KEI has a number of outstanding requests under the United States Freedom of Information Act (FOIA) for contracts related to biomedical innovations to control or treat the COVID-19 pandemic. On Thursday, June 25, and Friday, June 26, we received a number of contracts and amendments to contracts from BARDA and DOD that were signed or expanded in 2020 to cover research on COVID-19 vaccines or therapeutics.
KEI has updated an early briefing note on the use of the “Other Transactions Authority” legal mechanism, to include data from these contracts. (https://www.keionline.org/bn-2020-3)
For more information, contact Kathryn Ardizzone or James Love.
The contracts (available from this link) collectively involve billions of dollars of taxpayer funding and the following companies:
BARDA, OTAs
- Janssen (J&J), contract for a vaccine.
- Jannsen (J&J) contract for a therapeutic (a drug).
- Genentech (Roche), for a therapeutic (the use of biologic drug tocilizumab (marketed as Actemra) for COVID-19).
- Regeneron Pharmaceuticals, for a COVID-19 therapeutic.
BARDA, non OTAs
- Moderna, for a vaccine.
- Protein Sciences Corporation (Sanofi), for a vaccine.
Department of Defense OTA
- Ology Bioservices (previously called Nanotherapeutics, Inc.), for a vaccine.
Both BARDA and DOD received expanded authority to enter into OTAs under the CARES Act.
While heavily redacted, the contracts shed considerable light on the extent to which the federal government has limited or eliminated altogether its rights in intellectual and data arising from the COVID-19 research and development that it is funding.
Five of the contracts we received are designated as “Other Transaction Agreements” (OTAs). As detailed in a separate analytical memorandum on OTA contracts (available here), federal agencies, including the DOD, BARDA and the NIH, are using Other Transactions Authority to limit or eliminate the government’s rights in inventions and data that were funded by taxpayers.
Under the OTAs, several provisions of the Bayh-Dole Act and the Federal Acquisition Regulation on rights in data are being disregarded. The contracts generally involve a renegotiation of such basic public interest provisions as the federal royalty-free right, the grounds for march-ins, the ownership of patent rights, and the definition of “practical application,” typically in order to eliminate the Bayh-Dole obligation to make products available “to the public on reasonable terms” — language that authorizes the federal government to intervene if pharmaceutical companies charge unreasonable prices for federally-funded drugs, biologics, vaccines, and other medical products.
KEI has prepared several tables that illustrate the differences between the standard Bayh-Dole Act provisions regarding government rights in federally-funded patents and the language included in new OTA contracts for the COVID-19 pandemic response.
BARDA
On reasonable terms eliminated
Note that in the Janssen/J&J, Genentech/Roche and Regeneron OTAs, as well as earlier BARDA OTAs with the Medicines Company (a firm acquired by Novartis in 2019) and AstraZeneca, BARDA has redefined “practical application” to eliminate phrase “on reasonable terms”. This means that the government has limited its ability to intervene if the pharmaceutical companies (which are party to the agreements and are receiving hundreds of millions of dollars to conduct the research) charge unreasonable prices for the resulting COVID-19 vaccines or treatments.
Grounds for march-in rights narrowed
On the issue of march-in rights, the Regeneron contract is redacted in such a way that the grounds for a march-in are actually a secret, which is absurd, since it is normally a right the public can use, if they know the grounds. In the cases of the OTAs involving Genentech (a company owned by the Swiss firm Roche), Johnson & Johnson, AstraZeneca (a UK/Swedish firm), and the Medicines Company (now owned by the Swiss firm Roche), the march-in rights were modified to eliminate two of the four grounds in the Bayh-Dole Act, including one on preference for U.S. manufacturing. The two remaining grounds for march-in (failure to achieve practical application (35 U.S.C. § 203(a)(1)), and to alleviate health or safety needs (35 U.S.C. § 203(a)(2)) are weakened in the BARDA OTAs. The narrowed definition of practical application eliminates the government’s authority to march-in if the pharmaceutical company fails to make an invention available on reasonable terms, and the J&J OTA narrows the right to march-in to alleviate health or safety needs by requiring specifically that the U.S. government or the WHO has declared a public health emergency.
Narrower government license rights
OTAs with Genentech and Regeneron for COVID-19 treatments include new language limiting the federal governments worldwide royalty free right to use inventions. The new, limiting language in the OTAs, which is not in the Bayh-Dole Act statute or implementing regulations, is as follows:
“For clarity, this license does not include the right to use or allow others to use the Subject Invention for commercial purposes.”
35 U.S.C. § 202(c)(4) and 35 U.S.C. § 209(d)(1) provide that for all federally-funded inventions, the federal government “shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.” There is no limitation in the statute on how that license is used.
The J&J OTA to develop a COVID-19 treatment completely eliminates the government’s royalty-free right to use inventions arising from the funded research.
In 2018, following lobbying the rights holders, the Trump administration proposed a similar narrowing of the government’s rights, but stopped short of changing federal regulations, when the proposals were opposed by several health groups and members of Congress. This is significant because the contract changes are intended to eliminate the ability of the U.S. to use its royalty free license to have generic manufacturers make and distribute through pharmacies and other commercial outlets an effective diagnostic test, drug or vaccine for COVID 19. (more on the 2019 debate on this topic here: https://www.keionline.org/30451)
Reporting on the utilization of subject inventions
KEI reviewed the requirements on the reporting on the utilization of subject inventions in three of the OTAs, between BARDA and Genentech, Janssen, and Regeneron. These three contracts have provisions relating to the reporting on utilization of subject inventions. In all three cases, the contracts cite 35 U.S.C. § 202(c)(5), which is a Bayh-Dole Act provision that requires confidential treatment of reports submitted by contractors. In all three contracts the government agreed not to disclose such information to persons outside the government without permission of the recipient. Since OTAs are not required to adhere to the Bayh-Dole Act, this is one of the areas in where the contracts could have provided more transparency or better public interest safeguards than the Bayh-Dole Act, but BARDA chose to embrace the restrictive provisions in the Bayh-Dole to limit transparency.
DOD
The DOD OTA with Ology Bioservices disregards the Bayh-Dole Act altogether. It states on page 2 that “[t]his Agreement is not subject to the Bayh-Dole Act, 35 U.S.C. §§ 200-212.” And the contract does not provide the government rights in the inventions developed by Ology under the contract, using federal funds.
Rights in data
The contracts also weakens the federal government rights in data. This is a topic that will be the subject to a subsequent KEI research note.
Table 1: Definitions of “practical application” in BARDA OTAs eliminate the requirement of the availability of subject inventions to the public “on reasonable terms”.
| Source | Definition of Practical Application |
| Bayh-Dole Act “funding agreements” | “The term ‘practical application’ means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.” |
| BARDA/Regeneron OTA Agreement No.: HHSO100201700020C (COVID-19 therapeutic) | “Practical Application: With respect to a Subject Invention, to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the Subject Invention is capable of being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public for a regulatory approved product.” |
| BARDA/Johnson & Johnson OTA Agreement No.: HSO100201800012C (COVID-19 therapeutic) | “Practical Application: With respect to a Subject Invention, to manufacture, in the case of a composition of product or a medical device; to use in manufacturing, in the case of an invention useful in manufacturing; to practice, in the case of a process or method, or to operate, in the case of a machine or system; and, in each case, under such conditions so as to establish that the Subject Invention is capable of being utilized.” |
| BARDA/Genentech OTA Agreement No.: HHSO100201800036C (COVID-19 therapeutic) |
“Practical Application: With respect to a Subject Invention, to manufacture, in the case of a composition or product; to practice, in the case of a process or method, or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the Subject Invention is capable of being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public for a regulatory approved product.” |
| BARDA/AstraZeneca OTA Agreement No.: HHSO100201500029C |
“Practical Application: With respect to a Subject Invention, to manufacture, in the case of a composition of product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the Subject Invention is capable of being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public.” |
| BARDA/Medicines Company OTA, Agreement No.: HHSO100201600026C |
“Practical Application: With respect to a Subject Invention, to manufacture, in the case of a composition of product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the Subject Invention is capable of being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public.” |
Table 3: BARDA OTAs narrow the government’s march-in rights
| Source |
Grounds for March-in Rights |
| Bayh-Dole AcA “funding agreements” |
“[I]f the Federal agency determines that such—
(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; (3) action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the contractor, assignee, or licensees; or (4) action is necessary because the agreement required by section 204 has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to section 204.” |
| BARDA/Regeneron OTA Agreement No.: HHSO100201700020C (COVID-19 therapeutic) |
Redacted completely. |
| BARDA/Johnson & Johnson OTA Agreement No.: HHSO100201800012C (COVID-19 therapeutic) |
“[I]f HHS determines that:
Such action is necessary because Recipient, assignee their licensees or Affiliates have not taken steps, consistent with the intent of this Agreement, to achieve Practical Application of the Subject Invention; orSuch action is necessary to alleviate the following urgent health or safety needs that effect the United States and that are not reasonably satisfied by Recipient, assignee, or their licensees or their Affiliates:
|
| BARDA/Genentech OTA Agreement No.: HHSO100201800036C (COVID-19 therapeutic) |
“[I]f the Government determines that:
Such action is necessary because Recipient or assignee has not taken effective steps, consistent with the Intent of this Agreement, to achieve Practical Application of the Subject Invention; or Such action is necessary to alleviate health or safety needs, which are not reasonably satisfied by Recipient, assignee, or their licensees.” |
| BARDA/AstraZeneca OTA Agreement No.: HHSO100201500029C |
“[I]f HHS determines that: Such action is necessary because Recipient or assignee has not taken effective steps, consistent with the Intent of this Agreement, to achieve Practical Application of the Subject Invention; Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by Subcontractor, assignee, or their licensees.” |
| BARDA/Medicines Company OTA Agreement No.: HHSO100201600026C |
“[I]f HHS determines that: 1. Such action is necessary because Recipient or assignee has not taken effective steps, consistent with the intent of this Agreement, to achieve Practical Application of the Subject Invention; or 2. Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by Recipient, assignee, or their licensees.” |
Table 4: BARDA OTAs’ terms on government use of patented inventions narrow the government’s license to use federally-funded inventions.
| Source | Government’s License to Federally-Funded Inventions |
| Bayh-Dole Act. 35 U.S.C. § 202(c)(4). (Licenses for inventions developed outside the government, with federal funding) | “With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world: Provided, That the funding agreement may provide for such additional rights, including the right to assign or have assigned foreign patent rights in the subject invention, as are determined by the agency as necessary for meeting the obligations of the United States under any treaty, international agreement, arrangement of cooperation, memorandum of understanding, or similar arrangement, including military agreement relating to weapons development and production.” |
| Bayh-Dole Act. 35 U.S.C. § 209(d)(1). (Licenses for inventions developed by government employees but licensed outside the government) |
“Any licenses granted under section 207(a)(2) shall contain such terms and conditions as the granting agency considers appropriate, and shall include provisions— (1) retaining a nontransferrable, irrevocable, paid-up license for any Federal agency to practice the invention or have the invention practiced throughout the world by or on behalf of the Government of the United States;” |
|
BARDA/Genentech OTA Agreement No.: HHSO100201800036C (COVID-19 therapeutic) |
“License to Government For Subject Inventions To Which Recipient Retains Ownership. With respect to any Subject Invention Made Under This Agreement in which Recipient retains title, the Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on behalf of the United States the Subject Invention throughout the world. For clarity, this license does not include the right to use or allow others to use the Subject Invention for commercial purposes. |
| BARDA/Johnson & Johnson OTA Agreement No.: HHSO100201800012C (COVID-19 therapeutic) |
No government royalty-free license was included in the OTA. |
| BARDA/Regeneron OTA Agreement No.: HHSO100201700020C (COVID-19 therapeutic) | With respect to any Subject Invention developed under this Agreement in which Recipient retains title, the Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on behalf of the United States the Subject Invention throughout the world. For clarity, this license does not include the right to use or allow others to use the Subject Invention for commercial purposes. |
Table 5: BARDA OTAs eliminate or narrow unlimited government rights in data delivered under the contract.
| Procurement contracts under the FAR |
The government has unlimited rightsin data delivered under the contract, regardless of how it was funded, giving the government the ability “to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so.”
This includes the right to allow competitors to use data delivered under the contract, for any reason, including commercial purposes. Unlimited rights apply to all data delivered under the contract regardless of how they were funded. |
| Regeneron OTA HHSO100201700020C (COVID-19 therapeutic) |
“i. For Data produced under this Agreement including Computer Software, to the extent developed with Government funds, the Recipient grants to the Government a paid-up, nonexclusive, nontransferable, irrevocable, worldwide license in such Data to exercise Government Purpose Rights except as expressly provided elsewhere in this Agreement. For Data produced under this Agreement, excluding Computer Software, to the extent developed with private funds, the Recipient grants to the Government a paid-up, nonexclusive, nontransferable, irrevocable, worldwide license in such Data to exercise Limited Rights. The Government will not obtain any rights in Computer Software produced under this Agreement to the extent developed with private funds.” |
| BARDA/Johnson & Johnson OTA Agreement No.: HHSO100201800012C (COVID-19 therapeutic) |
“1. The Government will receiveLimited Rights in Data delivered in the performance of the SOW that is marked with the “Limited Rights” legend required by Article X, Section C below. Any Data which is part of a patent application claiming a Subject Invention will be subject to the disclosure and release restrictions set forth in Article IX, Section B of this Agreement.
2. The Governmentmay not, without the prior written permission of Recipient, release or disclose Data outside the Government, use Data for competitive procurement or manufacture, release or disclose Data for any purpose, or authorize Data to be used by another party. The Government will be able to share Data within the Government provided that the Government recipient is obligated to keep the information confidential. The Government shall inform all Government recipients of Data of the relevant restrictions of this Agreement. Data in any document which is a part of a patent application that would disclose a Subject Invention will be subject to Limited Rights until publication of patent application in accordance with Article IX of this Agreement . . . .” |
| Genentech OTA HHSO100201800036C (COVID-19 therapeutic) |
“The Government shall have unlimited rights for use in the Field in–
(i). Preexisting data funded by the Government. For clarity, Government rights in any preexisting data produced by Recipient and funded by the Government under a separate agreement shall be governed by such separate agreement, and this Agreement shall not alter any Government rights in such data produced outside of this Agreement. (ii). Data first produced in the performance of this Agreement exclusively with government funds (iii). Form, fit, and function data delivered under this Agreement; (iv). Data delivered under this Agreement (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair of items, components, or processes delivered or furnished for use under this Agreement; and 2. The Government shall have Government purpose rights to all data produced in performance of this contract that was funded jointly by both parties under the cost sharing arrangement contained in this Agreement. 3. The Government shall have Limited Rights to (a) all data, other than restricted computer software, that embody trade secrets or are commercial or financial and confidential or privileged, that pertains to items, components, or processed developed at private expense in the performance of this Agreement, and (b) data contained in a disclosure of a Subject Invention provided to the agency prior to the filing of a patent application.” |
| AstraZeneca OTA Agreement No.: HHS0100201500029C | “For Data other than computer software, the Recipient grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, nontransferable, nonsublicensable, irrevocable, worldwide license in such Data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly by or on behalf of the Government, subject to the limitations applicable to the Government’s use of Limited Rights Data and except as expressly provided elsewhere in this Agreement.” |
| Medicines Company OTA Agreement No.: HHSO100201600026C | “For Data delivered under this Agreement, other than computer software and Limited Rights Data, the Recipient grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, nontransferable, nonsublicensable, irrevocable, worldwide license in such Data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly by or on behalf of the Government, except as expressly provided elsewhere in this Agreement.” |