KEI Comments: ERYTHRYx Therapeutics: Prospective Grant of an Exclusive Patent License on Methods of Modulating Erythropoiesis With Arginine Vasopressin Receptor 1B Molecules

UPDATE: On July 13, 2019, KEI received a response to our comments on the prospective license to be given to ERYTHRYx Therapeutics. The brief response simply stated that NIH had already assessed the company to meet their technical and financial criteria, and dismissed our requests for greater reporting and transparency, stating, “it is not consistent with our mission to create reports requested by the public. If your organization is requesting documents, such requests should be filed under the Freedom of Information Act.”


This is an odd exclusive license. The NIH wants to grant exclusive rights on patents for new uses of a very old drug.

Apparently the license will cover “Use of arginine vasopressin receptor 1B agonists to treat anemia caused by (i) chronic renal failure on dialysis, (ii) receiving myelosuppressive chemotherapy, or (iii) lacking antidiuretic hormone.”

ERYTHRYx Therapeutics (the company getting the license) did not exist until January of 2018, has no web page, and lists its business type as “patent holding.”

Our full comments follow:


July 9, 2018

Yun Mei
Technology Transfer and Patent Specialist
Office of Technology Transfer and Innovation Access
National Institute of Dental and Craniofacial Research
National Institutes of Health
Email: yun.mei@nih.gov.

Re: Prospective Grant of an Exclusive Patent License: Methods of Modulating Erythropoiesis With Arginine Vasopressin Receptor 1B Molecules, to ERYTHRYx Therapeutics. Notice for comment published in 83 FR 29127.

Dear Yun Mei,

Knowledge Ecology International (KEI) offers the following comments on the, “Prospective Grant of an Exclusive Patent License: Methods of Modulating Erythropoiesis With Arginine Vasopressin Receptor 1B Molecules,” to ERYTHRYx Therapeutics, which was noticed in the Federal Register (83 FR 29127).

The patents described in the notice are as follows:

  1. U.S. Provisional Patent Application No. 61/885,258, filed October 1, 2013 and entitled “Methods of Modulating Erythropoiesis with Arginine Vasopressin Receptor 1B Molecules” (HHS Reference No. E-619-2013-0-US-01);
  2. PCT Application No. PCT/US2014/058613, filed October 1, 2014 and entitled “Methods of Modulating Erythropoiesis with Arginine Vasopressin Receptor 1B Molecules” (HHS Reference No. E-619-2013-0-PCT-02); and
  3. U.S. Patent Application No. 15/022,531, filed March 16, 2016 and entitled “Methods of Modulating Erythropoiesis with Arginine Vasopressin Receptor 1B Molecules” (HHS Reference No. E-619-2013-0-US-03).

The field of use may be limited to “Use of arginine vasopressin receptor 1B agonists to treat anemia caused by (i) chronic renal failure on dialysis, (ii) receiving myelosuppressive chemotherapy, or (iii) lacking antidiuretic hormone.”

We assume, from the FR notice, the geographic area for the license to ERYTHRYx Therapeutics will only cover the United States, although we do note the PCT application, which started the national phase at the European Patent Office (EPO) in March 2016, which makes it seem as though some other countries may be relevant.

Since the drug is already on the U.S. market (as mentioned in the FR notice), we oppose the granting of an exclusive license, absent some explanation of why a monopoly needs to be granted for the three patented inventions held by the NIH, in order to find new uses for an older drug.

We assume that the purpose of the exclusive license is to allow ERYTHRYx Therapeutics to charge high prices in the United States, on an older generic drug, all while the invention was funded and owned by the NIH. This raises several questions, including for starters, who is the company looking to obtain this legal monopoly?

It appears as though ERYTHRYx Therapeutics was created in January 2018. According to documents filed with the State of California, the type of business is “patent holding.”

https://businesssearch.sos.ca.gov/Document/RetrievePDF?Id=201803210059-23772691

We cannot find a web page for the company. James Schaeffer (listed as Manager on the LLC form linked above) appears to be a VP of External Relations at California Institute for Biomedical Research and a former Merck employee, and perhaps you can confirm that, and also tell us if there are any current or former NIH officials involved in the company, as employees or shareholders.

Should the NIH give this monopoly to the shell company ERYTHRYx Therapeutics, at a very minimum, the licensee should be required to file an annual report to the NIH, available to the public, on the research and development (R&D) costs associated with the development of any product that uses the invention, including reporting separately and individually the outlays on each clinical trial. Here we note that this is different from asking the licensee to provide the public access to its business plan. We are asking for data going forward, and for actual outlays on R&D, rather than planned outlays.

The NIH should also consider adding conditions in the license to protect the public from both non-use of the invention, and unreasonable use.

Without knowing more about the current state of development for the repurposed drug, or the investments needed to expand FDA approval for the drug, it may be challenging for the NIH to set such conditions, but regardless, the NIH has a responsibility to limit the use of exclusive licenses and the scope of rights granted in any exclusive license, under 35 USC § 209, and also to seek the advice of the Attorney General, pursuant to 40 USC § 599.

For the NIH to enable citizens to comment usefully on these proposed exclusive licenses, the NIH needs to provide more context to justify the exclusive nature of the license, and the terms of the license themselves. For example, the NIH should explain in lay terms, how much money the government has spent on the inventions so far, and how much additional investment is estimated to be necessary to further commercialize the products. Also, it would be useful to know if the NIH is licensing any rights in test data that may be relevant to the registration of repurposed drug, since the FDA regulatory test data protections provide non-patent incentives that may be relevant.

We note for that small molecule test data, the FDA grants five years of exclusive rights to rely upon data when the tests involve novel drugs, and three years when the tests involve a new use for an existing drug.

In this case, for a patent on a repurposed drug to a shell company with no visible operations, a shorter term of license would be more appropriate than a life-of-patent license. The HHS policy in the early 1980s was to permit an initial exclusive term of 5 years, subject to the possibility of an extension upon a showing that the extended term was justified.

Finally, during the period of exclusivity the price should bear some relationship to the risks and costs of obtaining FDA approval for a new indication. The NIH could include in the license a provision that the price should be sufficiently reasonable that for most private insurance plans, the drug is considered a Tier 1 or Tier 2 medication, and also that the company selling the drug as a monopoly for the patented repurposed use have a sufficiently robust patient assistance program to ensure the drug is accessible to persons without insurance or with inadequate insurance, a possible situation that seems quite relevant looking forward.

Sincerely,

James Love
Knowledge Ecology International
1621 Connecticut Avenue NW
Suite 500
Washington, DC 20009
Tel.: (202)332-2670
James.Love@keionline.org