U.S. lawmakers, advocacy groups and state officials who urged the Department of Health and Human Services (HHS) to march in on patents covering Gilead Sciences Inc.’s COVID-19 drug, Veklury (remdesivir), likely were disappointed, and perhaps surprised, by the Government Accountability Office’s (GAO) conclusion this week that, despite a $161.5 million taxpayer investment in the antiviral’s development, there are no government patents to march in on.

One of those officials is HHS Secretary Xavier Becerra, who last year, as California’s attorney general (AG), led several other state AGs in pushing HHS to exercise Bayh-Dole Act march-in rights on remdesivir, based on the drug’s price and supply issues.

“Alternatively, at a minimum, we ask that you support states by assigning to states the ability to use the march-in rights under this law to achieve the same purposes,” the AGs said in an Aug. 4 letter to top HHS, FDA and NIH officials. The AGs apparently assumed that since federal money was used to test remdesivir against various viruses, there had to be patents the government could lay claim to under Bayh-Dole.

That’s not the case, the GAO said in a report released March 31, which showed that the government has no patents on remdesivir.

Stemming from a congressionally requested GAO audit of the federal investment in the antiviral drug, the report could serve as a reminder of the limitations of the Bayh-Dole march-in rights, which are restricted to patents covering federally funded inventions. Bayh-Dole, passed in 1980 to jumpstart innovation, doesn’t give the government the right to march in on privately held patents just because federal funding was involved in basic research or testing.

In the case of remdesivir, the CDC, Department of Defense (DoD) and NIH entered research collaborations with Gilead knowing that the Foster City, Calif., company already had a portfolio of patents and patent applications on the compound. They also knew that if their scientists developed new methods of use for remdesivir, patents on those methods would have little value since the government would have to license the compound patents from Gilead if it wanted to commercialize the method or license it to another company.

Who did what

Gilead began working on the research that would lead to remdesivir in 2000. By the time the government agencies began funding preclinical research of remdesivir’s parent compound in 2013 and of remdesivir itself in 2014, Gilead already had synthesized the parent compound, isolated remdesivir, conducted and funded preclinical research that identified and then confirmed the antiviral activity of both compounds against coronaviruses and other viruses, and begun patenting its inventions.

Besides collaborating on the federal research, Gilead continued its own research on remdesivir, filing more patent applications as its work advanced. For instance, the company began patenting methods of using remdesivir to treat coronavirus infections in 2015, a year before NIH scientists began their remdesivir research focusing on coronaviruses.

As a result, Gilead had 16 U.S. patents as of the end of last year, including six claiming the molecular structure of remdesivir and parent compounds. It also had submitted eight more remdesivir-related patent applications, according to the GAO.

Over the past 20 years, Gilead has invested $1.3 billion in developing remdesivir. Of that, $786 million was for R&D costs, including $40 million for supplying remdesivir for use in NIH clinical trials and other clinical and research settings. An additional $147 million was spent to supply the drug for use in other clinical and research settings, and $318 million went in to expanding manufacturing and distribution capabilities for the drug, Gilead officials told the GAO.

In comparison, the federal investment, made between 2013 and 2020, is about 12% of what Gilead spent. Over that eight-year period, the CDC, DoD and the NIH conducted and funded preclinical research collaborations with Gilead that helped demonstrate remdesivir’s antiviral properties against multiple viruses. NIH also funded three clinical trials – two in Ebola and one in COVID-19, the GAO said.

The bulk of the government’s $161.5 million investment came from the NIH, which provided nearly $12 million for preclinical research conducted by the agency itself and NIH-funded universities, as well as $109 million for the NIH-funded clinical trials. In addition to the financial support, the government agencies provided federal Biosafety Level 4 facilities for testing remdesivir against dangerous pathogens such as the Ebola virus.

No one questioned the federal support until the FDA authorized remdesivir last year as the first COVID-19 treatment. Then, amid concerns about how Gilead might price the drug, lawmakers and advocacy groups claimed the company shouldn’t profit from a drug made with taxpayer dollars.

The clamor continued when Gilead announced a “no-bargaining” price of $2,340 for a five-day course for all governments in the developed world and $3,120 for private U.S. insurers, which was below the Institute for Clinical and Economic Review’s cost-effectiveness benchmark price range.

In response to the outcry, DoD officials conducted an inventorship analysis of the remdesivir patents, but determined that the work its scientists had done “did not rise to the level of coinventor status on any of Gilead’s remdesivir patents,” according to the GAO.

The DoD determination was based on the facts that:

  • Gilead had invented the compound and determined that it had antiviral activity against the hepatitis C virus prior to the DoD collaboration;
  • Gilead entered into the DoD collaboration with rights to all remdesivir and other compounds it provided;
  • Gilead told the DoD scientists what the compounds should be screened for;
  • DoD scientists used standard antiviral tests and screening methods in testing remdesivir against viruses such as Ebola, so they developed no new tests or methods that could be patented.

The NIH told the GAO there was no reason for it to conduct an inventorship analysis, as Gilead had already determined that remdesivir exhibited antiviral activity against coronaviruses before the agency began its research. In addition, the principal investigators of NIH-funded coronavirus research projects didn’t file invention disclosures because their work didn’t involve any modifications to remdesivir or its parent compounds. The CDC also saw little opportunity to claim inventorship as a result of its research testing remdesivir against Ebola.

Meanwhile, officials from the agencies told the GAO that Gilead made considerable contributions to the federally funded research. And a principal investigator noted that “Gilead had dedicated substantial resources and maintained a coronavirus research team for several years prior to the COVID-19 pandemic when few others were interested in studying coronaviruses,” the GAO said.

Although the federally supported research didn’t result in government patent rights, it did help deliver a needed drug, the GAO said. Other than convalescent plasma, remdesivir was the only authorized COVID-19 treatment available in the U.S. for six months, beginning May 1. It received full FDA approval in October.