Bitter Pills

The AIDS drug Ziagen has brought healthy windfalls to the University of Minnesota and GlaxoSmithKline. But it isn't doing anything at all for the millions who are dying of the disease in Africa.

Within only a few months, Vince and his fellow researchers had synthesized a series of new compounds and, despite the skepticism of the NIH officials who reviewed the work, sent them for testing at Alabama's Southern Research Institute. One family of compounds in particular, which Vince named carbovir, caught the testers' attention: They proved exceptionally effective in inhibiting the replication of HIV, while showing a low toxicity--meaning that they tended not to affect healthy cells. "I remember a guy from the NIH called me at home on a Saturday morning," Vince recalls. "He was really excited. He told me they wanted me to patent these right away, and they said they'd pay for preclinical testing to attract a pharmaceutical company."

The university duly patented the compounds, crediting Vince, along with a visiting researcher named Mei Hua, with the discovery. Vince says he didn't foresee the controversy that would follow. "I never thought, 'We're going to get a patent and make some money.' The patent was just a mechanism of getting our work out there and doing something with it. If we hadn't patented it, it'd have been like we were throwing it away. I thought we did something good. And then all of a sudden we became bad guys."


Craig Lassig

It was a propitious time to capitalize on carbovir. HIV had recently become public-health enemy No. 1, and new patent regulations made university research especially attractive for drug companies eager to develop antiviral therapies. Even so, it took a decade--and the second-largest lawsuit in Minnesota history (trailing only the tobacco settlement)--for Vince's compounds to become a marketable drug.

In 1988 the University of Minnesota licensed the patent for carbovir to the British pharmaceutical firm Glaxo in exchange for five percent of sales from any drug the company eventually developed using the compounds. But Glaxo shelved the project, and in 1991, in accordance with its contract, the university reclaimed its patent. In 1993 carbovir was licensed a second time, to North Carolina-based Burroughs Wellcome. As it happened, the Burroughs scientist assigned to work with carbovir, Susan Daluge, was one of Robert Vince's former postdoctorate researchers.

There were early problems with carbovir, says Daluge. For one thing, the family of compounds proved insoluble, which meant they could not be effectively administered orally. A more serious drawback arose during early clinical trials: Burroughs scientists discovered that the drug caused a violent, sometimes deadly, reaction in up to five percent of patients. (This side effect, called hypersensitivity, remains a major obstacle to the drug's widespread prescription.)

Meanwhile, the pharmaceutical industry was consolidating, and in a twist of fate for the U of M, Burroughs was acquired by Glaxo. (The new company merged again last year, with SmithKline Beecham, to form GlaxoSmithKline, the world's third-largest pharmaceutical conglomerate and the largest producer of AIDS drugs). In the midst of the corporate maneuvering, getting carbovir ready for market became a priority. Eventually Daluge turned Vince's work into a chemical called abacavir sulfate, later marketed as Ziagen.

Clinical trials proved promising, and by 1998 it was clear Ziagen would be a blockbuster; industry analysts predicted annual sales of up to $800 million. But as the drug was being readied for the market, trouble arose: Glaxo claimed that Ziagen bore so little resemblance to carbovir that the company was not obligated to pay the university royalties. In addition, Glaxo attorneys claimed that Robert Vince had taken credit for work Susan Daluge had done while at the university, thus invalidating the university's patent altogether.

A mere two months before Ziagen won approval from the U.S. Food and Drug Administration, the university filed suit against Glaxo. Months of rancorous legal proceedings ensued, during which both sides exchanged ugly accusations of scientific misconduct and legal two-stepping. Vince recalls this time of endless depositions with a hint of bitterness. "I'm not a lawyer," he says. "But it still consumed all of my time. I couldn't do anything else."

In October 1999 a protracted court battle seemed assured. Then, in a late-night session at St. Paul's federal courthouse, Glaxo backed down. Under the terms of the suit's settlement, the U of M would receive a lump sum of $7.25 million, plus royalties on a sliding scale beginning with five percent of worldwide sales and going up to ten percent. As mandated by federal law, two-thirds of those royalties would have to be reinvested in research--in this case, an endowment for graduate students and a new drug-development center. The rest--an estimated $10 million per year--would go to the patent holders, Robert Vince and Mei Hua.

Financial windfall notwithstanding, the most important aspect of the lawsuit was the precedent it set: In securing the largest settlement ever won by a university defending its patent rights, the university's victory signaled a sea change in university-industry relations. Mark Rotenberg, the school's general counsel, says the case demonstrated the university's increasing willingness to protect its patents with tooth and claw. "It's a phenomenon common in the pharmaceutical industry that if a company strikes it hot, they take the position that it's not really your property," Rotenberg asserts. "Our success was a sign to the drug industry that universities will defend their intellectual property."

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