FLC | GAO report on NIH T2 fails to credit positive public-health impact, analyst notes

GAO report on NIH T2 fails to credit positive public-health impact, analyst notes

December 2, 2020

In response to a Government Accountability Office (GAO) report on licensing of intellectual property (IP) by the National Institutes of Health (NIH), a November 30 analysis published by news portal IPWatchdog called the report's recommendations "small potatoes" and questioned why the significant public-health impact of NIH-funded inventions—particularly in response to the ongoing COVID-19 pandemic—was not referenced.

The GAO report, which was made public on November 20, was conducted at the request of Rep. Carolyn Maloney (D-NY), who chairs the House Committee on Oversight and Reform, and Senator Debbie Stabenow (D-MI), Ranking Member of the Senate Subcommittee on Health Care. After a yearlong review of every Health and Human Services (HHS) patent and license since the 1990's, the GAO issued two recommendations:

1. The Director of NIH should revise NIH's standard commercial license agreements to incorporate a provision consistent with 35 U.S.C. § 209(d)(3)(D) to put licensees on notice that the agency can terminate the license in whole or in part if the licensee has been found by a court of competent jurisdiction to have violated the federal antitrust laws in connection with its performance under the license agreement.

2. The Director of NIH should determine—in collaboration with outside stakeholders as appropriate—what licensing information is most useful to enable the public's and policymakers' understanding of licensing outcomes and impacts and, to the extent permitted by law, publicly report such information in an accessible and searchable format to the maximum extent possible.

NIH immediately accepted both recommendations. It will include language in its licenses regarding antitrust violations and will provide data such as the date of the license, its degree of exclusivity and whether or not the invention was made under a cooperative research and development agreement (CRADA).

"If discovering a justification for imposing price controls on therapies based on federally funded inventions was the objective, the result is a big disappointment," IPWatchdog contributor Joseph Allen wrote. "Rather than a scalping, HHS emerged from this ordeal with a modest trim around the ears, if that."

The GAO found that of its 4,446 patents, HHS licensed 94 inventions, primarily from NIH, which resulted in 34 new drugs treating diseases like hepatitis, cancer and HIV. Of these, five were significantly successful, generating $2 billion in royalties for the agency. GAO reported that collaborative research often contributed to the 94 licensed inventions and “the vast majority of co-inventions are with universities.”

"That’s not surprising given that NIH extramural R&D is the primary source of life science research conducted on campus," Allen wrote. "It also shows how important research alliances have become since the passage of the Bayh-Dole Act in 1980."

GAO calculated that it typically took eight years after licensing for those drugs to reach the marketplace.

"Obviously NIH isn’t licensing late stage discoveries, as critics often allege," Allen wrote.

What's missing from the GAO report, Allen says, is some context related to the positive impact of NIH-funded technology transfer.

"It would have been nice to make some reference to the incredible impact that NIH funded inventions have had in protecting public health," he wrote. "At a time when HHS supported research alliances are developing desperately needed drugs and vaccines to combat COVID-19 in record time, it seems like our technology transfer system should be getting kudos. It’s critical that the incoming Administration appropriately values the selfless contributions of those who work so hard to move NIH-funded inventions from the laboratory into the marketplace where they can alleviate suffering. A sincere 'thank you,' rather than fault finding, is in order. But sometimes no good deed goes unpunished."

Read the report: https://www.gao.gov/products/GAO-21-52