[Ip-health] Stat News: Should the federal government seize patents on a Biogen drug that starts at $750,000 a year?​

Zack Struver zack.struver at keionline.org
Tue Jan 24 10:40:29 PST 2017

Ed Silverman at Stat News just published this story on KEI's request for an
investigation into federal funding in Spinraza, a new and expensive
treatment for spinal muscular atrophy.

The article is behind a paywall, but I encourage you to visit the site here:

​I also encourage anyone who has the extra resources to subscribe to Stat
Plus. Ed Silverman is one of the few reporters, and Stat one of the few
publications, that consistently delves into the social and political issues
around intellectual property and access to medicines.


Should the federal government seize patents on a Biogen drug that starts at
$750,000 a year?​

By ED SILVERMAN @Pharmalot

JANUARY 24, 2017
When Biogen received regulatory approval last month to sell the Spinraza
rare disease drug, the company surprised Wall Street by setting a price
that few expected — $750,000 for the first year of treatment and $375,000
each year thereafter. At the time, at least one analyst suggested the price
tag amounted to “sticker shock” that may cheer investors, but also invite
criticism at a time of growing outrage over drug pricing.

Already, the scrutiny has begun.

A consumer advocacy group alleges the organizations that discovered the
drug – Cold Spring Harbor Laboratory and Ionis Pharmaceuticals – failed to
properly file paperwork noting research was supported, in part, by federal
funds. And this failure could allow the federal government to take title to
the patents should it decide there is a need to prevent a monopoly that
impedes access to lower-cost versions.

So the advocacy group, Knowledge Ecology International, plans to ask the
National Institutes of Health and the Centers for Medicare and Medicaid
Services to exercise legal rights that, ultimately, could make it possible
for the federal government to decide that lower-cost versions should be
available, according to a letter the group sent last week to the HHS Office
of Inspector General.

In its letter, which an OIG spokesman says the agency is “carefully
reviewing,” KEI calls the price tag excessive. The drug, by the way, is the
first to be approved to to treat spinal muscular atrophy, a disease that
robs people of the ability to walk, eat, or breathe, and is the leading
genetic cause of death for infants. Ionis, which struck a development and
marketing deal with Biogen in 2012, is named on two key patents (here is
one and here is the other).

“The government has rights in the inventions it funds and the inventors
have an obligation to report the invention to the funding agency and
disclose it on the patent,” said Jamie Love of KEI, which tracks patents
and access to medicines issues. “When the inventor fails to report, there
is a violation … and the non-profit organization or small business
organization is not allowed to retain title to the invention.”

For now, taking patents is a hypothetical notion, but the move by KEI
reflects a wider variety of tactics pursued by critics of drug pricing, an
issue that has galvanized consumer anger at drug makers and is attracting
the attention of President Trump. And while Spinraza may be a welcome salve
for an unmet medical need, the price charged by Biogen, which licensed the
drug from Ionis, stands out.

The cost could be “the straw that breaks the camel’s back in terms of the
US market’s tolerance for rare disease drug pricing,” Leerink analyst
Geoffrey Porges wrote in an investor note after the drug was approved last
month. “At the very least … the price is going to force payers to closely
scrutinize which patients receive access and limit the overall access

Specifically, the advocacy group wants the NIH to pursue so-called march-in
rights. Under federal law, this allows an agency that funds private
research to require a drug maker to license its patent to another party in
order to “alleviate health and safety needs which are not being reasonably
satisfied” or when the benefits of a drug are not available on “reasonable
terms.” KEI also plans to ask Medicare to use its royalty-free rights to
license others to make a generic version available at “reasonable prices.”

An Ionis spokesman, however, contends that the drug maker “has not received
any federal grants or funding” for Spinraza. And a spokeswoman for Cold
Spring Harbor would only say that the laboratory is “aware of the KEI
letter to HHS and [is] looking into it.” A Biogen spokesman wrote us that
the company is “aware of the KEI report but do[es] not comment on legal

A KEI spokesman explained that, while a Cold Spring Harbor scientist
received NIH funding that directly led to the discovery of the drug,
employees from both the lab and the drug maker are listed as inventors on
the patents. Consequently, he said, both organizations were required to
file paperwork with the NIH.

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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