Developing drugs to fight cancer, the fourth most prevalent cause of human deaths worldwide, is a mission beyond reproach. That the U.S. government has allocated a significant portion of funds and bright minds towards the cause is still more commendable.

Yet the manner in which the government is facilitating this development may not be the most effective method of promoting the public’s health care interests.

On October 12, 2011, Genesis BioPharma, a biotechnology company that specializes in developing targeted cancer immunotherapies, announced that it has entered into a Patent License Agreement with the National Institutes of Health (NIH) for non-exclusive licenses to forty-three patents and patent applications relating to adoptive cell therapy for the treatment of cancer.

While the NIH is steadfast in its commitment to making its health care technology as widely available to the public as quickly as possible, this sizable licensing agreement raises concerns as to whether Genesis will bring the most effective and well-developed product to market, or whether it will simply do so the fastest.

The development process

The Federal Technology Transfer Act (FTTA), passed in 1986, promotes cooperative research and development between the government and private entities, and protection of the intellectual property that may be developed through these partnerships. To that end, the National Institutes of Health uses government funding to research and patent technologies relating to public health, then collaborates with external corporations to develop the technology and bring the inventions to market.

This collaboration frequently takes the form of non-exclusive licenses to corporations, whereby the company develops a saleable product, manufactured in the United States, for which it pays NIH licensing royalties. These licensing agreements include enforceable performance benchmarks to ensure that the public will receive the benefit of the NIH-funded research through the release of commercialized products. NIH reserves the right to revoke a license if the licensee fails to make reasonable process in developing the invention or if it cannot satisfy unmet public health needs.

While NIH favors non-exclusive licenses, under certain conditions it will grant exclusive licenses on its technology to interested companies. Cases in which a licensee must undertake substantial additional risks, time and costs in the development process leading up to commercialization may necessitate offering an exclusive license as an incentive to companies undertaking that additional burden. Exclusive licenses require public notice and comment, and preference must be given to U.S. companies with no more than 500 employees.

In the infrequent event that two companies are interested in the same license, NIH may either grant a co-license, or will select a licensee based on the companies’ submitted product development plans. This determination will be made before any discussion of the financial terms of the license has begun to avoid auctioning the technology to the highest bidder.

That sounds great, what’s the problem?

The NIH’s emphasis on product development plans and broad public access to health-related technologies over financial incentives, while admirable, does little to assuage concerns raised by those who are skeptical of collaborations between the government and private entities. Some fear that these licensing agreements too closely tie NIH’s goals to the licensee’s commercialization interests. Although to NIH commercialization means public access to health care, to its corporate licensees it means financial gain.

One critic expresses the concern that, by placing an inordinate premium on research with immediately apparent commercial rewards, the policies tend to skew the direction of research away from basic scientific investigation. The implications of this emphasis may be that while NIH does not entertain bidding wars, it does promote product development plans that could overlook efficacy in the name of efficiency. In this way, the FTTA may be incentivizing the commercialization of inadequate health care products and methods.