HHS Office of Inspector General Declines to Investigate Failure to Disclose Federal Funding in Ionis Pharmaceuticals’ Spinraza

The Department of Health and Human Services Office of Inspector General (OIG) informed KEI that it would not move forward with an investigation into whether Isis Pharmaceuticals, now known as Ionis Pharmaceuticals, failed to report federal funding in patents on Spinraza.

In a letter dated March 13, 2017, Matthew Charette, the Special Agent in Charge of the Investigations Branch of OIG, explained that OIG counsel believes that OIG has limited authority, and that the obligation to “monitor[] invention reporting and remedy[] noncompliance” “rests with NIH’s Office of Policy for Extramural Research Administration (OPERA).”

On January 18, 2017, KEI submitted a 22-page letter to OIG containing evidence that the patents on Spinraza benefited from federal grants. KEI did not just ask OIG to investigate Isis’ alleged failure to report this funding, in violation of the Bayh-Dole Act and federal regulations, but also urged the OIG “to investigate whether the National Institutes of Health failed to conduct proper oversight in administering its grants” and to “recommend appropriate action to remedy the situation in line with the statute and prior decisions with regard to failure to disclose a subject invention.”

Spinraza is used to treat Spinal Muscular Atrophy (SMA), a debilitating illness that largely affects very young children. Biogen, which collaborates with Ionis, sells Spinraza for a price of $750,00 for the first year of four injections, and $375,000 for every year thereafter. As explained in KEI’s original letter to OIG, Ionis worked with researchers at Cold Spring Harbor Laboratories who received federal funding for their work on a treatment for SMA. We also noted that failure to disclose federal funding affects the ability of the government to use march-in rights or its royalty-free rights in patents under the Bayh-Dole Act.

The letter from is available as a pdf and transcribed below.

Mr. Andrew Goldman
Legal Counsel
Knowledge Ecology International
1622 [sic] Connecticut Avenue, NW, Suite 500
Washington, DC 20009

Dear Mr. Goldman:

I am responding to your letter dated January 28, 2017, concerning potential violations of the Bayh-Dole Act by Isis Pharmaceuticals, now known as Ionis Pharmaceuticals, and Cold Spring Harbor Laboratory. You requested that the Inspector General investigate whether two inventions patented by Isis and Cold Spring Harbor are Federally-funded subject inventions that should have been disclosed to the National Institutes of Health (NIH) and, if so, recommend an appropriate remedy. We have consulted with our counsel and, as explained below, we believe your requets is better handled by NIH.

Under the Inspector General Act of 1978 (IG Act), OIG may conduct investigations relating to fraud, waste, abuse or other misconduct in connection with programs and operations of HHS. However, OIG’s authority is limited. To preserve OIG’s independence and objectivity, OIG may not assume responsibility for the operation of a Departmental program. See §§ 4 and 9(a) of the IG Act. Here, the responsibility for administering and overseeing extramural research grants rests with NIH’s Office of Policy for Extramural Research Administration (OPERA). This responsibility includes monitoring invention reporting and remedying noncompliance. For this reason, OIG must decline your request.

We did, however, contact representatives from NIH in connection with your letter. We provided NIH with a copy of your letter, and we were informed that NIH/OPERA is currently addressing your concerns. We recommend that you contact NIH/OPERA for further information about this matter.

We hope that this information is useful to you. If you have additional questions, please do not hesitate to contact me or Peter Taschenberger, Senior Counsel at Peter.Taschenberger@oig.hhs.gov or (202) 205-8896.

Sincerely,
/s/
Matthew Charette
Special Agent in Charge
Investigations Branch

cc: James Love, Director
Zack Struver, Research Associate
Diane Singhroy, Scientific Advisor

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