NIH Received Few Royalties From Development of Taxol, GAO Report Finds
The NIH spent $484 million between 1977 and 2002 for research on the cancer medication Taxol but received only $35 million in royalties from Bristol-Myers Squibb, which contracted with the agency to manufacture and market the treatment, according to a General Accounting Office report released on Friday, Reuters/Washington Post reports. BMS has earned $9 billion from Taxol sales since the 1991 agreement (Reuters/Washington Post, 6/7). BMS spent about $1 billion to develop Taxol (Philadelphia Inquirer, 6/7). The 1991 agreement required BMS to develop a process to manufacture Taxol but did not require the company to pay the NIH royalties. Taxol reached the market in 1993. In 1996, BMS agreed to pay the NIH 0.5% in royalties on worldwide sales of Taxol in exchange for the license to three agency patents on methods to use Taxol to treat cancer, the report found; the company later did not use those methods. The report found some evidence in support of claims from NIH officials that the agency "lacked the bargaining power to squeeze a better deal" from BMS; only four companies sought the Taxol contract, and the NIH considered BMS "substantially more qualified" to develop the medication than the other three companies, the Wall Street Journal reports. NIH rules place a higher priority on "bringing research to patients quickly" and a lower priority on royalties, the Journal reports (Landers, Wall Street Journal, 6/9). NIH officials also said that the agency did not have a patent on Taxol -- which "might have given it more negotiating power" -- because the medication was "already in the public domain," the Newark Star-Ledger reports. The report also found that the NIH did not use price controls to reduce the cost of Taxol (Todd/Silverman, Newark Star-Ledger, 6/7). In addition, the report found that Medicare paid $687 million for Taxol over five years -- three times the amount spent by other federal programs for "widely used" cancer treatments, Reuters/Post reports (Reuters/Washington Post, 6/7).
Sen. Ron Wyden (D-Ore.), a "longtime critic of what he sees as inadequate efforts by the NIH to recoup taxpayers' investment in basic medical research," requested the GAO report, the Journal reports (Wall Street Journal, 6/9). "This report proves that NIH does not understand that as part of its mandate to get drugs to market quickly, it must effectively move to make sure that patients can afford those products -- and that they should also work to get taxpayers a square deal," Wyden said. However, NIH Director Elias Zerhouni said, "Examining the financial aspects of the development of Taxol in isolation from the NIH's mission tells only part of the story." He added that the Taxol case "showed how determined efforts of government and industry created a drug that ultimately treated one million people," the AP/Las Vegas Sun reports (AP/Las Vegas Sun, 6/6). The GAO report is available online. Note: You must have Adobe Acrobat Reader to view the report.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.