By Mark Blaxill
This is not an idle question, for Lowy and Schiller’s conflict disclosure forms the basis for an alternative to Zerhouni’s narrative, one that spotlights the unusually self-contained set of Department of Health and Human Services (DHHS) activities that surrounded HPV vaccine development. This alternative narrative is more of a business story than a scientific one, a narrative in which commercial interests were inextricably linked to matters of life and death. In this narrative, Gardasil is perhaps the leading example of a new form of unconstrained government self-dealing, in arrangements whereby DHHS can transfer technology to pharmaceutical partners, simultaneously both approve and protect their partners’ technology licenses while also taking a cut of the profits. Literally and figuratively, DHHS has the authority in such situations to allow its business partners to get away with murder for the greater good, effectively granting its private business partners a license to kill.
DHHS officials have their own language for such arrangements. They call them public-private partnerships, and DHHS agencies have gotten progressively more aggressive about pursuing them. NIH, for example, launched its own “Program on Public-Private Partnerships” in 2005, shortly before Gardasil’s launch. On the web-site describing this program, the NIH program managers concede that the kind of technology transfer involved with Gardasil carries unavoidable ethical risks, acknowledging that “The potential for conflict of interest exists any time the NIH and NIH staff engage with non-Federal entities to achieve mutual goals.” They provide little more than a pro forma solution for such conflicts, however: any concerned NIH staffers are encouraged to “contact their Deputy Ethics Counselor.”
It’s important to shed light on this alternative narrative as a counterpoint to the heroic story promoted by Gardasil’s many sponsors. An uninformed observer might like to assume that the responsible agencies of DHHS care not at all about commercial opportunities and exclusively attend in a disinterested fashion to the issues of health and safety that would naturally concern any consumer of vaccine products.
But that assumption would be incorrect. By taking a commercial perspective on Gardasil’s development and regulation, one is forced to confront a new and disturbing question. How is disinterested vaccine safety governance even remotely possible when DHHS employees stand as heroes at the head of the parade when a new vaccine is invented within its walls, while agency leaders are leading the cheering section, approving the new product’s launch, making the market for the product with its recommendations and then turning around to cash multi-million dollar checks? In order to better understand the real lessons of Gardasil under the harsh light of the business interests at work, let’s take a closer look at how the Merck-NIH partnership on Gardasil was forged.
Conflicts of interest in vaccine development and regulation
As the world’s largest single sponsor of biological research, NIH frequently funds research with commercially valuable outcomes. When that R&D generates potentially valuable inventions, NIH submits patent applications to the U.S. Patent and Trademark Office (USPTO) and actively pursues the approval of those patents, which when granted become valuable commercial property for DHHS, the patents’ owner. Since NIH has neither the authority nor the capability to pursue product commercialization efforts, in order to encourage private companies to invest in conducting the necessary clinical trials, NIH’s Office of Technology Transfer (OTT) was created to grant commercial licenses for such DHHS patents to commercial partners, including vaccine manufacturers. When new products invented at NIH clear the requisite regulatory hurdles at the Food and Drug Administration (FDA) and reach the market, OTT then shares in the profits. They also distribute the rewards back to the scientific teams whose products have succeeded in reaching the commercial stage: when license fees flow into OTT’s coffers, the Federal employees who invented the technology are entitled by NIH policy to a share of the royalties.
From a technology development standpoint, such commercial arrangements are the result of an intentional public policy; in fact they resulted from an Act of Congress. The Bayh-Dole Act of 1980 was written with the express purpose of making it easier for federally-funded academic research to receive patent protection that would allow the ready licensing of the fruits of commercially valuable R&D to private businesses. At the time, the concern of Congress was that federally funded inventions too often languished within the academy because businesses had insufficient incentive to invest in clinical trials, since these inventions were often unsupported by the powerful competitive protection afforded by an exclusive patent license.
The policy worked. Within the research universities that receive the vast majority of federal funding, Bayh-Dole has had the desired effect and has enabled university technology transfer offices all over the world to generate billions of dollars of licensing revenue in the last few decades--especially in the life sciences--by licensing patents from federally-funded university research to corporate partners. Bayh-Dole has effectively turned research into big business for many universities and transformed technology transfer offices into important profit centers at academic institutions all over the world.
But when technology licensing takes place within federal agencies, Bayh-Dole creates an entirely different problem: an unprecedented web of conflict, one in which the same departments that are tasked with regulating the health and safety of medical products are also profiting from them. As Lowy and Schiller conceded in their review article disclosure, this conflict of interest came into play directly on Gardasil: both men are named inventors on the technology that makes Gardasil possible; NIH filed for and received patents on their invention of the VLP technology; DHHS is the owner of the patent family that protects the commercial rights to the invention; in order to bring the product to market, OTT licensed the vaccine technology to Merck; and as Merck has generated billions in Gardasil revenue, OTT has received millions in Gardasil profits.
But DHHS is also responsible for regulating Gardasil in numerous ways. The FDA reviewed the clinical trials in which Gardasil was tested in human populations and passed judgment on Gardasil’s safety. An Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) decided whether or not to recommend Gardasil for young women and children. The FDA and CDC together now conduct the surveillance to decide whether or not Gardasil is proving safe in larger populations. And as some families are now beginning to seek compensation based on claims that Gardasil caused injury in some of its recipients, the division of the Health Resources and Services Administration (HRSA) that oversees the Vaccine Injury Compensation Program (VICP) will soon sit in judgment as to whether, to whom, and how much compensation will be provided to Gardasil’s victims.
As you can see in the chart below, all of this activity is supervised in a single department by one Cabinet official, the Secretary of Health and Human Services. The sole non-governmental agency involved in this commercial enterprise is Merck’s Vaccine Division. In effect, the Merck-DHHS partnership leaves the business side to Merck while DHHS is solely responsible for
Both Merck and GSK itemize revenue for Gardasil and Cervarix in their quarterly and annual earnings statements. Their annual results are summarized in the first two columns of the table. For Merck, Gardasil has been a blockbuster success, yielding a cumulative total of over $4 billion in revenue through year end 2009. By contrast, GSK’s revenues have been growing more slowly and have not yet reached a cumulative total of half a billion dollars.
For their part, OTT does not itemize their HPV license revenues. However, they do report their total royalty revenue as well as the cumulative revenue from their “top 20” technology licenses since 2007. These top 20 licenses have been worth over $70 million annually in profits for NIH in the last three years, and HPV licenses have soared to the top of those rankings quickly. Last year, OTT reported that HPV licensing was its top revenue generator. OTT doesn’t disclose exactly how much the Gardasil and Cervarix royalties contribute to NIH, but if we make the assumption that their patent licenses entitle them to 1% of the HPV vaccine revenues of their partners (an assumption that appears reasonable based on the available data), then we can safely estimate that OTT has been collecting somewhere in the range of $15 million per year from Lowy and Schiller’s invention.
In addition to their numerous scientific awards for their discoveries, Lowy and Schiller have received cash distributions from NIH based on their patents. As Federal employees, they are each eligible to receive a share of patent royalties up to $150,000 per year and Gardasil’s success has guaranteed that they would receive the maximum reward. That means that since FDA’s approval in 2006, each man has earned roughly a half million dollars in royalty revenue.
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This is the DHHS vision of public private partnership at work. Contrary to the rhetoric, these partnerships aren’t simply a high-minded collaboration of scientific visionaries, but rather a large commercial enterprise with extraordinary profits at stake: an enterprise from which NIH receives credit and money and based on which its corporate partners build multi-billion dollar businesses.
How does such a partnership affect the incentives of regulators whose job it is to make sure the products are safe? It’s not obvious that they do. Just because DHHS has a financial stake in Gardasil doesn’t necessarily mean that every subsequent decision its employees make is corrupt, part of some nefarious conspiracy to kill young women for money. Indeed, HPV royalty revenues of $15 million represent just a small fraction of a DHHS budget that rose to well over $700 billion in 2009. In the larger scheme of things, DHHS revenues on Gardasil are just a small drop in a very large bucket.
Far more likely to play a role, however, in public-private paternerships like the Gardasil vaccine are the insidious cultural pressures that emerge in a supremely political organization like DHHS. Can we really expect the Secretary of HHS to take his or her FDA Director to task for implementing lax standards on vaccine approval when the Director of NIH is simultaneously praising the “heroic” researchers who invented the product in the first place? Is it more likely that CDC will apply extra caution in their vaccine policy recommendations when its sister agency is involved or will they be more likely to activate the fast track in their process of making recommendations for Gardasil? What we have observed so far merely suggests the potential for bias in the regulation of products in which DHHS holds a direct stake. In the next part of our series, Age of Autism will investigate the question of whether or not there have been actual patterns of bias in the ways in which regulators at FDA and CDC have conducted their duties with respect to Gardasil.
Mark Blaxill is Editor at Large of Age of Autism.