U sues

The University could recover tens of millions of dollars if a lawsuit over patented compounds, which might have helped develop the most recent anti-AIDS drug, Ziagen, proves successful.
North Carolina-based Glaxo Wellcome, a global pharmaceutical corporation, refutes the University’s claims that the company owes royalties for a patented molecule a University professor created and licensed to the drug company in 1992.
The University is the plaintiff in less than 1 percent of cases handled by the Office of the General Counsel.
The suit began in U.S. District Court in October, but the University requested that the complaint be sealed to avoid breaching confidentiality provisions in the license agreement. Glaxo Wellcome filed a counter suit in December and denied charges the University made.
The University’s Office of the General Counsel made the complaint available to The Minnesota Daily last week.
With the market for HIV and AIDS drugs soaring into the billions of dollars per year, the University could gain tens of millions of dollars in Ziagen royalties.
Both sides agree that in 1992, the University licensed Glaxo Wellcome to use and develop compounds patented by Robert Vince, a professor in the College of Pharmacy. In return, the University would get royalties. Vince would not comment for this story.
“The University attempts to manage its portfolio of intellectual property carefully,” said Mark Rotenberg, the University’s general counsel.
Vince created a class of compounds that prevents replication of the HIV virus, said Tony Strauss, acting assistant vice president for the Office of Patent and Technology Marketing.
He said Vince’s compound is unique because it decreases the daily dosage a patient must take compared to other anti-AIDS drugs.
Glaxo Wellcome created and tested Ziagen, which recently won approval from the Food and Drug Administration. The drug went on sale in January.
Central to the lawsuit is how much, if any, Ziagen takes from the Vince patents.
According to the agreement, if compounds patented by Vince are contained in the drug, the University is entitled to a 10 percent royalty of the drug’s sales. If a Vince patent is used only to help manufacture the drug, the royalty is 5 percent.
“The general issue is the extent to which Ziagen infringes on the Vince patents,” Rotenberg said.
Officials at Glaxo Wellcome maintain that the drug was developed independently of the Vince compound.
“Our position is that we do not owe any royalties,” said Ramona DuBose, spokeswoman for Glaxo Wellcome.
Rotenberg said he is going to argue that Ziagen contains a Vince compound; thus, the University is entitled to 10 percent. But if the court is not convinced of this, he will argue that a Vince patent helps manufacture the drug.
The University’s complaint also briefly states that the person who developed Ziagen for Glaxo Wellcome was a post-doctorate fellow who worked under Vince. Nobody interviewed for this story would name the person.
“We contend that (the drug) was discovered by a Glaxo Wellcome employee while working at Glaxo Wellcome,” DuBose said.
Because of the confidentiality clause, DuBose could not mention specifics of the license agreement — such as $3.5 million “milestone” payments already made to the University by Glaxo Wellcome.
Milestone payments are made when a drug makes certain steps along its way to FDA approval.
DuBose would only say that the company has fully complied with the provisions of the agreement.
The University also contends that under U.S. patent law, Glaxo Wellcome must produce a substantial amount of the drug in the United States. Glaxo Wellcome manufactures Ziagen in the United Kingdom.
Potential royalties from the license agreements is split four ways. The inventor receives 33.3 percent; another 33.3 percent goes to cover expenses incurred in the development process; 25.3 percent goes to a University research account and the final 8 percent goes to the college.
Ziagen, only the 15th drug the FDA has approved to fight HIV and AIDS, is a newcomer to the huge market for such treatments.
Steven Fischer, a spokesman for the Washington, D.C.-based advocacy group AIDS Action, said that treatment with drugs like Ziagen can cost a patient more than $14,000 a year. With 335,000 people being treated, the total cost runs to $4.69 billion nationally per year.
Treatments usually entail taking three or more drugs, Ziagen included. DuBose said that the daily wholesale price for Ziagen is $9.70, or $3540.50 per year. But she added that does not include mark-ups by the wholesalers or HMOs.
The lawsuit is not holding up distribution of Ziagen.
“The regents have no intention of slowing down the manufacture or delivery of products that might help folks with AIDS,” Rotenberg said.