A Delaware federal jury last week voided three government-owned patents covering a two-drug regimen for HIV known as pre-exposure prophylaxis, or PrEP. It also found that Gilead’s Truvada and Descovy for PrEP wouldn’t have infringed the patents even if they were valid.
The verdict marked a thorough success for Gilead and saved it from as much as $1 billion in potential royalties. It’s not yet clear whether the US will appeal the verdict, and competing interests have varied views on whether it will chill the symbiotic partnerships on which the industry relies.
But the mere fact that the federal government sued a former collaborator has some pharmaceutical industry insiders and healthcare advocates in flux about the lengths to which the government will go to protect its rights in collaborations.
Hans Sauer, deputy general counsel for Biotechnology Innovation Organization—a trade group that counts Gilead as a member—said the litigation has made clear that research partners “need to diligently monitor their continuing obligations under material transfer or clinical trial agreements—but we knew that already.”
“At this stage it is neither clear nor likely that this dispute will significantly affect government-industry scientific collaboration,” said Sauer, also an adjunct professor at Georgetown Law. The intellectual-property provisions in such agreements, he said, won’t necessarily require different structuring in the verdict’s wake. He also sees nothing wrong with the thousands of such pacts “under which companies, universities, and government labs currently collaborate.”
“That should be reassuring to both industry and government,” Sauer said.
But Lawrence Gostin, a professor of medicine at Georgetown University and of public health at the Johns Hopkins University, called the jury’s decision “a deep blow.”
“This will embolden Pharma to refuse to enter license agreements to share in profits funded by taxpayers,” he wrote one day after the verdict on Twitter.
Robin Feldman, a professor at the University of California College of the Law in San Francisco, said the case is “an opening shot in the battle brewing between the government and industry over the government’s rights in research.”
Collaboration Gone Sour
The government, Gostin said in an interview, “has been very dissonant about asserting its intellectual property rights. Highly deferential to pharmaceutical companies. And normally, they enter into terms of agreement on paying licenses to the government.”
Gilead, however, did not.
That refusal catalyzed what Gostin—who also directs the World Health Organization Collaborating Center on National and Global Health Law—called “a very, very rare and bold move:” The federal government’s decision to challenge Gilead’s refusal in court.
The US Health and Human Services Department sued Gilead in November 2019, alleging that researchers at the Centers for Disease Control and Prevention in the mid-2000s developed the breakthrough approach now known as PrEP. Gilead, the US alleged, “exaggerated its role in developing PrEP” drugs Truvada and Descovy and “reaped billions” through their sales without paying the government any royalty.
Gilead denied that its drugs infringe and argued the patents should be canceled.
The jury agreed.
Losing the case, Gostin said, means the government “may very well go back to being highly deferential to Big Pharma, and gun-shy about going to court again.”
In the end, “consumers are the ones that lose because the US taxpayer pays twice,” he said. “You know, they pay for government funding of basic research as well as government-sponsored clinical studies, as the CDC did. And then, they also pay high monopoly prices to the company.”
Industry insiders and patent lawyers who represent drug companies bristle at such arguments. One attorney who specializes in IP deals and licensing called it “simplistic” and compared it to saying that the taxpayer is paying twice for vegetables because the farmer has used the highway system to move products.
A Gilead spokesperson said the company “will continue to champion collaborations, including our efforts with HHS and the CDC that span more than 15 years, as we all work together toward our common goal to end the HIV epidemic for everyone, everywhere.”
‘Hesitant Partner’
Gilead said at a 2019 congressional hearing that it invented Truvada and supported the clinical trials that led the US Food and Drug Administration to approve its use for PrEP. It also has publicly said that it spent more than $1 billion on research and development related to the drug.
At the same hearing, Robert M. Grant, a professor of medicine at the University of California whose PrEP research was funded by the National Institutes of Health, testified “on how the promise of PrEP remains unfulfilled.” Having spent 20 years developing the regimen, Grant said, he went to Capitol Hill “at my own expense because I promised that PrEP would become available if proven. We have not kept that promise.”
Gostin, the Georgetown and Johns Hopkins professor, said the government “had planned to use PrEP to end the AIDS pandemic in America as we know it, but the high prices have gotten in the way.”
At the 2019 hearing, Grant said Gilead “did not provide leadership, innovation, or funding for PrEP research. Gilead’s role was limited to donating study drug and placebos.”
“In my experience,” Grant said, “Gilead proved to be a hesitant partner in PrEP research. For example, Gilead made public in 2005 that it wouldn’t seek FDA approval for PrEP no matter what the data showed.”
Daniel O’Day, Gilead’s chief executive, testified that the company believed the CDC’s PrEP patents were invalid but that Gilead had chosen not to challenge them “because we value our collaborative relationship with the agency.”
“To be clear, despite some media suggestions otherwise, Gilead invented Truvada, no one else,” O’Day said. “Gilead developed the two drugs that are combined in Truvada, invented the combination that allowed these drugs to be taken as a single pill, and invented the drugs used to treat HIV in combination with other antiviral drugs.”
‘Fancy Footwork’
The Gilead case differs somewhat from typical discussions about litigation that involves government-funded research, Feldman said, because the US holds the disputed patents.
“In many circumstances, the government has pathways for claiming rights related to drugs when tax-payer funds supported the early research,” she said. “So far, the federal government has chosen not to exercise those rights.”
Feldman, director of UC Law SF’s Center for Innovation, in 2019 authored “Drugs, Money, and Secret Handshakes: The Unstoppable Growth of Prescription Drug Prices.”
“Much of the battle involves posturing and preening right now,” she said. “The government is sending signals that it might flex its muscles; industry is responding by signaling that it intends to play hardball.”
Those signals haven’t been limited to the Gilead suit.
In March, Feldman said by way of example, HHS and the Commerce Department formed a working group to review march-in rights that the Bayh-Dole Act of 1980 gives the government—rights that Feldman said “have sat idle on the government’s shelves.” When the government helps fund development of a drug, march-in authority allows it to make the drug itself or license others to make it.
“Doing so could inject competition into stagnant markets,” she said, “but could also shoot an arrow into the heart of pharma industry profits.”
Gostin said that if the government “can’t recoup some of the funding” from its partnerships, “it’s a real disservice to the public.” The CDC and the National Institutes of Health “often are looking over their shoulder at the White House that doesn’t wanna rock the boat” with the industry. “And this time CDC must have gotten a green light from the White House to do this,” he said.
“And to lose this way, so thoroughly,” Gostin said, “is disheartening for advocates of more reasonable prices for life-saving medications and vaccines.”
Both parties, Feldman said, need each other “in this delicate dance.”
“Regardless of whether the Gilead case is appealed,” she said, “I would expect to see a lot of fancy footwork ahead.”
The case is US v. Gilead Sciences, Inc., D. Del., No. 19-cv-2103.
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