.
•
Universities may grant either exclusive or non-exclusive licenses to
industry.
- An exclusive license gives a single company the sole right to
develop and sell the invention.
- A non-exclusive license allows many companies to use and sell the
invention.
•
In either case, universities receive royalties and/or other payments in
exchange for the license.
How big a role do universities play?
• Academic R&D is a small proportion of total U.S. R&. But,
academic basic science research comprises 40%-50% of total
U.S. basic research
• Nearly 60% of academic R&D is funded by the federal gov’t
Source: NSF Science and Engineering Indicators, 2002.
Historical Perspective
• For most of the 20th century, universities rarely patented their
research output—resisted directed involvement and discouraged
it as taboo (particularly medical patenting)
Source: Mowery and Sampat (2001)
The non-patenting norm prevailed before
1950—in medical patenting till 1970s
• Most universities had no
patent policy before WWII
– Harvard and Yale examples
– Need to request waiver
• Post WWII Trends
– Substantial increase in federal
funds for universities
Source: Palmer (1948), NSF Science and Engineering Indicators, 2002.
Academic R&D in biomed sciences,
and in turn patents, surged in the 1970s…
• Universities began direct
management of patent
portfolios
• Process of getting patents
and rights to license
remained cumbersome
• Decline in federal funding
led to more aggressive
patenting efforts
• 1974 - Harvard ends
stance against patenting
medical innovations
Percent of total academic patents in three largest academic utility classes
Source: NSF Science and Engineering Indicators, 2002.
Bayh-Dole (1980):
Patent & Trademark Law Amendments Act
• Goal: Increase technology transfer and utilization of federally-funded
research
• What did it do?
– Universities given right to retain the property rights to inventions
made under federal funding
– Exclusive licensing permitted
– No distinction between downstream inventions and fundamental
research discoveries
• Rationale
– Commercialization: Basic nature of university research requires
further development by industry
– Industry won’t take on risk without exclusive licensing rights
– Universities won’t transfer as much without financial incentives
Bayh-Dole Has Some Special Provisions for
Preserving the Public Domain
•
Funding agencies permitted to restrict patenting ex-ante only in
“exceptional circumstances” that contradict goals of Bayh-Dole (such
determinations can be challenged – and provision is cumbersome)
•
Agencies can exercise “march-in rights” to compel licensing of a university
patent if necessary to alleviate public health or safety needs
–
–
•
NIH has sought to promote goals through hortatory statement.
–
•
NIH has never exercised these rights – significant administrative obstacles
Current cases: Norvir and Xalatan
For ex: For human genomic DNA sequencing information, NIH issued
statement against patenting – effectively contributing to a “no-patenting” norm
w/out forbidding it
Reasonable pricing clause for commercialized federal research existed
initially, but was repealed by the Clinton Administration
University Patenting –
Phenomenon of the 1980s and 1990s
Perspective: University patenting has grown faster than other patenting in the U.S.
Source: Jaffe (2000)
Licensing Activity Has Surged…
Number of Licenses Issued Annually
Source: Bremer, 2001 speech - data from AUTM Licensing Survey
…as Have Royalties from Licensing
Royalties to Universities/Hospitals in Millions of Dollars
Source:
Source:
Bremer,
Bremer,
2001
2001
speech
speech
(http://www.autm.net)
- data from AUTM Licensing
- data fromSurvey
AUTM Licensing Survey
Why does any of this matter?
Answering the initial question:
How big a role do universities play?
•In the US, most basic biomedical research is performed at
universities and funded by the federal government, usually the NIH.
•Until 1980, most inventions derived from university biomedical
research were not patented.
•In 1980, C1ongress passed the Bayh-Dole act, which instructed
universities (and others) to patent inventions made during
government funded research.
•The import of (early stage) university research and federal funds –
example: AIDS drugs and top 5 selling drugs
What are the goals of university technology
transfer?
The $$ Tension – in theory and in practice
•Yale claims that “The primary goal of commercializing Yale
inventions is to disseminate and develop knowledge for the
public good.”
•Yale calls generating revenue a subsidiary goal.
•Despite this, Yale and other universities run their tech
transfer offices like commercial profit seeking ventures.
•But the “ethos” is recognized inside and outside universities
and can be used to push for change.
Realities of University Tech Transfer
•
Typically, university research is “upstream.”
– Adds complexity to policy development
– According to AUTM data, 2/3 of university licenses are given to small companies
•
Licensing income is limited, but it is discretionary
– On average, revenues from licensing patents make up 2%-4% of university research
budgets
– Bayh-Dole requires income sharing (inventor’s personal share often makes up 30%)
– But, recall the house that d4t built…
•
Resources for tech transfer are finite
– Many university owned patents don’t get licensed; most licensed patents
don’t result in big money for universities.
• AUTM Annual Survey: <1% of 21K licenses generated >$1M (2000).
– Practice of limited patenting in developing countries, given the high cost of securing
such patents
– Example implication: Avoid overly complex schemes that require resources for
monitoring
Workshop at Yale – September 2002
• Discussions produced a broad normative framework or basic principles
regarding the role of universities
Universities should systematically take “access” into consideration when
patenting/licensing, given the institutional ethos which prompts their concern for the
common public good
• In addition, workshop participants generated a litany of possible
strategies that universities might use to facilitate or to ensure the
accessibility of their innovations
Promising Trends
• Generating Discussion: Working Groups and Publications
• Licensing of compounds to treat Chagas disease in developing
countries to OneWorld Health, a non-profit pharmaceutical company.
Strategy Development – 2003 to present
• Multi-part approach
• Development of network / materials; support for activists
• “Best practices”  Developing Country License
• Pro-access policy statement?
•Additional ways to increase transparency / monitoring?
• Process
• Development of principles
• Meetings with tech transfer officers, university presidents, etc.
• Consultations with experts
Strategy Development – 2003 to present
• Goal: Getting universities to adopt policies and to utilize practices
that will facilitate and accelerate access to essential medicines
• Focus: Developing Country License
• Seeking to maintain “open” markets through cross licensing
-“reach through clauses” preventing enhancement patents
from blocking market access
• Positive access requirements (reasonable pricing), particularly
where markets are not “open” for some reasons
• Complexities of operationalization