WASHINGTON -- Agreements such as the one the ScrippsResearch Institute and Sandoz Pharmaceuticals Inc. plan to signJuly 1 could "have a devastating impact on small, technology-hungry companies," Rep. Ron Wyden, D-Ore., said Thursday.

Wyden was opening a hearing on drug development dealsbetween tax-supported laboratories and pharmaceuticalmanufacturers before his Subcommittee on Regulation,Business Opportunities, and Technology.

In return for about $30 million annually for 10 years, Sandozwould gain virtual control of the Scripps Institute and itsresearch. The agreement's many provisions, effective in 1997,include the right to transfer research projects from Scrippslaboratories to its own laboratories, and then to ban anyScripps researcher involved from continuing such research,Bernadine Healy said in her last appearance before Congress asNIH director.

Sandoz could also withdraw from the agreement if Scrippsselects a chief executive officer that Sandoz does not like. AndSandoz could probably deny renewal of contracts Scripps haswith 40 small companies, Healy said.

"A leveraged buyout of taxpayer-financed research," is whatHealy called the agreement because most of Scripps' funding --about $70 million annually -- comes from the NationalInstitutes of Health.

But the Scripps-Sandoz agreement was an aberration among375 agreements between NIH grantee institutions andcompanies that the agency analyzed, Healy said. In particular,44 percent of the agreements were with small businesses, and86 percent of the agreements are project-specific.

None of the agreements included provisions, as the Scripps-Sandoz deal did, requiring that the institution assist inobtaining a waiver of the U.S. manufacturing requirement thatwas legislated in the Bayh-Dole act of 1980.

Wyden fears that the Scripps-Sandoz agreement could becomea model for future industry/institutional agreements.

Such comprehensive exclusive licensing agreements can lock upa new technology, unless the company licenses it, BarbaraConta, patent administrator for Regeneron Pharmaceuticals Inc.warned. She described an agreement between a university anda corporation that prevented Regeneron from developing anovel neurotrophic factor, despite her company's readiness andability to do so.

"Because such license agreements are only possible for largefirms, they may disadvantage small entrepreneurial companiesin particular," said Conta.

Sheldon Krimsky, professor and chair of the Department ofUrban and Environmental Policy at Tufts University, had morefundamental criticisms of university/company agreements.Krimsky, who was a member of the Recombinant DNA AdvisoryCommittee (RAC) of NIH more than a decade ago, and who is aboard member of the Council for Responsible Genetics, said thata 1992 study of 107 clinical trials sponsored by pharmaceuticalcompanies found "no instance in which an investigator found anew drug inferior to an alternative product."

Krimsky also fears that ties between biotechnology faculty andcompanies will stifle exchange of information among academicscientists. Such ties are pervasive, he said, citing a 1992 study.

The National Science Foundation has proposed a program of"limited and targeted financial disclosure" where researchinvolves potential conflict of interest. NIH will complete asimilar proposal in about a year, said Sandy Shamblee, anagency lawyer. But these proposals, Krimsky said, do notaddress public access to such information or questions ofinstitutional conflict of interest.

The FDA is also developing disclosure provisions forresearchers conducting clinical trials, due later this summer,Steve Jenning, staff director of Wyden's subcommittee, toldBioWorld. Wyden hopes that these regulatory measures willsuffice to deal with the problem.Meanwhile, in an April 5 letter to then Health and HumanServices undersecretary-designate Philip Lee, Scripps CEOCharles Edwards complained that "for reasons entirely unclearto us, Dr. Healy has called into question many aspects of the(Scripps-Sandoz agreement.)"

On Wednesday, Sandoz CEO Timothy Rothwell sent a fax toNIH's legal adviser, Robert Lanman, saying, "To the fullestextent possible, we will work with you in good faith to addressall of NIH's concerns prior to July 1, 1993."

If not, NIH will restrict all future grants to Scripps to preservesmall biotechnology companies' access to NIH-supportedtechnology.

-- David C. Holzman Washington Editor

(c) 1997 American Health Consultants. All rights reserved.

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