WASHINGTON _ The National Institutes of Health (NIH) cameunder congressional fire on Monday for failing to police its grantrecipients to insure that the government retains rights to patentedtechnologies stemming from federally funded research.Rep. Ron Wyden (D-Ore.) led the attack at a hearing of the HouseSmall Business Committee's Subcommittee on Regulation, BusinessOpportunities and Technology. He focused on a report releasedMonday from the Office of Inspector General (OIG) revealing thatScripps Research Institute (SRI) failed to credit the U.S. governmenton a full one-third of the patents it was granted between 1983 and1993. He said Scripps' underreporting raised questions about similarpatterns at the 1,400 other universities and non-profit institutions thatannually receive more than $8 billion worth of research grants from theNIH.An OIG audit of SRI and a simultaneous study of NIH monitoringpractices concluded that the NIH's systems to track federal funding ofpatented inventions are inadequate. In fact, the NIH relies on only twoemployees in its Division of Extramural Invention Reports (DEIR) tomonitor all inventions arising out of NIH-funded research.Wyden said it was "unbelievable" that so few people were"watchdogging an $8 billion program." He said that as a result of its"massive" investment, "the federal government has certain rights andinterests including an assurance of reasonable pricing and availabilityof products commercialized as a result of this research.""Specifically, the government can use its leverage to force co-licensingof technologies, and competing drugs and devices, or even, in the caseof flagrant disregard of the public interest, it can take ownership of thepatent," said Wyden.Under law, NIH grant recipients who develop a new technologysupported with federal funds must disclose the invention to the NIHwithin 60 days. In addition, grantees must include a "governmentrights" clause in any patent application for the invention and mustprovide the government with a nonexclusive, nontransferable,irrevocable license to use the invention. The government can exercisethe rights Wyden referred to only under certain circumstances.Scripps: A Case StudyLast year, Wyden requested the OIG to conduct an audit of 130 patentsawarded to La Jolla, Calif.-based SRI between 1983 and 1993. SRI,one of the world's largest non-profit biomedical research organizations,received more than $500 million worth of NIH research grants duringthat decade.Michael Hill, assistant inspector general for OIG's public health serviceaudit division, said that a review of NIH records early in the auditindicated that SRI received only 13 patents between 1983 and 1993. Amere five of the 13 patents included a government rights clause.But Hill said when OIG auditors double-checked the NIH data againstrecords from the U.S. Patent and Trademark Office (PTO) and acommercial patent data base, they discovered that SRI had obtained125 patents between 1983 and 1993. The data showed that 51 (41percent) of SRI's 125 patents contained a government rights clause.OIG then checked the titles and inventors' names on the 74 SRI patentsthat did not include the clause against records of NIH grants awarded toSRI. Upon further investigation, the NIH and SRI determined that afull 94 (75 percent) of the 125 SRI patents were actually developedwith the use of federal funds. Thus the SRI underreported federalfunding on 43 patents.In conducting the SRI audit, OIG investigators found NIH records in"disarray," according to Hill. The agency relies on paper documentsinstead of a computerized system and does not verify or cross-check itsrecords."Our work indicates that fundamental problems exist with NIH'sability to monitor grantees' compliance with [invention reporting]regulations," said Hill. "NIH does not have a system of coordinatingdata with the PTO or other sources of information, to ensure that NIHis receiving accurate and complete records from grantees. Further, NIHdoes not perform reasonability checks of otherwise analyze data itreceives from grantees."OIG recommendations for an overhaul of the NIH monitoring systemincluded: establishing a systematic process to ensure that NIH granteessubmit required information about inventions; collecting more detailedlicensing and utilization data on all NIH-funded inventions;computerizing the tracking system; and establishing a direct, electroniclink with the PTO and at least one commercial patent data base toverify all information.In addition, OIG recommended that SRI reporting behavior bescrutinized in-depth and that a thorough review of invention reportinghabits at other top NIH grantee institutions be conducted.Wendy Baldwin, NIH deputy director for extramural research, said thatthe agency concurred with most of OIG's recommendations and hadalready begun work on a new computer system. She said the agency'swork with Scripps has not uncovered any evidence of a "maliciousintent to deceive or suppress," but rather suggested that theunderreporting was due to oversight and confusion about theregulations."We accept this finding of the Inspector General and acknowledgethese errors of omission, errors we should not have made," said SRI'ssenior vice president William Beers on Monday. "We assure you,however, that these errors were just that _ inadvertent, unintentionalmistakes. Scripps derives no benefit from omitting sponsorshipstatements."Beers said that Scripps has rectified its errors and added a governmentrights clause to all of its existing patents and pending patentapplications, in keeping with the law. He added that none of thepatented technologies found to be in error had yet been used in acommercially available product."We are confident that neither the governments' nor the public'sinterests were prejudiced in any way by the mistakes Scripps made inreporting its inventions," said Beers. n
-- Lisa Piercey Washington Editor
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