Exclusive licensing of federal inventions continues to be an issue for much public debate. This is especially true for PHS/NIH, which generally includes a "reasonable pricing" clause in its CRADA-related and other exclusive licenses. PHS/NIH is currently considering dropping or significantly modifying use of this "reasonable pricing" clause. This generally requires exclusive licensees to demonstrate a "reasonable relationship" and provide "reasonable evidence" between pricing in the marketplace and the "public investment in the product, and the health and safety needs of the public." Most discussion of reasonable pricing has centered on breakthrough, orphan and potential blockbuster drugs and biopharmaceuticals that persumably would be protected from competition by exclusive licensing and/or where PHS/NIH has made other significant contributions (e.g., preclinical studies, clinical trials, etc.). "Reasonable pricing" has never been defined or enforced, and no specific legislative authority enables PHS/NIH or any federal agency to require justification of pricing for licensed products in the marketplace.
"Reasonable pricing" has been a disincentive leading many biotechnology, pharmaceutical and other companies to avoid licensing federal inventions, entering into CRADAs and even less informal federal technology transfer activities (including research grants) with PHS/NIH, but also extending to other federal agencies/labs. Many pharmaceutical and biotechnology companies of all sizes are concerned that PHS/NIH, Congress, other federal agencies or adversarial groups may seek to control or influence pharmaceutical pricing, using this clause to attack pricing or require provision and possibly public disclosure of proprietary pricing strategies and cost data where the government was involved in a product's invention or development.
For example, recent Congressional hearings have included criticism of the pricing of various marketed pharmaceuticals developed largely through CRADAs and federal patent licensing.12 These include recombinant beta-glucocerebrosidase from Genzyme Corp. for treatment of type I Gaucher's disease, exclusively licensed from NIH and developed largely through a clinical trial CRADA, and taxol from Bristol-Myers Squibb Co. for treatment of uterine, breast and other cancers, developed through a clinical trial CRADA. These have been cited as cases where "reasonable pricing" (price controls) should be enforced, while others cite these as exemplary successes of federal technology transfer, with PHS/NIH fulfilling its public health mandate by facilitating development of needed innovative and cost-effective products for seriously ill patients that most likely would never have been developed without its involvement.
Some data from the Federal Bio-Technology Transfer Directory concerning government-wide, PHS and NIH licensing activity are presented below. Note, data concerning "invention licenses" and "licensed inventions" are presented below. This involves looking at distinct inventions licensed to a company with either exclusivity or nonexclusivity (invention licenses) and the individual inventions that have been licensed. Sometimes, more than one invention (invention license) is included in a granted license (package), and inventions may be licensed more than once. Most federal agency/lab and other discussions of licensing involve the ambiduous term "licenses" (as packages granted to companies; technology transfer transactions), rather than the licensing of inventions (invention licenses). Limited data are presented below concerning license packages, but these are presented as cross-references among invention entries in the Directory and in the License Number Index.
Directory licensing and exclusivity data indicate:
* Over 1/5 (22%; 463/2100) of federal biomedical/biotech inventions have been licensed. This includes 26% (328/1274) of PHS and 32% (332/1029) of NIH inventions. This appears to be a rather high percentage of invention licensing, since conventional wisdom states that only about 10% or less of licensed inventions are ever used commercially. This is perhaps indicative of the value industry has found in these federal inventions and federal agency/lab technology transfer accomplishments.
* The majority of invention licenses are from PHS (84%) and NIH (72%).
* An estimated 19% of all federal and 13% of PHS and NIH invention licenses involve exclusivity. The majority of federal (71%) and PHS and NIH (77%) invention licenses are nonexclusive.
* About 75% of federal, 93% of PHS and 79% of NIH licensed inventions have only one license granted.
* A small number of inventions (7.8%; 38), all from PHS/NIH, have more than 5 licenses granted. The most frequently licensed inventions with >= 10 licenses each are discussed in a section below.
* PHS and NIH licenses are more likely to be nonexclusive and licensed inventions are more likely to have more nonexclusive licenses. Federal inventions have an average of over 2 licenses/licensed invention, and PHS/NIH inventions average about 2.5 licenses/licensed invention.
Regarding exclusivity:
* About 11% of federal and 13% of PHS and NIH inventions have been exclusively licensed.
* About 27% of federal, 23% of PHS and 22% of NIH invention licenses are exclusive licenses.
* About 50% of federal, 49% of PHS and 47% of NIH licensed inventions have been exclusively licensed.
* About 21% of federal, 17% of PHS and 18% of NIH inventions have been licensed only once with exclusivity (exclusively to only one company; the highest level of exclusivity). About 70% of these federal and 80% of these PHS/NIH inventions involve therapeutic technologies/uses (often biopharmaceuticals and drugs in development).
* About 10% (25/230) of federal exclusively licensed inventions have more than one exclusive license granted (are co-exclusive licenses). Nearly all (24) of these are from NIH. Co-exclusivity involves two or more exclusive licenses granted, usually either for different fields of use or the licensees sharing/competing within the same fields of use.
* Twenty-five inventions, 24 from NIH, have been licensed both exclusively and nonexclusively.
Regarding licensing of therapeutics-related technology:
* About 16% of federal, 18% of PHS and 22% of NIH inventions involve therapeutic technologies/uses.
* About 30% of federal, 27% of PHS and 25% of NIH invention licenses involving therapeutics are exclusive invention licenses. PHS has 78% and NIH has 66% of all federal therapeutics-related exclusive invention licenses.
* About 59% of federal, PHS and NIH licensed therapeutics-related inventions are exclusively licensed.
* About 73% of federal, 83% of PHS and 85% of NIH exclusive invention licenses involve therapeutic technologies/uses. This high degree of exclusive licensing is related to the need for industry to obtain exclusivity for therapeutics to protect the often tens to hundreds of millions of dollars investment required to develop and bring these to the market.
* About 29% of federal, 29% of PHS and 28% of NIH exclusively licensed therapeutics inventions have reached the clinical trials stage of development (not necessarily trials conducted by federal agencies/labs).
* Comparable percentages of exclusively licensed therapeutics inventions involve biologics/biotechnology vs. drugs/chemical technology.