[Ip-health] NIH Waivers for U.S. Manufacturing Requirements for Federally-Funded Drugs

Zack Struver zack.struver at keionline.org
Mon Sep 19 08:13:30 PDT 2016


http://keionline.org/node/2629

NIH Waivers for U.S. Manufacturing Requirements for Federally-Funded Drugs

Submitted by Zack Struver on 16. September 2016 - 15:26

The National Institutes of Health, from 2011 through May of 2015, seemed to
grant all requests for waivers of a requirement under federal law that
patent holders who benefit from U.S. taxpayer-funding ensure that their
patented inventions are manufactured in the United States.

The Bayh-Dole Act imposes various requirements on the grant of exclusive
licenses by the patent holders of federally-funded inventions. In
particular, the act generally requires that exclusive licensees
“substantially” manufacture the invention in the United States.

The Act, however, also allows for the patent holder to obtain a waiver on
the U.S. manufacturing requirement from the Federal agency that provided
for the funding of the invention. According to a FOIA response
<http://keionline.org/sites/default/files/35-usc-204-waiver-foia.pdf>
recently obtained by Knowledge Ecology International, the NIH seems to
grant every manufacturing waiver request that comes its way.

Waivers can be granted on the grounds that the firm either (1) made
“reasonable but unsuccessful efforts … to grant licenses on similar terms
to potential licensees that would be likely to manufacture substantially in
the United States,” or (2) “that under the circumstances domestic
manufacture is not commercially feasible” (35 U.S.C. § 204). The statute
notes that the NIH may grant a waiver in either circumstance, not that it
is required to if either condition is met.

The FOIA response, originally filed by Johns Hopkins University’s
technology transfer center <http://ventures.jhu.edu/about-us/>in May of
2015, revealed that the National Institutes of Health (NIH) received and
granted nine fee waiver requests in 2014, and received four through May of
2015, granting three with one pending at the time of the FOIA response.

The NIH Office of Technology Transfer (OTT) maintains statistics on its
website <http://www.ott.nih.gov/ott-statistics> on the grant of waivers
between 2011 and 2014, which also incorporates waivers made under other
provisions in federal law, such as waivers of federal titles in patent
rights.

According to the FOIA response, all Bayh-Dole U.S. manufacturing waivers
for the NIH are currently administered by the Division of Extramural
Inventions & Technology Resources (DEITR) in the NIH Office of Extramural
Research.

​[see original blog post for chart]

​"The intent of section 204 of the Bayh-Dole Act was that drug corporations
who profit from American taxpayer funded research in turn manufacture these
drugs in America," Alex Lawson, Executive Director of the non-profit Social
Security Works, wrote in a statement. He continued:

"There is a waiver system for corporations that cannot manufacture the
drugs in the United States, but the NIH seems to be granting these waivers
to every single company that requests one.

"Further, some drug corporations use offshore manufacturing to avoid paying
US taxes, it would be completely against the letter and spirit of the law
if companies that benefit from taxpayer funded research are granted waivers
to then produce drugs overseas in order to avoid paying US taxes."

Chapter 604A of the United States Public Health Service Technology Transfer
Policy Manual
<http://www.ott.nih.gov/sites/default/files/documents/policy/pdfs/604-a-policy.pdf>
outlines detailed procedures for the evaluation of waivers for the section
204 U.S. manufacturing requirement by the National Institutes of Health. As
stated above, there are two separate grounds, one of which must be
satisfied for the grant of a waiver:
that the licensee made reasonable but unsuccessful efforts to license to a
firm with the capacity for U.S. manufacturing; or that U.S. manufacture of
the patented invention is not commercially feasible.

Under the first grounds, the NIH is required to consider the “probable
range of companies interested in a license,” and “The significance of the
technology, the availability of alternative products, size and location of
intended patient populations, and the degree of regulatory review needed to
bring the product to the U.S. market.” The NIH is also required to evaluate
the good faith efforts made by the federal contractor seeking to license
its invention. The manual lists five separate criteria that may be relevant
in making a determination that the company actually made good faith efforts.

The “not commercially feasible” standard is even more stringent, requiring
the NIH to evaluate at least seven factors.

The NIH requires licensors to submit a detailed waiver request
<https://public.era.nih.gov/iedison/public/utilization/ManufacturingWaiver.jsp>,
including all of the information listed in the manual.

Given the extensive requirements outlined in the Tech Transfer Manual and
the level of detail required in a waiver request, as well as the large
number of drug and medical device manufacturers in the United States, it
comes as a surprise that the NIH seems to grant every manufacturing waiver
request.

-- 
Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428
keionline.org



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