University IP Policies and Access to Medicines

1. University IP Policies and Access to Medicines Yale AIDS Network

2. Currently, what do universities do with the products of research? • If they think an invention can be commercialized, they patent it. • Universities then license the patent to industry, which will further develop and market the invention. • Universities may grant either exclusive or non-exclusive licenses to industry. • - An exclusive license gives a single company the sole right to develop and sell the invention. • - A non-exclusive license allows many companies to use and sell the invention. • In either case, universities receive royalties and/or other payments in exchange for the license.

3. Why Care About University Patenting? • While academic R&D is a small proportion of total U.S. R&D, academic basic research comprises roughly 40-50 percent of total U.S. basic research. • Nearly 60 percent of academic R&D is funded by the federal government. • Patenting can result in limited access to research outputs. Source: NSF Science and Engineering Indicators, 2002.

4. For Most of 20th Century, Universities Rarely Patented Research Output • While patenting activity dates back to 1900s, most universities resisted direct involvement and some discouraged it – considered taboo. • Rights to inventions from federal funds typically remained in the public domain. • Cumbersome process required for patenting – univs. had to request waiver. Source: Mowery and Sampat (2001)

5. Medical Patenting Was Particularly Controversial • Scarlet Fever Case – Widely Criticized Decision to Patent • Chicago physicians’ 1924 discovery of antitoxin • Numerous companies interested in commercializing • Concern about quality control led to patenting • AMA declined patents • Independent committee established instead • Criticism from medical community re: exercise of control over substance with public health consequences • Lancet and BMJ on danger of monopoly – high prices, hindrance of further research, commercialization of research process • Affected decisions of many other researchers

6. The Norm Before 1950 • Most universities lacked patent policies before World War II • Yale: (adopted 1938) “. . . it is, in general, undesirable and contrary to the best interests of medicine and the public to patent any discovery or invention applicable in the fields of public health or medicine; but if, at any time, any member of the faculty deems it necessary solely for the protection of the public, without profit to himself or the University, to control any invention or discovery by means of a patent, he shall bring the matter before the Prudential Committee” • Harvard: (no formalized patent policy except following, adopted 1934) “No patents primarily concerned with therapeutics or public health may be taken out by any member of the University, except with the consent of the President and Fellows; nor will such patents be taken out by the University itself except for dedication to the public” Source: Palmer (1948)

7. Post-World War II TrendsFederal Government R&D Support Rises • Substantial increase in federal funds for universities • Univ share of basic research doubled 25% - 50% between 1953-1968 • Third party involvement common into 1960s, primarily via Research Corp. • Some universities allowed patenting only if clearly in public interest • Prohibitions on medical patenting remained until 1970s Source: NSF Science and Engineering Indicators, 2002.

8. Academic R&D in Biomedical Sciences Surged in 1970s… • Molecular biology emerged as field of major advances in basic science • Many of these advances had commercial applications • Greatest increases in funding in 60s & 70s were in biomedical sciences • Growth of biomedical sciences played a role in 1970s rise in univ patenting 56 pct. of total academic R&D expenditures went to the life sciences. Source: NSF Science and Engineering Indicators, 2002.

9. …as did Patents in Biomedical Sciences Percent of total academic patents in three largest academic utility classes • Changes in 1970s • Universities began direct management of patent portfolios • Process of getting patents and rights to license remained cumbersome • IPAs between federal agencies and universities emerged as a common way for to patent and license • Decline in federal funding led to more aggressive patenting efforts • 1974 - Harvard ends stance against patenting medical innovations Source: NSF Science and Engineering Indicators, 2002.

10. 1980 – Patent and Trademark Law Amendments Act (Bayh-Dole) • Goal to increase technology transfer and utilization of federally-funded research • What did it do? • Universities given right to retain the property rights to inventions made under federal funding • Exclusive licensing permitted • No distinction between downstream inventions and fundamental research discoveries • Rationale • Commercialization: Basic nature of university research requires further development by industry • Industry won’t take on risk without exclusive licensing rights • Universities won’t transfer as much without financial incentives

11. Bayh-Dole Had Special Provisions for Preserving the Public Domain • Funding agencies permitted to restrict patenting ex-ante only in “exceptional circumstances” that contradict goals of Bayh-Dole (such determinations can be challenged – and provision is cumbersome) • Agencies can exercise “march-in rights” to compel licensing of a university patent if necessary to alleviate public health or safety needs • NIH has never exercised these rights – significant administrative obstacles • For human genomic DNA sequencing information, NIH issued statement against patenting – effectively contributing to a “no-patenting” norm w/out forbiding it • NIH has sought to promote goals through hortatory statements • Reasonable pricing clause for commercialized federal research existed initially, but was repealed by the Clinton Administration

12. University Patenting – Phenomenon of the 1980s and 1990s • University patenting surged in the 1970s, from less than 250 patents granted in 1975 to over 3,000 patents granted in 2000. • Publicly funded biomedical research accounts for a major share of patents Source: Jaffe (2000)

13. Licensing Activity Has Surged… Number of Licenses Issued Annually Source: Bremer, 2001 speech (http://www.autm.net) - data from AUTM Licensing Survey

14. …as Have Royalties from Licensing Royalties to Universities/Hospitals in Millions of Dollars Source: Bremer, 2001 speech (http://www.autm.net) - data from AUTM Licensing Survey

15. How does all this affect access in developing countries?The d4T story • 1966: compound synthesized under a National Cancer Institute grant at the Michigan Cancer Center • 1984: Yale scientists prove that d4T is potent against HIV in cell cultures • 1986: Yale files for a patent • 1988: Yale issues BMS exclusive worldwide license • 1994: FDA approval • 1994 - 97: BMS takes out process patents

16. The Money Trail • BMS made $443 million on sales of d4T in 2002; $515 million in 2001, $578 in 2000. • We don’t know what exactly BMS profits are from d4T, but according to the BMS 2002 Annual Report: • “In 2002, our company earned $2,034 million from continuing operations on global sales of $18.1 billion, putting us among the most profitable companies in the Fortune 500.”

17. The Impact of d4T for Yale • In 1999, Yale earned $46.12 million in royalties. • About $40 million of this was from d4T. • (But almost none of this comes from developing countries)

18. MSF’s request; Yale’s response • Feb 14, 2001: MSF request to Yale: • Asking Yale if they “would consider the importation of generic versions of stavudine for use in providing treatment free of charge to people with HIV/AIDS unable to afford treatment an infringementof your intellectual property rights,” and if so, if Yale would “issue a voluntary license to allow the importation and use of generic stavudine in South Africa.” • March 1: Yale replies: • Yale denies the request, indicating that they have granted an exclusive license to Bristol-Myers Squibb (BMS), and cannot legally respond to MSF’s request without BMS’s permission.

19. MSF’s Reply • March 9: MSF responds: • MSF suggests to Yale that their own policy states that a key objective is “the benefit of society in general,” and that they should follow their policy • MSF points out that d4T is not reaching those who need it in South Africa, and suggests that Yale has the ultimate power over their patent, and could breach their contract with BMS if need be. • March 11: NYT story “Yale Pressed to Help Cut Drug Costs in Africa” • March 16: GESO hands over petition and issues press release

20. March 14th: Concessions “EMERGENCY PATENT RELIEF” • “The Company will ensure that its patents donot prevent inexpensive HIV/AIDS therapy in Africa. The patent for Zerit, rights to which are owned by Yale University and Bristol-MyersSquibb, will be made available at no cost to treat AIDS in South Africa under an agreement the Company has recently concluded withYale.” • In June, 2001, “agreement not to sue” signed with Aspen Pharmacare.  PRICING • BMS will sell its two ARVs at one dollar per day (15 cents per day for d4T and 85 cents per day for ddI) throughout Africa • This is later extended to private sector.

21. What’s happening at other universities? • U Minn: Abacavir • Emory: 3TC • Duke: Fuzeon • Cotransformation patent: Columbia Univ. • Hep B vaccine: U of Washington • Cysplatin and Carboplatin: Michigan State • Others???

22. How can universities ensure that their IP helps those who need it most? • What can a university do when it is deciding where and if to patent an invention? • What can universities do when negotiating licenses with industry? • What can be done if a university invention has already been patented and licensed to industry? • Promising Trends • Licensing of compounds to treat Chagas disease in developing countries to OneWorld Health, a non-profit pharmaceutical company.