[Ip-health] Joint Comments regarding NIH Exclusive License in CAR Therapy to Lyell Immunopharma

kathryn ardizzone kathryn.ardizzone at keionline.org
Thu Sep 19 11:09:57 PDT 2019


https://www.keionline.org/31713

Joint Comments Regarding NIH Exclusive License in CAR Therapy to Lyell
Immunopharma

Posted on September 19, 2019 by Kathryn Ardizzone

On September 19, 2019, Knowledge Ecology International (KEI), Union for
Affordable Cancer Treatment (UACT), Social Security Works (SSW), Health
GAP, and Brook Baker submitted comments regarding the “Prospective Grant of
an Exclusive Patent License: Development and Commercialization of CD19/CD22
Chimeric Antigen Receptor (CAR) Therapies for the Treatment of B-Cell
Malignancies,” located in the Federal Register at 84 FR 43148
<https://www.federalregister.gov/documents/2019/08/20/2019-17866/prospective-grant-of-an-exclusive-patent-license-development-and-commercialization-of-cd19cd22>.
The proposed licensee is Lyell Immunopharma.

The license would cover two NIH-owned CAR therapies that their inventors
believe may offer better patient outcomes than the two existing CAR
treatments, Yescarta and Kymriah, because the inventions would decrease the
possibility of a patient developing resistance to the treatment.

The NIH is currently conducting one Phase 1 clinical trial associated with
the inventions, and funding another.

The joint comments outline four issues with the prospective license:

   1. The information provided by the NIH is not sufficient to demonstrate
   that it properly analyzed whether an exclusive license is “a reasonable and
   necessary incentive” under 35 U.S.C. § 209(a)(1), for example, by
   considering the non-patent incentives that exist regarding the Orphan Drug
   Act, the Priority Review Voucher and test data protection, in the context
   of a treatment already in two clinical trials;
   2. The NIH has not demonstrated that it properly analyzed whether the
   scope of the license is no broader than necessary to induce the investment
   needed to bring the technology to market under 35 U.S.C. § 209(a)(2),
   including, in particular, the number of years of exclusivity — the most
   important and manageable limitation on the scope of the monopoly rights;
   3. The NIH was not fully transparent about the license and reached a
   final determination before considering all timely-submitted public comment,
   in conflict with 35 U.S.C. § 209(e). Among the facts not disclosed was the
   NIH costs associated with financing the invention, including in particular
   the costs associated with financing two clinical trials, one of which is
   taking place on the NIH campus; and
   4. The NIH apparently has not sought the advice advice of the U.S.
   Attorney General regarding the license, as required by 40 U.S.C. § 559.

The text of the comments is copied as pasted below.
------------------------------

1621 Connecticut Avenue NW
Suite 500
Washington, DC 20009
www.keionline.org
September 19, 2019

Jim Knabb, Ph.D.
Senior Technology Transfer Manager
NCI Technology Transfer Center
9609 Medical Center Drive
Bethesda, MD 20892-9702
Via email to jim.knabb at nih.gov

*Re: “Development and Commercialization of CD19/CD22 Chimeric Antigen
Receptor (CAR) Therapies for the Treatment of B-Cell Malignancies,” 84 FR
43148*

Dear Dr. Knabb:

Knowledge Ecology International (KEI), Union for Affordable Cancer
Treatment (UACT), Social Security Works (SSW), Health GAP, and Brook Baker
offer the following comments on the National Institutes of Health (NIH)’s
prospective grant of an exclusive, worldwide license in “CD19/CD22 Chimeric
Antigen Receptor (CAR) Therapies for the Treatment of B-Cell Malignancies”
to Lyell Immunopharma, Inc., as noticed at 84 FR 43148.

CAR therapies, which treat advanced-stage cancers for which other treatment
options have failed, have been introduced on the market at extremely high
prices, restricting reimbursements, creating fiscal toxicity for patients,
and raising premiums and taxes.

Any license the NIH negotiates must comply with the criteria set forth at
35 U.S.C. § 209, which, among other restrictions, allows a federal agency
to license a government-owned technology on an exclusive basis only when
“granting the license is a reasonable and necessary incentive to . . . call
forth the investment capital and expenditures needed to bring the invention
to practical application[,]” and the “scope of exclusivity” is “not greater
than reasonably necessary to provide the incentive for bringing the
invention to practical application[.]” 35 U.S.C. § 209(a)(1)-(2).

The NIH is either conducting or sponsoring at least two Phase 1 clinical
trials associated with the technology, making it a less-costly, more
attractive investment for potential licensees and reducing the need for
broad, exclusive rights in this cancer treatment.

We have several objections to the process, question the timeliness of the
license, and object to licensing the patents without safeguards on pricing
and access.

   1. The information provided by the NIH is not sufficient to demonstrate
   that it properly analyzed whether an exclusive license is “a reasonable and
   necessary incentive” under 35 U.S.C. § 209(a)(1), for example, by
   considering the non-patent incentives that exist regarding the Orphan Drug
   Act, the Priority Review Voucher and test data protection, in the context
   of a treatment already in two clinical trials;
   2. The NIH has not demonstrated that it properly analyzed whether the
   scope of the license is no broader than necessary to induce the investment
   needed to bring the technology to market under 35 U.S.C. § 209(a)(2),
   including, in particular, the number of years of exclusivity — the most
   important and manageable limitation on the scope of the monopoly rights;
   3. The NIH was not fully transparent about the license and reached a
   final determination before considering all timely-submitted public comment,
   in conflict with 35 U.S.C. § 209(e). Among the facts not disclosed was the
   NIH costs associated with financing the invention, including in particular
   the costs associated with financing two clinical trials, one of which is
   taking place on the NIH campus; and
   4. The NIH apparently has not sought the advice advice of the U.S.
   Attorney General regarding the license, as required by 40 U.S.C. § 559.

In the event that the NIH grants the license over our objections, we
request that the license agreement incorporates a series of provisions
designed to safeguard the public interest and ensure that the license
implements the policy objectives of the Bayh-Dole Act and Public Health
Service (PHS) Technology Transfer Policy Manual.

*Background*

*The Inventions*

The Federal Register notice describing the license, located at 84 FR 43148,
lists two NIH-owned inventions: “E-016-2015: Chimeric Antigen Receptor
Targeting both CD19 and CD22” and “E-017-2017: CD19/CD22 Bicistronic CAR
Targeting Human B-Cell Malignancies.”

The inventions have potential indications in “hematological cancers such as
chronic lymphocytic leukemia (CLL), hairy cell leukemia (HCL) acute
lymphoblastic leukemia (ALL) and lymphoma” and “pediatric, blood-derived
cancers.”

The federal register notice lists the following intellectual property
rights as being associated with the inventions:

   - U.S. Provisional Patent Application 62/135,442, filed March 19, 2015
   (E-106-2015-0-US-01);
   - International Patent Application PCT/US2016/023055, filed March 18,
   2016 (E-106-2015/0-PCT-02);
   - U.S. Patent Application No.: 15/559,485, filed September 19, 2017 (E-
   E-106-2015/0-US-03);
   - U.S. Provisional Patent Application 62/506,268, filed May 15, 2017
   (E-017-2017-0-US-01); and
   - International Patent Application PCT/US2018/032,809, filed May 15,
   2018 (E-017-2017/0-PCT-02).

Of the above listed patent applications, only PCT/US2016/023055 and
15/559,485 were accessible on public databases.

The licensed technology may offer cancer patients better treatment outcomes
than existing CAR therapies. According to U.S. Patent Application
No.:15/559/485, “[t]he inventive dual specific CARs may provide many
advantages [over existing CAR therapies, which target only the CD19
antigen]”, including “greater potency as compared to a CAR that has
antigenic specificity for only one of CD19 and CD22 (but not both)” and the
ability to “reduce or prevent cancer cell escape due to loss of expression
of one of CD19 or CD22 by the cancer cell.”

*The Prospective Licensee*

The prospective licensee, Lyell Immunopharma, Inc. (“Lyell”), is a
relatively new biotech company, incorporated in Delaware on June 29, 2018.
It is registered to conduct business in California, where it is
headquartered.

Lyell’s website, www.lyell.com, lists the company’s “Senior Team” and Board
of Directors, but provides little other information about the company.
Items such as “Press Releases,” “Publications,” and “News” link to webpages
stating “[c]heck back later for updates.”

Lyell’s CEO, Rick Klausner, was the director of the NCI until 2001 and
since has been involved in a larger number of venture capital and
biomedical firms, including companies like Juno Therapeutics that have
benefited enormously from licenses in NIH-funded inventions and two NIH
CRADAs, to mention one example.

*Argument*

*1. The NIH has not demonstrated that it properly evaluated the necessity
of granting an exclusive license.*

Section 209 of the Bayh-Dole Act authorizes a federal agency to grant an
exclusive license in government-owned technology only if “granting the
license is a reasonable and necessary incentive to . . . (A) call forth the
investment capital and expenditures needed to bring the invention to
practical application; or (B) otherwise promote the invention’s utilization
by the public[.]” 35 U.S.C. § 209(a)(1).

It is our understanding that the NIH has not undertaken a serious
evaluation of the adequacy of existing incentives and subsidies, relating
to practical application of the inventions, in order to evaluate whether or
not an exclusive license was a “reasonable and necessary incentive.”

On August 23, 2019, KEI emailed you a list of questions about the license,
including the following question:

3. What is the NIH’s rationale for concluding that an exclusive, rather
than a non-exclusive, or a partially-exclusive license is a necessary
incentive under 35 U.S.C. § 209?
Did the NIH estimate the amount of investment required to bring the
technology to practical application?
Did the NIH consider the incentives from the Orphan Drug Act regulatory
exclusivity for rare diseases or FDA rules on exclusive rights to rely on
regulatory test data as inadequate to protect the private investment in the
technology?

Rather than answering this, or the majority of KEI’s questions, on
September 5, 2019, you emailed KEI a letter that reads as a final
determination regarding the proposed license (and, in fact, borrows
language from many of the NIH’s previous decision letters). The letter
states, in pertinent part:

Thank you for providing us with your comments regarding the aforementioned
Federal Register notice.
. . .

[W]e determined that the criteria set forth in 37 C.F.R.
404.7(a)(1)(ii-iii) have been satisfied. Lyell demonstrated the scientific
and financial capacity to develop CAR-T therapeutics to treat B cell
malignancies. The scope of the license proposed is necessary for
incentivizing the company to undertake the development risks to develop
this type of therapy. The grant of exclusivity to the Government-owned
intellectual property seeks to fulfill the government’s interest in
promoting the public health and public access to therapeutics.

In addition to the procedural issues with the letter, this explanation
misses the point. While it is appropriate for the NIH to consider a
prospective licensee’s capacity to develop the technology, the statutory
standard requires the NIH to determine if an exclusive license “a
reasonable and necessary incentive” for achieving practical application of
the invention.

To answer that question, the NIH must consider information beyond the
financial capabilities of the prospective licensee. Merely stating that
worldwide and life-of-patent exclusivity, with no strings attached on
pricing, is a positive for the investors, is not enough.

There are at least six factors that should be considered when determining
the necessary incentive under 35 U.S.C. § 209:

   1. The costs of financing research and development and bringing the
   invention to market, including clinical trial costs (and the extent to
   which those costs may be covered by the Orphan Drug Tax Credit, Research
   Credit, or reimbursement by health insurance or other subsidies, as well as
   any expected additional subsidies from governments or charities, including,
   for example, additional grants or continued or new collaborations with the
   NIH or other government agencies);
   2. The government’s investment in R&D and the development stage of the
   technology;
   3. The existence of non-patent incentives, including, for example, test
   data protection, Orphan Drug exclusivity and the award of one or more
   priority review vouchers;
   4. The existence of patent exclusivity from other, non-NIH owned
   patents, that may be used to block entry by competitors for some but not
   necessarily all uses of the patents (noting that Zolgensma required
   licensing from four separate patent estates);
   5. The anticipated cost to manufacture the resultant invention; and
   6. The expected post-market entry profitability of the invention, by
   year.

Consider, for example, a new CAR treatment that is expected to generate
$400 million per year (Yescarta generated $99 million in the 2nd quarter of
2019), where the costs of trials are expected to be less than $30 million
(200 patients at $150,000 per patient), before reductions for tax credits,
insurance reimbursements or other subsidies.

Even if the risks associated with the investments in clinical trials are
daunting, the risk-adjusted costs of the trials would be less than the
revenue from a single year of operation. If the net margin for sales in a
year were 50 percent, the project would be a good investment even if
exclusivity was limited to five years, the same term that the Bayh-Dole Act
permitted for federally-funded patents held by non-government patent
holders when the Act was passed. And, this does not even consider the
benefits of a possible priority review voucher.

*NIH-Funded Research and Development*

Given the research and development status of the licensed inventions, we
estimate that the costs and risks associated with bringing this technology
to market are relatively low compared to other licensing opportunities in
earlier-stage inventions.

In an email dated September 6, 2019, you stated that the following trials
appear to be associated with the licensed technology:

NCT03448393
Title: “CD19/CD22 Chimeric Antigen Receptor (CAR) T Cells in Children and
Young Adults With Recurrent or Refractory CD19/CD22-expressing B Cell
Malignancies”
Actual Study Start Date: 3/26/2018
Estimated Primary Completion Date: 12/1/2021
Phase: 1
Patient Enrollment: 89
NIH Grant: None listed
Principal Investigator: Nirali N Shah, NCI

NCT03241940
Title: “Phase I CD19/CD22 Chimeric Antigen Receptor T Cells in Peds
Recurrent/Refractory B Cell Malignancies”
Actual Study Start Date: 10/20/2017
Estimated Primary Completion Date: 8/1/2025
Phase: 1
Patient Enrollment: 50
NIH Grant: P30CA124435
Principal Investigator: Crystal Mackall, Stanford University.

Both trials are Phase 1. The NIH will have paid for the riskiest stage of
clinical trial testing in the FDA approval process.

The first trial listed, NCT03448393, is being conducted by the NCI at its
laboratories in Bethesda, Maryland. The second is funded by NIH Grant No.
P30CA124435.

The fact that the government is funding two clinical trials, including one
conducted on the NIH campus by NCI employees, indicates that these
inventions have a higher likelihood of success than other technologies
licensed at earlier phases of development.

We also note that the first two CAR T approvals, for Yescarta and Kymriah,
were granted orphan drug status under the Orphan Drug Act of 1983, 21
U.S.C. §§ 360aa–360ee. The subsidies associated with Orphan Drug
designation, including a 25% tax credit on clinical trials, must be taken
into account when analyzing any likely additional R&D costs a licensee
would incur in commercializing the licensed technology.

*Other Incentives*

The licensed inventions likely would qualify for additional, valuable
government incentives.

Yescarta and Kymriah qualified for seven years of Orphan Drug exclusivity
for certain indications, as well as 12 year of test data protection on all
indications. In the European Union, those protections are 10 and 11 years,
respectively. Similar protections exist in Japan, Canada, and in many other
countries.

The FDA granted Novartis a priority review voucher for Kymriah. The subject
technology has indications in pediatric populations and rare diseases and
thus will likely receive a priority review voucher as well. In April 2018,
Spark Therapeutics sold a priority review voucher for $110 million.

In determining whether exclusivity is a “reasonable and necessary
incentive,” the NIH must take into consideration the likelihood that the
new technologies will receive Orphan Drug market exclusivities and/or
priority review vouchers, and evaluate the incentive that the 12 years of
test data provides, even in the absence of an exclusive patent license.

*2. The NIH has not demonstrated that it properly analyzed whether the
scope of rights in this license will not be greater than reasonably
necessary to induce the investment needed to commercialize the inventions.*

Under Section 209 of the Bayh Dole Act, executing an exclusive license in
government-owned inventions is not a binary decision: grant or do not grant
a fully-exclusive, worldwide, life-of-patent license. Rather, under 35
U.S.C. § 209(a)(2), the scope of an exclusive license must “not [be]
greater than reasonably necessary to provide the incentive for bringing the
invention to practical application[.]”

A federal agency proposing to grant an exclusive license must determine the
following terms related to the scope of the license:

The period of exclusivity – how long the licensee may claim a monopoly on
the right to market and sell the invention (i.e., five years, ten years,
life of patent, etc.);
Territorial reach (worldwide or limited to the U.S. or a particular
geographic region); and
Field of use (i.e., targeted diseases).

The NIH has not demonstrated that it makes any effort to determine the
number of years of exclusivity that are reasonably necessary to achieve
regulatory approval and commercialization.

In KEI’s August 23, 2019 email, KEI asked you about the duration of
exclusivity for the proposed license, and whether “the NIH [has] undertaken
an economic analysis to determine if a shorter exclusivity period such as a
five or 10 year term would be a sufficient incentive under 35 U.S.C. 209
for the licensed technologies[.]”

You did not answer. Rather, you stated: “Many of your questions relate to
terms in the license which have not yet been negotiated and would be
business confidential.”

There is an inherent contradiction between the idea that the terms of the
license have yet to be determined and your statements, in the preceding
paragraph, that “[NIH] ha[s] determined that the criteria set forth in 37
C.F.R. 404.7(a)(1)(ii)-(iii) have been satisfied[,]” and that “[t]he scope
of the license proposed is necessary for incentivizing the company to
undertake the developmental risks to develop this type of therapy.”

Setting aside the fact that the NIH apparently rendered a decision about
the license before considering all timely-submitted public comments, it is
impossible for the NIH to find that the scope of the license satisfies
Section 209 and the associated federal regulations if the NIH has not yet
considered what the scope will be.

Based on this, and prior interactions between KEI and the NIH, it appears
that the NIH never negotiates an exclusive license for a period shorter
than life-of-patent. Such a policy or practice would violate Section 209,
which requires that federal agencies negotiate exclusive licenses on a
case-by-case basis, and mandates that the scope of a license in
federally-owned inventions is no greater than reasonably necessary.

*3. The NIH was not fully transparent about the license and reached a final
determination before considering all timely-submitted public comment, in
conflict with 35 U.S.C. § 209(e).*

A federal agency may not grant an exclusive license in government-owned
technology without first notifying the public of the prospective license,
allowing a minimum 15-day period for the public to comment, and considering
all timely-submitted comments. 35 U.S.C. § 209(e).

As noted previously, on August 23, 2019, KEI emailed you a list of
questions related to the criteria for granting an exclusive license, such
as the stage of research and development of the invention, whether any
clinical trials were associated with the technology, the duration of the
license, and whether NIH sought the advice of the Attorney General.

On September 5, 2019, you emailed KEI a response letter that not only
failed to answer many of KEI’s questions, but also stated that the NIH had
determined that the relevant criteria are satisfied by the license. The
deadline to submit comments was two weeks away.

Reaching a conclusion about a license before considering all
timely-submitted comments conflicts with 35 U.S.C. § 209(e), which states
that “[n]o exclusive or partially exclusive license may be granted . . .
unless . . . the Federal agency has considered all comments received before
the end of the comment period[.]” Because the comment period had not yet
closed, and KEI had not, in fact, submitted its comments, it was premature
for the NIH to conclude that the proposed exclusive license to Lyell
satisfied the relevant criteria.

After KEI pointed out that the August 23, 2019 email was a set of
questions, and not comments or suggestions, the NIH never followed up with
answers to many of the questions asked (other than to provide the clinical
trial numbers associated with the invention). For the public to
meaningfully comment on a license, it must have basic information from the
NIH.

One issue, in particular, about which the NIH was not transparent was trial
costs. You stated in your letter that you “do not have additional
information related to the costs, etc. of these clinical trials.” While it
may be the case that you do not personally have such information, someone
within NIH should be able to disclose such data.

In regard to extramural research specifically, as part of the NIH grant
process, grant recipients are required to submit a variety of reports and
forms, many of which involves disclosures of anticipated or actual
expenditures. For example, according to the NIH website, “[r]ecipients of
federal funds are required to report the status of funds for grants or
assistance agreements to the sponsor of the grant[,]” which involves
“submit[ting] a statement of expenditures associated with the grant to the
sponsor[]” using an SF 425 form. The NIH’s recordkeeping procedures
demonstrates that it keeps track of trial costs.

*4. The NIH apparently has not sought the antitrust advice of the U.S.
Attorney General regarding the license, as required by 40 U.S.C. 559.*

We object to the license unless the NIH first obtains the antitrust advice
of the United States Attorney General, who confirms that the license would
not be anticompetitive.

Under the Federal Property and Administrative Services Act, 40 U.S.C. §§
101 et seq., “[a]n executive agency shall not dispose of property to a
private interest until the agency has received the advice of the Attorney
General on whether the disposal to a private interest would tend to create
or maintain a situation inconsistent with antitrust law.” 40 U.S.C. §
559(b)(1).

This includes when the NIH proposes to grant an exclusive license in
federally-owned technology. “Property” is defined at 40 U.S.C. § 102 to
mean “any interest in property.” The statue exempts personal property if
the fair market value is less than $3,000,000, but specifically excludes “a
patent, process, technique, or invention” from that exception.

The regulation 41 C.F.R. § 102-75.270 also makes clear the inclusion of
patents “irrespective of cost.”

41 C.F.R. § 102-75.270 – Must antitrust laws be considered when disposing
of property?

Yes, antitrust laws must be considered in any case in which there is
contemplated a disposal to any private interest of –

(a) Real and related personal property that has an estimated fair market
value of $3 million or more; or

(b) Patents, processes, techniques, or inventions, irrespective of cost.

KEI asked you whether the NIH requested the advice of the U.S. Attorney
General concerning the licenses. You did not answer. In the past, the NIH
has asserted its position with respect to 40 U.S.C. § 559 as follows:

“The statute you reference is directed to the disposal (assignment) of
government property. It has little relevance to our patent licensing
activities, which are principally government by the Bayh-Dole Act and its
regulations.”

We disagree.

The Bayh-Dole Act expressly incorporates federal antitrust laws. 35 U.S.C.
§ 209(a)(4) allows a federal agency to grant an exclusive license only if
the license “will not tend to substantially lessen competition or create or
maintain a violation of the Federal antitrust laws.” 35 U.S.C. § 211
provides that “[n]othing in this chapter shall be deemed to convey to any
person immunity from civil or criminal liability, or to create any defenses
to actions, under any antitrust law[.]” The Bayh-Dole Act sets out the
areas in which the statute “shall take precedence over any other Act which
would require a disposition of rights in subject inventions[,]” 35 U.S.C. §
210, and mentions 21 separate statutes, but not the FPASA.

Second, the term “disposal” is not a defined term under 40 U.S.C. § 102 of
the FPASA, and
is not limited to “assignment” or “sale.” In fact, there are many examples
of regulations and laws that include licensing amongst dispositions, either
explicitly or by implication.

If NIH grants an exclusive license in a federally-owned invention, it is
disposing of a government property interest so as to trigger 40 U.S.C. §
559.

*5. In the event that the NIH decides to grant the license over our
objections, we recommend that the NIH includes a series of provisions
designed to safeguard the public interest and ensure that the licenses
implement the governing principles listed in the Public Health Service
(PHS) technology transfer manual.*

In the event that the NIH proceeds with the license, KEI requests that it
includes the following provisions to protect the public’s interest in the
NIH-funded technology:

   1. *Price discrimination*. Any medical technology using the patented
   invention should be available in the United States at a price that does not
   exceed the median price in the seven largest economies by GDP that have at
   least 50 percent of the GNI per capita as the United States, using the
   World Bank Atlas method. This is a modest safeguard.
   2. *Low and middle income countries*. The exclusive license should not
   extend to countries with a per capita income less than 30 percent of the
   United States, in order to ensure that the patents do not lead to
   restricted and unequal access in developing countries. If the NIH rejects
   this suggestion, it needs to provide something that will give effect to the
   policy objective in the “United States Public Health Service Technology
   Transfer Policy Manual, Chapter No. 300, PHS Licensing Policy,” which
   states the following: “PHS seeks to promote commercial development of
   inventions in a way that provides broad accessibility for developing
   countries.”
   3. *Global registration and affordability*. The license should require
   Intima Bioscience to disclose the steps it will take to enable the timely
   registration and availability of the medical technology at an affordable
   price in the United States and in every country with a demonstrated need,
   according to the Centers for Disease Control and Prevention (CDC) and/or
   the World Health Organization (WHO), either by supplying a country directly
   at an affordable, publicly disclosed price and with sufficient quantities,
   or by providing technology transfer and rights to all intellectual property
   necessary for third parties to do so.
   4. *Medicines Patent Pool*. The NIH should retain a right to grant the
   WHO, the Medicines Patent Pool or other governments the rights to use the
   patent rights to procure the medical technology from competitive suppliers,
   including technology transfer, in developing countries, upon a finding by
   HHS or the WHO that people in these markets do not have sufficient access
   to the medical technology.
   5. *Years of exclusivity*. We propose the license reduce the years of
   exclusivity when revenues are large. The NIH has many options, including by
   providing an option for non-exclusive licensing, such as was done in the
   ddI case. We propose that the exclusivity of the license be reduced when
   the global cumulative sales from products or services using the inventions
   exceed certain benchmarks. For example, the period of exclusivity in the
   license could be reduced by one year for every $500 million in global
   cumulative revenue after the first one billion in global sales. This
   request is consistent with the statutory requirements of 35 U.S.C. § 209,
   which requires that “the proposed scope of exclusivity is not greater than
   reasonably necessary to provide the incentive for bringing the invention to
   practical application.”
   6. *Transparency of R&D outlays*. The licensee should be required to
   file an annual report to the NIH, available to the public, on the research
   and development (R&D) costs associated with the development of any product
   or service that uses the inventions, including reporting separately and
   individually the outlays on each clinical trial. We will note that this is
   not a request to see a company business plan or license application. We are
   asking that going forward the company be required to report on actual R&D
   outlays to develop the subject inventions. Reporting on actual R&D outlays
   is important for determining if the NIH is meeting the requirements of 35
   U.S.C. § 209, that “the proposed scope of exclusivity is not greater than
   reasonably necessary to provide the incentive for bringing the invention to
   practical application.” Specifically, having data on actual R&D outlays on
   each clinical trial used to obtain FDA approval provides evidence that is
   highly relevant to estimating the risk adjusted costs of bringing NIH
   licensed inventions to practical application.

*Conclusion*

We object to the prospective license for the reasons stated herein. If the
NIH decides to execute the license over our objections, we request that, at
the very least, it includes the safeguards we have proposed, which are
designed to implement the Bayh-Dole Act’s stated policy objective that
government-sponsored inventions are available to the public on reasonable
terms, as well as the PHS Technology Transfer Manual’s policy of promoting
access in developing countries.

Sincerely,

Knowledge Ecology International
Union for Affordable Cancer Treatment
Social Security Works
Health GAP
Brook Baker





-- 
Kathryn Ardizzone, Esq.
Counsel
Knowledge Ecology International
1621 Connecticut Avenue NW, Suite 500
Washington, DC 20009
kathryn.ardizzone at keionline.org
(202) 332-2670


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