2018: Briefing note on NIH proposed license to Gilead for CD-30 CAR T technology

Contact: Kim Treanor 202-332-2670; kim.treanor@keionline.org
January 5, 2018

The National Institutes of Health (NIH) has proposed an exclusive license with Gilead for certain patent applications for inventions that target CD-30 proteins and CAR T technologies.

The proposed license is to Kite, a company Gilead acquired in 2017 for $11.9 billion. Gilead and Kite previously registered a CAR T based product, Yescarta, a treatment for adults with a certain type of lymphoma. Yescarta was also developed using technology invented by and licensed from the NIH and was the subject of a separate NIH Cooperative Research and Development Agreement (CRADA).

Yescarta has a list price in the United States of $373,000, plus additional costs relating to the treatment. It was recently reported that only five patients have received the treatment due to its high cost.

Knowledge Ecology International (KEI) filed an objection to the exclusive license on January 4, 2018. The objection made the following points.

1. It is premature to grant an exclusive license, given the fact that the NIH is funding a Phase 1 trial.

The NIH is currently sponsoring and fully funding a Phase 1 trial with 76 patients for the technology. KEI objects to the NIH licensing the CD-30 CAR T inventions before the NIH or anyone has information about the Phase 1 trial results. The value of the invention will be much higher if the trial is successful, and the NIH could obtain a higher royalty and cash payments for the licenses, a shorter term of exclusivity, or a lower price for the product, and perhaps no exclusivity at all, if there is more certainty the technology will work. Licensing the technology now, just as the Phase 1 trial begins, eliminates the possibility of a much better license in the future.

2. If the NIH grants an exclusive license, it should include clear safeguards in the license to protect U.S. residents from excessive prices and access barriers.

If the NIH does grant an exclusive license, it needs to have concrete and clear safeguards to protect U.S. residents from excessive prices and access barriers. KEI proposed five different provisions in the license to address this. They included:

(a) A clause prohibiting prices that discriminate against U.S. residents, when compared to nine other high income countries with large economies,

(b) An obligation to avoid significant gaps in access in the United States,

(c) A requirement that the price for this NIH funded invention “not be higher than CAR T treatments of similar efficacy, taking into account differences in patient populations, if the cumulative revenue per indication is less than $300 million.”

(d) A requirement that ”the price should not increase faster than the rate of inflation as measured by the consumer price index, unless the increase can be justified by a need to earn a reasonable profit on the risk adjusted investments in research and development,” and

(e) A provision to end the monopoly when the cumulative global revenue for the product exceeds $300 million, for any approved FDA indication or $1 billion for all indications.

3. The NIH should protect patients in countries with per capita incomes that are less than one third of U.S. per capita income.

KEI noted the NIH has filed an application in the WIPO PCT to protect the invention in 199 countries, including most countries in Sub-Saharan Africa, and many countries classified by the United Nations as a least developed country.

KEI asked that the NIH exclude from the exclusive license any country with a per capita income that is less than one third the per capita income of the United States.

4. The NIH should require transparency with regards to R&D outlays.

KEI noted, “it is an unnecessary and reason-inhibiting fact that actual R&D outlays are often hidden from the public, although speculation about R&D costs is used to justify high prices. The NIH can remedy this by requiring that companies that license NIH-owned technologies disclose to the public the actual R&D costs for commercializing inventions, along with all public sector R&D subsidies, such as the Federal R&D and Orphan Drug tax credits.”

A copy of the KEI submission to the NIH is available here:

James Love

James Love is the Director of Knowledge Ecology International. Previously, he was an economist for the Center for Study of Responsive Law where he also directed the Consumer Project on Technology and the Taxpayer Assets Project, Senior Economist for the Frank Russell Corporation, and held lecturer positions at Rutgers and Princeton Universities. His KEI webpage is https://keionline.org/jamie.