CDC may have claims on Gilead's patents for COVID-19 drug remdesivir

Six years ago, a team of scientists at the Centers for Disease Control and Prevention (CDC) began researching dozens of compounds supplied by Gilead Sciences for use in combating different viruses. One compound, in particular, appeared effective in treating Ebola. Now that discovery might have some significant implications related to COVID-19, patent law and federal agencies.

The CDC work helped make it possible for Gilead to obtain patents for the compound, which is now known famously as remdesivir. Although it never panned out as an elixir for Ebola, remdesivir has since become the first medication to win regulatory approval to treat some hospitalized COVID-19 patients. So far, the repurposed drug has yielded $873 million in sales, with most coming from the U.S.

Those hefty sales have been fueled by controversial pricing, though. The federal government signed a deal for U.S. hospitals to pay $3,120 per treatment, the highest price in the world. Moreover, that deal occurred after the involvement of government scientists in discovering uses for the drug. One consumer group estimated U.S. taxpayers contributed $70 million to developing remdesivir.

As a result, remdesivir has become a flashpoint in an intensifying debate over taxpayer-funded research that leads to big-selling medicines, which may be unaffordable for some patients, even as drug makers hold patent rights and keep the profits. Next month, in fact, the General Accountability Office is expected to release a report that examines the role taxpayer funds played in the development of remdesivir, a move requested by lawmakers.

In this case, however, it appears possible that U.S. taxpayers may be entitled to a financial payback. In fact, the CDC suggested the issue could wind up in court.

Here’s the deal: Patent law indicates CDC scientists should be listed as co-inventors on one or more patents covering remdesivir, according to legal experts. Consequently, the U.S. government may have some ownership rights, because the research was critical to its overall development.

“If CDC had not tested the parent [compound] against Ebola in April of 2014, I’m not sure any of the following work would have happened,” according to Michael Lo, a CDC scientist, whose team collaborated with the U.S. Army Medical Research Institute of Infectious Diseases (AMRIID) and later tested remdesivir itself as an Ebola treatment. He declined to comment, however, when asked if CDC scientists should have been listed on any patents.

Gilead, meanwhile, subsequently obtained patent rights that are broad enough to allow the company to claim exclusive rights for remdesivir for any use, not just treating Ebola or any closely related virus, according to patent experts. (Those patents can be found here, here, and here). In other words, thanks to complex nuances in patent law, the U.S. government – and any generic drug manufacturers that contracts with the U.S. government – might have a right to make, use, and sell remdesivir without paying Gilead any royalties on these patents.

“The facts show that CDC scientists made significant contributions to inventions — methods of using remdesivir — claimed in the patents. That gives CDC a strong claim that its scientists are true co-inventors of these patents,” explained Christopher Morten, deputy director at the New York University Technology Law and Policy Clinic, who studies patents and access to medicines, and has worked with advocacy groups that have been critical of Gilead pricing policies.

“Under U.S. patent law, if an inventor contributes to the invention of even a single claim made in a patent, then that inventor is a co-inventor of the entire patent. Co-inventorship matters because co-ownership arises from co-inventorship,” he continued. “If a scientist contributes to the invention of even a single claim of a patent, she is legally a co-inventor of the entire patent. With co-inventorship comes a presumption of co-ownership. If CDC scientists co-invented one or more of these patents, the CDC is presumed to be the patents’ legal co-owner.”

When asked if the CDC believes it has any legal claims, an agency spokesperson said, “this is a legal matter subject to potential litigation and CDC has no further comment.”

A spokesperson for the AMRIID did not respond to repeated requests for comment.

A Gilead spokesperson wrote us that the company “disagrees with the premise that the government has any rights to Gilead’s remdesivir intellectual property” and “is confident that its intellectual property accurately both the prior and ongoing work of Gilead researchers and protects Gilead’s significant, longstanding investments in remdesivir.”

The spokesperson further argued that the research leading to the drug began more than a decade ago as part of an effort to cure hepatitis C and that Gilead researchers “invented remdesivir, identified its broad-spectrum antiviral activity, optimized the formulation of the product, and scaled up the manufacturing process.”

Whether the CDC would pursue litigation is unclear, but an issue would be whether the agency reached any deals with Gilead over intellectual property, according to Arti Rai, a former U.S. Patent and Trademark Office official and Duke University law professor, who specializes in intellectual property. She has also researched patents and the role played by the federal government in developing remdesivir.

“The evidence suggests that the CDC scientists could be co-inventors with respect to the claims that cover using remdesivir to treat Ebola and other filoviruses,” she wrote us. “Because the default rule under patent law provides that co-inventorship of even one claim of a patent entitles the co-inventor to ownership of the entire patent, a key question is whether the relevant contractual agreements assigned all ownership rights over inventions to Gilead.”

A materials transfer agreement between the CDC and Gilead that was signed in 2013 contains language that may provide some clues. The document is heavily redacted and so any reference to remdesivir may have been obscured, but the agreement was signed by a CDC researcher who was among those that explored the use of the drug for combating the Ebola virus.

One clause appears to indicate that Gilead has the right to use the outcome of the research for its own patent protection, while another clause states that the CDC granted Gilead the right to negotiate a license to any intellectual property that is owned by the agency and emerged from the research. How the language might be reconciled remains to be seen.

One expert suggested the agreement may put the CDC in the proverbial driver’s seat.

“A contract can potentially transfer ownership of a patent, but the materials transfer agreement between Gilead and the CDC does not appear to transfer patent ownership from CDC to Gilead,” wrote Robert Gomulkiewicz, who heads the graduate program in intellectual property law and policy at the University of Washington. “The agreement does permit Gilead to use data generated by CDC in Gilead’s own patent applications, and CDC promises to give Gilead the opportunity to negotiate a license to any CDC patents that might arise from using Gilead’s licensed materials. However, these provisions do not assign CDC patents to Gilead.”

The Gilead spokesman did not address questions about the materials transfer agreement, specifically.

If the CDC were to assert any patent rights, the agency could authorize lower-cost generic versions of remdesivir, since pricing remains an issue. In recent months, a dozen state treasurers asked Gilead to lower its price and more than 30 state attorneys general urged the federal government to sidestep Gilead patents so generic versions could be manufactured.

The U.S. government is already locking horns with Gilead over a similar situation.

The Department of Health and Human Services (HHS) last year filed a lawsuit accusing the company of infringing patents on a pair of HIV prevention pills and unfairly reaping hundreds of millions of dollars from research funded by taxpayers. Gilead countersued, arguing HHS breached several contracts and “secretly” obtained patents stemming from research that led to the Truvada HIV-prevention pill.

Meanwhile, the long-term outlook for remdesivir sales could diminish once sufficient supplies of COVID-19 vaccines start to become available. For instance, Morgan Stanley analyst Matthew Harrison projected in a recent investor note that remdesivir sales will reach nearly $1.9 billion next year, but then rapidly trail off to nothing by 2023.

And a decision last month by the World Health Organization not to recommend the drug may also blunt usage. The agency cited a clinical trial showing no survival benefit. In an editorial last week in the New England Journal of Medicine, Food and Drug Administration officials argued their approval “marked an important step toward addressing the needs” of Covid-19 patients, but conceded the lack of a survival benefit demonstrated a need for more therapies.

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