Notes from October 15, 2018 hearing on the KEI v NIH lawsuit over the Gilead CAR T patent license

On Monday, October 15, 2018, Judge Peter J. Messitte of the United States District Court, District of Maryland, convened a hearing on a motion by the NIH to dismiss a lawsuit (Case 8:18-cv-01130-PJM) by KEI regarding the decision by the NIH to grant an exclusive license on CD30 protean CAR T patents to Gilead Sciences (via the Kite Pharma subsidiary). The various pleadings in the case are available here:

The NIH had decided that KEI did not have the right to an administrative appeal of the NIH decision to grant the patent licenses to Gilead, and had asked the judge to dismiss our lawsuit on the the grounds that KEI lacked standing to sue the NIH over the license to Gilead.

The KEI lawsuit seeks to establish KEI’s right to have the NIH consider our administrative appeal (it was denied before it was even filed), as well as to determine if the NIH was subject to 40 USC § 559, which provides that an “executive agency shall not dispose of property to a private interest until the agency has received the advice of the Attorney General on whether the disposal to a private interest would tend to create or maintain a situation inconsistent with antitrust law.”

At issue is the decision by the NIH to grant an exclusive license on patented inventions to Gilead, for a development of an “Anti-CD30 Chimeric Antigen Receptor (CAR) for the treatment of human cancer” including in particular Hodgkin lymphoma (HL), Non-Hodgkin’s Lymphoma (NHL), diffuse large B cell lymphoma (DLBCL), peripheral T cell lymphoma not otherwise specified (PTCL-NOS), anaplastic large cell lymphoma (ALCL), and angioimmunoblastic T cell lymphoma (AITL). (Federal Register notice here.)

KEI’s original objection to the Gilead license raised the following four issues:

  1. It is premature to grant an exclusive license, given the fact that the NIH is funding a Phase 1 trial on the technology the NIH is licensing.
  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. Among the measures proposed to protect U.S. residents on pricing was a proposed reference pricing cap to ensure U.S. residents don’t pay more than residents of high income countries with large GDPs, and that exclusivity is terminated when revenues exceed $300 million for each 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.
  4. The NIH should require transparency in regards to R&D outlays.

KEI’s administrative appeal, which the NIH refused to consider, addressed our original concerns and refuted points made by Dr. Lambertson on behalf of NCI, which included assertions that (1) an exclusive license would not create a monopoly, (2) the license had to proceed immediately, prior to the NIH having any results from the Phase 1 trial the NIH is currently funding, because NIH/NCI did not have the budget to conduct Phase 2 and 3 clinical trials, (3) that safeguards against excessive pricing and access barriers would not be included because they have not been used by NIH for years, and (4) certain regulations prevent the NIH from requiring transparency of R&D costs.

The KEI administrative appeal raised additional issues regarding the admitted refusal of NIH to adhere to 40 U.S.C. § 559, which requires that any federal agency disposing of federal property — including patents — must seek and obtain the antitrust advice of the Attorney General prior to the disposal to private interests. The statute is part of the Federal Property and Administrative Services Act, which governs government procurement, utilization and disposal of property.

The October 15, 2018 hearing was held by Judge Peter J. Messitte. Judge Messitte spent considerable time questioning the Department of Justice lawyer regarding its objections to our standing, but also on the NIH’s own process for administrative appeals, which are not set out by regulation.

The NIH failed to have our suit dismissed, at least for now, and Judge Messittee ordered briefing on the following question(s):

(1) as a matter of administrative law (i.e. court decisions reviewing actions by government agencies in general, not just the statutes and regulations directly applicable to NIH), was KEI entitled to a hearing on either or both (a) its objections to the NIH’s decision to issue the license and (b) the NIH’s refusal to consider KEI’s appeal; and,

(2) if not, does that procedure violate KEI’s constitutional right to due process?

KEI was represented at the hearing by Daniel Doty.

If KEI ever gets a truly independent review of the NIH decision on the Gilead license, it will explore, among other issues, if “the proposed scope of exclusivity is not greater than reasonably necessary to provide the incentive for bringing the invention to practical application,” which is a requirement of 35 U.S.C. § 209.

Two CAR T technologies, each originally funded by and in one case licensed from the NIH, were recently sold for $9 to $12 billion. The fact that the NIH has funded this CAR T therapy through a 79 patient Phase I trial (NCT03049449), and the Novartis CAR T treatment Kymriah was approved on the basis of evidence from 63 patients, suggests to KEI that a term less than the life of the patent would be required by the statute, given the plain language of 35 U.S.C. § 209.