...COVID - Related Technologies
Aggregated data for fiscal year 2020 show the NIH and CDC collected a combined $63.4 million in royalty revenues under a business model that allows the NIH to grant technology licenses to the private sector.
With 27 different institutes and centers housed under the National Institutes of Health (NIH) umbrella — including the National Institute for Allergy and Infectious Diseases (NIAID) — NIH is the largest biomedical research agency in the world.
Operating under the U.S. Department of Health and Human Services (HHS), NIH currently wields a hefty annual budget of nearly $42 billion.
Within NIH, the Office of Technology Transfer (OTT) plays a “strategic role” in supporting patenting and licensing for inventions that emerge from laboratories at the NIH and also Centers for Disease Control and Prevention (CDC).
In a win-win business model, the NIH routinely grants technology licenses (both exclusive and non-exclusive) to the private sector for use or commercialization of its inventions, with those licenses then driving billions of dollars in royalties back into NIH coffers.
In fiscal year (FY) 2020 alone — October 2019 through September 2020 — aggregated data for NIH and CDC show the agencies collected a neat $63.4 million in royalty revenues.
Under federal law, a portion of licensing royalties reverts to NIH to support undefined “mission-related activities.” Another portion goes directly to the agency’s inventors, who are allowed up to $150,000 in payments per calendar year. The same holds true at CDC.
Scientists like to frame these payments as “positive incentives,” but Children’s Health Defense Chairman Robert F. Kennedy, Jr. characterizes the royalty rules as “recipes for regulatory corruption.”
The gift that keeps on giving
Universities, too, receive royalties when they market patented technologies. Nearly 25 years ago, a University of Michigan biologist complained that two California universities (both public and private) were using royalties as a mechanism to covertly fleece taxpayers.
Citing a technology patented and licensed by the two universities, the professor explained that “ordinary people” had already paid through their tax dollars for the basic research that gave rise to the patents. He argued taxpayers should not have to continue paying the universities “many times over the original investment through patent royalties.”
The royalty monies flowing to NIH scientists have periodically attracted comparable public ire.
In 2005, an explosive Associated Press (AP) scoop showed large numbers of agency scientists — at the NIH’s explicit instruction — were routinely failing to disclose royalty payments, either to taxpayers or to participants in taxpayer-funded clinical trials who were obligingly testing out the NIH’s royalty-generating experimental treatments.
As AP pointed out, “Such research helps bring the treatment closer to possible commercial use, which could in turn bring the researchers and NIH higher royalties.”
Among the scientists scolded by AP for “testing products for which they secretly receive[d] royalties” was NIAID’s Dr. Anthony Fauci.
Even without royalties (which are classified as “federal compensation” rather than “outside income”), the long-time NIAID director — who describes himself as a humble “government worker” with a “government salary” — is the nation’s highest paid federal employee.
During the 2005 brouhaha, professing to be “extremely sensitive about the possibility of an appearance of a conflict of interest,” Fauci told the public he was donating his payments to charity.
Judging by a late-2020 report from the Government Accountability Office (GAO), there is still considerable room for improvement in terms of NIH transparency about NIH’s licensing activities.
The GAO noted NIH “does not report which of its patents are licensed or release metrics that would enable the public to evaluate how licensing affects patient access to resulting drugs.”
As one of its top two recommendations, the GAO urged NIH to provide “more information to the public” — in “an accessible and searchable format to the maximum extent possible” — to help citizens and policymakers understand licensing outcomes and impacts.
2020: Laying the groundwork for more historic highs?
“More public information” is conspicuously lacking in the OTT’s FY2020 annual report, which provides only one paragraph of specifics (and two paragraphs of boilerplate) in a short section on “Inventions and Agreements.”
In addition to noting the $63.4 million in FY2020 royalty revenues, the paragraph highlights a significant uptick in invention disclosures (up 20% over FY2019) and patent applications — 47% more applications filed compared to the previous year. (Invention disclosures are the first step in the patenting process.)
Elsewhere, technology transfer statistics show NIH executed more licenses in FY2020 (n=359) than in any prior fiscal year dating back to 1985 (when a mere 25 licenses were executed).
A few more COVID-specific details are available in the three-page portion of the GAO report focused on NIAID (pp. 22-25). There, we learn NIAID and its Technology Transfer and Intellectual Property Office (TTIPO) worked “diligently” and “as quickly as possible” in 2020 to facilitate worldwide “sharing” of NIAID-developed SARS-CoV-2 spike proteins and plasmids (molecules encoding the spike proteins) to spur development of COVID-19 diagnostics, treatments and vaccines.
These efforts resulted in:
Ninety-six agreements with 75 academic organizations, nonprofit entities, government agencies, international organizations and other entities to furnish NIAID spike proteins or plasmids for research projects (called “material transfer agreements”)
Twenty-one licenses negotiated with biotechnology or pharmaceutical companies, mostly for SARS-CoV-2 vaccine development — these licenses pertain to “most of the vaccines in advanced clinical trials and several currently in use around the world” (notably, the Moderna mRNA-1273 vaccine that received Emergency Use Authorization in Dec. 2020)
An additional 16 agreements to collaborate on research, including four clinical trial agreements for SARS-CoV-2 vaccines