[Ip-health] Groups Object to Army Proposal to Give Sanofi a Monopoly on Patents for Taxpayer-Funded Zika Vaccine

Zack Struver zack.struver at keionline.org
Thu Jan 12 08:25:46 PST 2017


​Groups Object to Army Proposal to Give Sanofi a Monopoly on Patents for
Taxpayer-Funded Zika Vaccine

12 JANUARY 2017

CONTACT: Zack Struver, zack.struver at keionline.org, +1 (202) 332-2670

Groups Object to Army Proposal to Give Sanofi a Monopoly on Patents for
Taxpayer-Funded Zika Vaccine

Washington, DC — Today, Knowledge Ecology International (KEI), the American
Federation of State, County and Municipal Employees (AFSCME), People of
Faith for Access to Medicines (PFAM), Universities Allied for Essential
Medicines (UAEM), economist Dean Baker, Public Citizen, and Social Security
Works objected that U.S. Army plans [1] to grant an exclusive license to
Sanofi on government-owned technologies [2] for a Zika Virus vaccine would
violate public interest safeguards in United States technology transfer law.

The letter sent today to the the U.S. Army Medical Research and Materiel
Command (USAMRMC) follows previous comments from KEI [3].

The objection noted that “the Army proposal to grant an exclusive license
to patents on a new Zika vaccine to Sanofi is contrary to the provisions of
35 U.S.C. 209(a)(1),” a provision of the Bayh-Dole Act that requires the
government to evaluate whether an exclusive license is a “reasonable and
necessary incentive” to promote investment in the commercialization of a
patented technology.

The letter objected that an exclusive license would not be necessary to
incentivize Sanofi to to develop a Zika vaccine on three grounds:

1. The United States government is providing significant funding for
clinical research into the vaccine, including late stage clinical trials.
Sanofi has earned over $43.2 million in grants from the Biomedical Advanced
Research and Development Authority [4], commonly known as BARDA, to support
phase 2 clinical trials, with the option to apply for additional funds.

2. Sanofi will earn 12 years of exclusive marketing rights under provisions
in the Biologics Price Competition and Innovation Act (BPCIA) that will
prevent competitors from relying on the results of clinical trials for
biosimilar approval at the FDA.

3. Sanofi will earn a Priority Review Voucher (PRV) for its vaccine from
the FDA, which it could sell for a significant sum. United Therapeutics
sold a PRV to AbbVie for $350 million in August 2015 [5].

The signers expressed to the Army that the grant of a license to Sanofi
would be “unlawful.”

Statements from the Signers

James Love, Director of Knowledge Ecology International (KEI):

“Under the Bayh-Dole Act, there are two standards for the licensing of
patents involving federal funding of the invention: one for patents owned
by the federal government, and a different standard for the patents held by
universities and others who receive federal grants and research contracts.
The standard for the federal government is more strict, and it is in fact
illegal to grant an exclusive license unless the exclusivity is
‘necessary.’ In this case, the federal government is funding the Phase 1, 2
and 3 trials, paying for other R&D expenses, and giving Sanofi other
incentives, such as the lucrative priority review voucher. Under the
statute, the Army can’t pay for nearly everything and then justify an
exclusive license. If the taxpayer funded vaccine succeeds, American
residents run the predictable risk of buying back the invention from Sanofi
at high prices, under stressful conditions, to protect their unborn
children. This is not a small issue, and policy makers need to get it

Dean Baker, Economist and Co-Founder of the Center for Economic and Policy

"The Army's dealings with the Zika vaccine is an extreme example of the
treatment of government financed research more generally. This is a case
where the government bore the overwhelming majority of the costs and risks
associated with successfully developing a vaccine, yet it is now planning
to give Sanofi monopoly control over the distribution of the vaccine. As a
result of having rights to the government's patent monopoly, Sanofi will be
able to charge prices far above the free market price.

“While this is an extreme case, it illustrates the problem of the
government paying for much of the research needed to develop new drugs and
then allowing private companies to gain monopoly control over the
distribution of the final product. This is the reason that we see soaring
drug prices. If the government set pricing rules as a condition of access
to its research, or better yet simply allowed drugs to be sold in a free
market when it had paid for their development, we would save hundreds of
billions of dollars a year on drugs."

Fran Quigley, People of Faith for Access to Medicines:

“People of Faith for Access to Medicines strongly believes that the Army
proposal to grant an exclusive license to patents on a new Zika vaccine to
Sanofi is not just in violation of U.S. law: it is a violation of the
standards of morality and human decency embraced by people of all faiths
and moral traditions. This proposal would further advance the disturbing
practice of a fortunate few profiteering on essential medicines necessary
for the health for millions. This practice of elevating corporate profits
over the needs of people offends the sensibilities of the vast majority of
Americans and the faith and moral traditions that our communities and
families are built on.”

Merith Basey, Executive Director, Universities Allied for Essential

“An exclusive license will put Sanofi's shareholders above the needs of the
public, the very people who funded the research in the first place via
their taxpayer dollars. The US Government must ensure that this publicly
funded innovation is affordable for all.”

Background Information

Previous reporting on this story:

Eric Sagonowsky, “U.S. Army's planned Zika vax license to Sanofi raises
nonprofit's ire [6],” FiercePharma, Jan. 10, 2017.

Ed Silverman, “US Army license being awarded to Sanofi for a Zika vaccine
raises questions [7],” Stat News, Dec. 22, 2016.

Additional information on Sanofi’s collaboration with the U.S. Government:

Sanofi, “Sanofi Pasteur Signs Research Agreement for Zika Vaccine,” July 6,
2016, http://mediaroom.sanofi.com/sanofi

Sanofi, “Sanofi Pasteur, Fiocruz, and WRAIR Agree to Collaborate on Zika
Vaccine Research,” Oct. 27, 2016, http://mediaroom.sanofi.com/sanofi

Full text of 35 U.S.C. 209(a):

(a) Authority.—A Federal agency may grant an exclusive or partially
exclusive license on a federally owned invention under section 207(a)(2)
only if—

(1) 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

(2) the Federal agency finds that the public will be served by the granting
of the license, as indicated by the applicant's intentions, plans, and
ability to bring the invention to practical application or otherwise
promote the invention's utilization by the public, and that the proposed
scope of exclusivity is not greater than reasonably necessary to provide
the incentive for bringing the invention to practical application, as
proposed by the applicant, or otherwise to promote the invention's
utilization by the public;

(3) the applicant makes a commitment to achieve practical application of
the invention within a reasonable time, which time may be extended by the
agency upon the applicant's request and the applicant's demonstration that
the refusal of such extension would be unreasonable;

(4) granting the license will not tend to substantially lessen competition
or create or maintain a violation of the Federal antitrust laws; and

(5) in the case of an invention covered by a foreign patent application or
patent, the interests of the Federal Government or United States industry
in foreign commerce will be enhanced.

Additional data on Zika Virus are available as appendix II to the letter,
on page 12.

[3] http://keionline.org/node/2706
[7] https://www.statnews.com/pharmalot/2016/12/22/zika-vaccines-army-sanofi/

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

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