Pharma vs Mass General for the Big Money--OT??
- From: "Greatcod" <Greatcod@xxxxxxxxx>
- Date: 28 Jun 2005 07:38:00 -0700
This is mildly off-topic--(not enough vitrol), but it offers insight
into the intertwined world of corporations and universities.
Drug firm, MGH fight over royalties
By Christopher Rowland, Globe Staff | June 28, 2005
A dispute over royalties between Massachusetts General Hospital and the
manufacturer of the drug Enbrel could cut into the millions of dollars
in royalties received by the hospital and one of its star scientists.
Amgen Inc. last year sold nearly $2 billion worth of Enbrel, which
doctors prescribe to treat rheumatoid arthritis and psoriasis. Under
terms of a licensing agreement, the company paid Mass. General
approximately $41 million for its role in helping invent the drug --
about two-thirds of the $63 million in licensing payments the hospital
received from all sources last year. The money supports a major
genetics laboratory run by Brian Seed, a Harvard University
biophysicist who made key discoveries that led to Enbrel's development.
But now Amgen wants to reduce its payments to Mass. General.
Amgen, which is based in Thousand Oaks, Calif., inherited the Enbrel
pact with the hospital in 2001 when it bought Immunex Corp., a Seattle
company that developed the drug in the 1990s. Amgen's lawyers later
discovered language in the licensing agreement that ''allowed for a
certain amount of interpretation," said Frances Toneguzzo, director of
licensing deals at Mass General. The company's lawyers believe the
wording may allow Amgen to pay the hospital less, Toneguzzo said. Mass
General disagrees.
''When there are big dollars on the table, you tend to scrutinize every
piece of your contracts, and that's what happened here," Toneguzzo
said. She declined to say how much of its Enbrel royalties might be in
jeopardy.
In an e-mail statement, Andrea Rothschild, an Amgen spokeswoman, did
not address the dispute. She said the company routinely reviews such
''agreements and their value to the company."
During a drug's development, companies commonly sign licensing
agreements with other firms and research institutions whose discoveries
contributed to the product's creation. The complexity of such
arrangements often results in disagreements and the courts are
cluttered with conflicting claims from biotech inventors, though many
cases result in negotiated settlements. A trial involving an academic
institution and its partners in the private sector is unusual, but it
could happen in this case.
''This dispute may result in litigation being filed in the near
future," Partners HealthCare, Mass. General's parent corporation, said
in a financial disclosure statement this year.
Amgen -- which has a research laboratory in Cambridge -- is one of the
country's two largest biotech companies. A major portion of its muscle
stems from the $16 billion Immunex acquisition.
Drug companies typically conduct careful reviews of licensing contracts
after a merger, said Thomas F. Holt Jr., who heads the Boston
intellectual property practice at Kirkpatrick & Lockhart Nicholson
Graham LLP, and is not involved with Amgen or Mass. General. During
such an audit, they may question a laboratory's underlying claim to an
invention, for example, or question what sales royalties should be
based on.
Because of Enbrel's value, Holt added, it is not surprising that Amgen
is paying close attention to details.
''What's covered within all four corners of that licensing agreement
can get very complicated," he said. ''The bigger the stakes, the more
intense the scrutiny."
Losing even a portion of Amgen royalties would be a significant loss
for Mass. General, as well as a personal blow to Seed. Under the
hospital's formula for intellectual property deals, royalties are
divided into four parts -- a quarter each for the inventor, his
laboratory, the department, and the hospital.
Although the hospital has not disclosed numbers, last year's payment to
Seed under that formula would have been about $10 million. His
laboratory would have received another $10 million.
The laboratory budget supports three dozen researchers and technicians
who work with state-of-the-art genomics equipment, according to the
lab's website. It helps Mass. General compete with other institutions
for research grants from the National Institutes of Health, which
pumped about $1.6 billion into the Boston-area healthcare economy in
2003.
Enbrel is among the most successful biotech drugs on the market. It
reduces inflammation by using decoy receptors to divert the body's
immune response away from healthy cells. The techniques Immunex used to
create its decoys were first developed by Seed at Mass. General in the
late 1980s and early 1990s, according to Mass. General. At the time,
Seed was working with private-sector money from Hoechst AG to develop
HIV treatments.
Immunex signed a licensing agreement for Seed's technology in 1998, the
same year the drug won approval from the Food and Drug Administration.
It also signed an agreement with Hoechst.
''There were a lot of patents that had been filed by different people,"
said Toneguzzo. ''They were interested in ours not just because of the
subject matter, but because we had an early one."
Since buying Immunex, Amgen has resolved a major patent dispute with
another Seattle firm, ZymoGenetics, for an undisclosed sum. It has also
solved Enbrel production shortages that plagued Immunex. That has
helped Amgen make the drug hugely successful, with sales rising 46
percent from 2003 to 2004. Analysts expect sales to approach $3 billion
by 2006.
Toneguzzo said Mass. General's dispute with Amgen focuses on specific
wording in the contract. When the sales figures reach billions of
dollars, she said, ''small changes can make a big difference in terms
of revenue."
Christopher Rowland can be reached at crowland@xxxxxxxxxx
© Copyright 2005 The New York Times Company
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