[Ip-health] A payoff for U.S. taxpayers? CDC may have claims on remdesivir patents held by Gilead

Ed Silverman pharmalot at gmail.com
Tue Dec 8 04:10:02 PST 2020


STAT News / Pharmalot

A Payoff for US Taxpayers? CDC May Have Claims on Remdesivir Patents Held
by Gilead

By Ed Silverman

Six years ago, a team of scientists at the Centers for Disease Control and
Prevention began researching dozens of compounds supplied by Gilead
Sciences for use in combating different viruses. And they discovered that
one compound, in particular, appeared effective in treating Ebola.

Their work helped make it possible for the company to obtain patents for
the compound, which is now known famously as remdesivir
<https://www.statnews.com/2020/03/16/remdesivir-surges-ahead-against-coronavirus/>.
Although it never panned out as an elixir for Ebola, remdesivir has since
become the first medication to win regulatory approval to treat some
hospitalized Covid-19 patients. So far, the repurposed drug has yielded
$873 million in sales, with most coming from the U.S.

Those hefty sales have been fueled by controversial pricing, though. The
federal government signed a deal for U.S. hospitals to pay $3,120 per
treatment, the highest price in the world. Moreover, that deal occurred
after the involvement of government scientists in discovering uses for the
drug. One consumer group estimated
<https://mkus3lurbh3lbztg254fzode-wpengine.netdna-ssl.com/wp-content/uploads/The-Real-Story-of-Remdesivir-final-May-7.pdf>
 U.S. taxpayers contributed $70 million to developing remdesivir.

As a result, remdesivir has become a flashpoint in an intensifying debate
over taxpayer-funded research that leads to big-selling medicines, which
may be unaffordable for some patients, even as drug makers hold patent
rights and keep the profits. Next month, in fact, the General
Accountability Office is expected to release a report that examines the
role taxpayer funds played in the development of remdesivir, a move
requested
<https://www.statnews.com/pharmalot/2020/07/28/gilead-remdesivir-drug-prices-patents-covid19-coronavirus/>
 by lawmakers.

In this case, however, it appears possible that U.S. taxpayers may be
entitled to a financial payback. In fact, the CDC suggested the issue could
wind up in court.

Here’s the deal: Patent law indicates CDC scientists should be listed as
co-inventors on one or more patents covering remdesivir, according to legal
experts. Consequently, the U.S. government may have some ownership rights,
because the research was critical to its overall development.

“If CDC had not tested the parent [compound] against Ebola in April of
2014, I’m not sure any of the following work would have happened,”
according to Michael Lo, a CDC scientist, whose team collaborated with the
U.S. Army Medical Research Institute of Infectious Diseases and later
tested remdesivir itself as an Ebola treatment. He declined to comment,
however, when asked if CDC scientists should have been listed on any
patents.

Gilead, meanwhile, subsequently obtained patent rights that are broad
enough to allow the company to claim exclusive rights for remdesivir for
any use, not just treating Ebola or any closely related virus, according to
patent experts. (Those patents can be found here
<https://www.statnews.com/wp-content/uploads/2020/12/US9949994.pdf>, here,
<https://www.statnews.com/wp-content/uploads/2020/12/US9724360.pdf> and here
<https://www.statnews.com/wp-content/uploads/2020/12/US10695361.pdf>). In
other words, thanks to complex nuances in patent law, the U.S. government –
and any generic drug manufacturer that contracts with the U.S. government –
might have a right to make, use, and sell remdesivir without paying Gilead
any royalties on these patents.

“The facts show that CDC scientists made significant contributions to
inventions — methods of using remdesivir — claimed in the patents. That
gives CDC a strong claim that its scientists are true co-inventors of these
patents,” explained Christopher Morten, deputy director at the New York
University Technology Law and Policy Clinic, who studies patents and access
to medicines, and has worked with advocacy groups that have been critical
of Gilead pricing policies.

“Under U.S. patent law, if an inventor contributes to the invention of even
a single claim made in a patent, then that inventor is a co-inventor of the
entire patent. Co-inventorship matters because co-ownership arises from
co-inventorship,” he continued. “If a scientist contributes to the
invention of even a single claim of a patent, she is legally a co-inventor
of the entire patent. With co-inventorship comes a presumption of
co-ownership. If CDC scientists co-invented one or more of these patents,
the CDC is presumed to be the patents’ legal co-owner.”

When asked if the CDC believes it has any legal claims, an agency
spokesperson said, “this is a legal matter subject to potential litigation
and CDC has no further comment.”

A spokesperson for the U.S. Army Medical Research Institute of Infectious
Diseases did not respond to repeated requests for comment.

A Gilead spokesperson wrote us that the company “disagrees with the premise
that the government has any rights to Gilead’s remdesivir intellectual
property” and “is confident that its intellectual property accurately
reflects both the prior and ongoing work of Gilead researchers and protects
Gilead’s significant, longstanding investments in remdesivir.”

The spokesperson further argued that the research leading to the drug began
more than a decade ago as part of an effort to cure hepatitis C and that
Gilead researchers “invented remdesivir, identified its broad-spectrum
antiviral activity, optimized the formulation of the product, and scaled up
the manufacturing process.”

Whether the CDC would pursue litigation is unclear, but an issue would be
whether the agency reached any deals with Gilead over intellectual
property, according to Arti Rai, a former U.S. Patent and Trademark Office
official and Duke University law professor, who specializes in intellectual
property. She has also researched patents and the role played by the
federal government in developing remdesivir.

“The evidence suggests that the CDC scientists could be co-inventors with
respect to the claims that cover using remdesivir to treat Ebola and other
filoviruses,” she wrote us. “Because the default rule under patent law
provides that co-inventorship of even one claim of a patent entitles the
co-inventor to ownership of the entire patent, a key question is whether
the relevant contractual agreements assigned all ownership rights over
inventions to Gilead.”

A materials transfer agreement between the CDC and Gilead that was signed
in 2013 contains language that may provide some clues. The document is heavily
redacted <http://freepdfhosting.com/88f334a50f.pdf> and so any reference to
remdesivir may have been obscured, but the agreement was signed by a CDC
researcher who was among those that explored the use of the drug for
combating the Ebola virus.

One clause appears to indicate that Gilead has the right to use the outcome
of the research for its own patent protection, while another clause states
that the CDC granted Gilead the right to negotiate a license to any
intellectual property that is owned by the agency and emerged from the
research. How the language might be reconciled remains to be seen.

One expert suggested the agreement may put the CDC in the proverbial
driver’s seat.

“A contract can potentially transfer ownership of a patent, but the
materials transfer agreement between Gilead and the CDC does not appear to
transfer patent ownership from CDC to Gilead,” wrote Robert Gomulkiewicz,
who heads the graduate program in intellectual property law and policy at
the University of Washington.

“The agreement does permit Gilead to use data generated by CDC in Gilead’s
own patent applications, and CDC promises to give Gilead the opportunity to
negotiate a license to any CDC patents that might arise from using Gilead’s
licensed materials. However, these provisions do not assign CDC patents to
Gilead.”

The Gilead spokesman did not address questions about the materials transfer
agreement, specifically.

If the CDC were to assert any patent rights, the agency could authorize
lower-cost generic versions of remdesivir, since pricing remains an issue.
In recent months, a dozen state treasurers asked Gilead
<https://www.statnews.com/pharmalot/2020/09/17/gilead-remdeisivir-covid19-fda-coronavirus-pandemic/>
 to lower its price and more than 30 state attorneys general urged
<https://www.statnews.com/pharmalot/2020/08/04/state-attorneys-remdesivir-gilead-patents/>
 the federal government to sidestep Gilead patents so generic versions
could be manufactured.

The U.S. government is already locking horns with Gilead over a similar
situation.

The Department of Health and Human Services last year filed a lawsuit
accusing the company of infringing patents on a pair of HIV prevention
pills and unfairly reaping hundreds of millions of dollars from research
funded by taxpayers. Gilead countersued
<https://www.statnews.com/pharmalot/2020/04/26/gilead-cdc-lawsuit-hiv-research-truvada/>,
arguing HHS breached several contracts and “secretly” obtained patents
stemming from research that led to the Truvada HIV-prevention pill.

Meanwhile, the long-term outlook for remdesivir sales could diminish once
sufficient supplies of Covid-19 vaccines start to become available. For
instance, Morgan Stanley analyst Matthew Harrison projected in a recent
investor note that remdesivir sales will reach nearly $1.9 billion next
year, but then rapidly trail off to nothing by 2023.
And a decision last month by the World Health Organization not to recommend
<https://www.who.int/news-room/feature-stories/detail/who-recommends-against-the-use-of-remdesivir-in-covid-19-patients>
 the drug may also blunt usage. The agency cited a clinical trial showing
no survival benefit. In an editorial
<https://www.nejm.org/doi/full/10.1056/NEJMp2032369> last week in the New
England Journal of Medicine, Food and Drug Administration officials argued
their approval “marked an important step toward addressing the needs” of
Covid-19 patients, but conceded the lack of a survival benefit demonstrated
a need for more therapies.

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