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

KNOWLEDGE ECOLOGY INTERNATIONAL
FOR IMMEDIATE RELEASE
12 JANUARY 2017

CONTACT: Zack Struver, zack.struver@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 to grant an exclusive license to Sanofi on government-owned technologies 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.

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, 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.

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 right.”

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

"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 Medicines:

“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:

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


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.

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