[Ip-health] Text of letter from KEI to FTC over possible conspiracy between the Icahn School of Medicine at Mount Sinai, formerly, the Mount Sinai School of Medicine (MSSM), Sanofi, and Shire
james.love at keionline.org
Tue Jul 15 04:53:56 PDT 2014
Via E-Mail: antitrust at ftc.gov
July 15, 2014
Also via Regular Mail
Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
601 New Jersey Ave, NW
Washington, D.C. 20580
Telephone: (202) 326-3300
Re: Request for investigation into decision by Shire to not compete in U.S.
market for Fabry’s disease treatments
Dear Sir or Madam:
Knowledge Ecology International (KEI) is a non-profit organization that
includes as its mission to protect consumers from excessive prices for
drugs, vaccines and other medical technologies.
We are writing to ask the United States Federal Trade Commission (FTC) to
undertake an investigation into a possible conspiracy between the Icahn
School of Medicine at Mount Sinai, formerly, the Mount Sinai School of
Medicine (MSSM), Sanofi, and Shire to restrain competition for treatments
for Fabry’s disease. Specifically, we ask that the FTC investigate the
circumstances surrounding the simultaneous resolution of compulsory
licensing proceedings in the United States and Germany for patents for the
treatment of Fabry’s disease, and the decision by Shire to withdraw its
proposed registration of a biologic product that would compete directly
with the Sanofi product, which enjoys a monopoly in the United States, but
faces competition from Shire in Germany and other European countries.
Two U.S. biotech firms, both based in Cambridge, Massachusetts, originally
developed competing treatments for Fabry’s disease, a rare and severe
Genzyme developed Fabrazyme. Transkaryotic Therapies developed Replagal.
The development of both products benefited from NIH grants.
Both firms have since been acquired by larger European firms. Transkaryotic
Therapies was acquired by Shire on June 28, 2005. Genzyme was acquired by
Sanofi on February 26, 2011.
On August 3, 2001, Transkaryotic Therapies and Genzyme both received
European Medicines Agency approval, and 10 years of Orphan Drug status for
Europe, which expired on August 3, 2011.
In 2003 Genzyme obtained a regulatory monopoly in the United States under
the U.S. Orphan Drug Act. The U.S. exclusivity expired on April 24, 2010.
Both products are expensive. The Genzyme product was priced at around
$700 per day in 2010, or more than $250,000 per year, according to bills to
The two companies compete in other markets.
Beginning in 2009, Genzyme’s considerable problems with manufacturing
biologic drugs led to a significant shortage of Fabrazyme production, and
Genzyme reduced patient doses in the United States to 30 percent of what
was medically appropriate. The Fabrazyme shortages lasted until late 2012.
In Europe, there was an initial rationing of access, but after reports of
adverse medical outcomes from patients on reduced doses, the European
Medical Agency asked that full dosages be restored. As a consequence,
Genzyme suffered significant losses of market share to Shire, which was
able to scale up manufacturing of Replagal.
The Icahn School of Medicine at Mount Sinai is the owner of an important
patent on Fabrazyme. In US litigation, Shire’s Replagal was found to be
non-infringing. However, in April 2010, the middle of the Fabrazyme supply
crisis, Mount Sinai sued Shire in Sweden and Germany for infringement of
its patent, seeking to block production and sale of Replagal in Europe, and
litigation over the patent was later expanded to include the UK and other
countries. Mount Sinai sought injunctions to prevent Shire sales, and the
destruction of Shire’s infringing inventory.
Note that in some EU countries, including Germany and Sweden, Mount Sinai
had been issued Supplementary Protection Certificates, which extended the
patent term until August 2016, nearly 26 years after the initial
application for the patent in the United States.
In August of 2010, several U.S. Fabry’s patients filed an NIH Bayh-Dole
March-In in the United States, seeking a compulsory license to the Mount
Sinai patent in the United States.
The NIH rejected the U.S. Fabry’s patients march-in petition, but required
Mount Sinai to make monthly reports on steps taken to address the U.S.
shortage of Fabrazyme, and report on the patent litigation in Europe.
Governmentattic.org has published a FOIA request that details the “regular
updates to the National Institutes of Health (NIH) required from the Mount
Sinai School of Medicine” regarding the Fabrazyme issue. In these email
exchanges, the word injunction is mentioned 31 times.
It is clear from these emails that the NIH was putting pressure on Mount
Sinai to withdraw its request for an injunction against Shire in Europe, on
the grounds that an injunction would make the supply shortage worse, which
at that time was hurting U.S. patients more than patients outside of the
United States, and create an even larger embarrassment for the NIH, which
had just denied the U.S. compulsory license request.
The NIH was in a position to push Mount Sinai, because it had world-wide
rights on the Mount Sinai patent, as a consequence of funding the inventors
research, but the NIH’s interest in the injunction appeared to be limited
to the anticipated period of the U.S. supply shortage.
During the crisis over the shortage of Fabrazyme, beginning in 2009, the
U.S. FDA invited Shire to reactivate its earlier application for marketing
approval in the United States, an action that had been blocked under the
Orphan Drug Act exclusivity since 2003. Shire then began a series of steps
designed to obtain US marketing approval for Replagal. Since by 2009
Replagal had been used in Europe, Australia, Canada and in many other
countries, with good results, Shire was optimistic the FDA would provide an
Mount Sinai had been successful in its European infringement suit against
Shire in Germany. But on March 1, 2011, Mount Sinai informed the NIH
that it has been served with a Shire motion for a compulsory license for
the territory of Germany. The German compulsory licensing proceeding was
scheduled for the spring of 2012.
On March 14, 2012, Shire withdrew its application to the US FDA to sell
Replagal in the United States. Less than two months later, on May 9, 2012,
Mount Sinai granted Shire a non-exclusive license to use its patent in
connection with the sale of Replagal in the European Union.
Request for investigation
The decision of Shire to withdraw its US BLA application for Replagal may
have been part of a larger agreement to divide markets for Fabry
treatments, and possibly to facilitate collusion on pricing, as Shire is
now required to provide financial information to Mount Sinai, as regards
its Replagal sales. As a consequence, U.S. patients are depending upon a
single supplier for treatments, and are disadvantaged because there is both
a lack of potential competition among suppliers and a less secure supply
We ask the FTC to investigate the near simultaneous withdrawal of the US
BLA application for Replagal with the Mount Sinai granting of a patent
license to Shire for the European market.
We are attaching a detailed timeline of relevant dates and events. Note
that the relationship between Mount Sinai and Genzyme is and was complex.
For example, at the time of the supply crisis and the two compulsory
licensing requests, Carl Icahn held a reported 4.9 percent of the shares in
Genzyme, Inc., and as a consequence of a proxy battle, on June 9, 2010
placed a Mount Sinai official on the Genzyme Board of Directors. The
school has also subsequently been named the Icahn School of Medicine at
The sequence of events served the interest of several parties. Mount Sinai
was able to protect its monopoly in the United States, avoid a compulsory
license in Europe, and collect money from patent royalties in several
countries outside of the United States. The shareholders of Genzyme
avoided losing market share in the United States and also avoided a
weakened bargaining power with reimbursement entities- both outcomes at
risk from an expected Shire entry into the US market following the
termination of US Orphan Drug exclusivity. In one year following his Proxy
battle, Carl Icahn realized a 36 percent increase in Genzyme share prices,
worth more than $260 million. Shire avoided being shut-out of the markets
in Germany, Sweden and other high income countries through August 2016.
The NIH also achieved its objectives of preserving its perfect track record
of rejecting all Bayh-Dole March-In requests for compulsory licenses, even
while finding it necessary to insist that Mount Sinai did not seek
injunctions for patent infringement in Europe, a practice that sometimes is
referred to as a compulsory license, when sanctioned by a court and subject
to court ordered royalty payments, and certainly here, induced by the NIH,
an entity with a global royalty free right in the patent.
But not everyone benefited. In particular, U.S. Fabry patients, who had
just suffered through nearly three years of severe rationing of medication
including, in some cases no access and in other cases doses restricted to
30 percent of appropriate treatments, lost the opportunity for a second
firm to enter the market. A second firm would have provided U.S. Fabry
patients three concrete benefits. First, there would be more security of
future supplies, should there be another manufacturing failure. Second,
Fabry patients would have the opportunity to use either Fabrazyme or
Replagal, and there is evidence that some patients do better with one than
the other. Third, the availability of two suppliers can and should lead to
price competition, particularly when prices bear very little relationship
to manufacturing costs.
U.S. taxpayers did not benefit. The NIH funded the early development of
both Fabrazyme and Replagal. But what the U.S. has received from those
investments are two products, one not available in the United States, both
owned by foreign firms, and both sold at extraordinarily high prices. Some
of the patients who receive Fabrazyme at prices of $700 per day and higher,
have the treatments reimbursed by Medicare, Medicaid or other government
programs. Other patients use private insurance or in some cases, employee
funded health insurance. The high prices for Fabrazyme drives up insurance
premiums for everyone.
KEI asks the FTC to investigate the decision by Shire to withdraw its
application to sell Replagal in the United States, including by reviewing
all communications with The Icahn School of Medicine at Mount Sinai,
Genzyme and Sanofi, and activist shareholders in Genzyme, to determine if a
conspiracy existed whereby Shire agreed to withdraw its application to
compete in the U.S. Fabry disease market if Mount Sinai granted a license
to use an NIH funded invention in European markets.
Knowledge Ecology International
1621 Connecticut Avenue, Suite 500
Washington, DC 20009
Email: james.love at keionline.org
Sales of Fabrazyme and Replagal
Timeline for Fabrazyme, Replagal
Documents related to “the Fabrazyme matter” including periodic regular
updates to the National Institutes of Health (NIH) required from the Mount
Sinai School of Medicine and Correspondence, 2011
All documents available at http://keionline.org/node/2055
James Love. Knowledge Ecology International
http://www.keionline.org, KEI DC tel: +1.202.332.2670, US Mobile:
+1.202.361.3040, Geneva Mobile: +41.76.413.6584, twitter.com/jamie_love
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