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NIH Tech Transfer Chief Says Agency Is Keen To Partner with Industry on Drug Development

The National Institutes of Health can help the pharmaceutical industry speed the commercialization of new drugs by offering resources and funding to complement the efforts of industrial partners and assume some of the risk involved in drug discovery and development, the director of the agency’s technology transfer office said at a meeting last week.
In addition, NIH also hopes to further the commercialization of new drugs by allowing its intramural researchers to engage in high-risk, application-driven research, disseminating its technologies as widely as possible, and educating other countries about the US technology commercialization dynamic.
Mark Rohrbaugh, director of the NIH Office of Technology Transfer, shared his thoughts on NIH’s technology transfer efforts at the Licensing Executives Society Eastern Chapter meeting in New York last week.
According to Rohrbaugh, the NIH has a role in technology transfer both from an extramural and intramural perspective. Of the agency’s total budget of around $28.6 billion in fiscal 2007, Rohrbaugh estimated that around 90 percent, or $25.7 billion, is earmarked for extramural research, while the remaining 10 percent, or $2.9 billion, goes toward internal research.
The extramural, or “traditional,” role of the agency is to fund basic research that gives rise to new industry and products, he said. Approximately 80 percent of the NIH’s extramural funding “is still in the basic [research] realm,” Rohrbaugh said, and thus supports traditional, bench-top, peer-reviewed research. This research can then be commercialized through the university-facilitated technology transfer process enabled by the Bayh-Dole Act.
The remaining 20 percent of NIH’s extramural funding goes toward cooperative agreements and contract research with industry that supports applied drug discovery science, Rohrbaugh said.
“Bayh-Dole gives universities a lot of leeway to commercialize” the basic science being conducted within their walls,” he said. Specific biomedical applications such as new drugs or research tools are what “give rise to the kind of applied research from which intellectual property can arise,” he added.
According to Rohrbaugh, NIH can offer industry a broad range of support for pre-clinical drug development such as good manufacturing practice compliance, high-throughput screening and, in some cases, even the earliest stages of clinical development.
“We’re looking for new uses for drugs to complement what industry is doing,” Rohrbaugh said. ”We can take away some of the risk from industry involved in drug development.”
Rohrbaugh said that approximately one-half of all cancer therapeutics and “almost all” anti-retroviral and HIV drugs currently on the market at one point had an investigational new drug application held by the NIH.
The NIH has in recent years beefed up its ability to partner with industry in the area of drug development through its Roadmap for Medical Research program and associated initiatives such as the Molecular Libraries Screening Center Network, which performs high-throughput screening against a large library of small molecules maintained in a central molecule repository.
The roadmap initiative has allowed the NIH to acquire or develop additional resources to support drug development in the post-genomic era such as whole-genome analysis, genome-wide association studies, and a public-private biomarkers consortium.
Risky Business
Although NIH extramural funding plays a large role in the biomedical technology transfer process in the US, the agency also believes it can speed the development of new drugs through its internal research program.
The NIH funds intramural research differently than it does extramural research. Perhaps the biggest example of this is the fact that extramural researchers must apply first to have their research funded, while intramural research is funded ahead of time based on the individual institution and laboratory, and the research is reviewed post hoc to develop recommendations for distributing funding the following year.
“This gives intramural researchers the ability to do higher-risk work and research that is maybe not as hypothesis-driven,” as their counterparts in industry or academia, Rohrbaugh said.
The agency’s intramural researchers hold around 2,500 issued or pending patents and 1,500 current licensing agreements, Rohrbaugh said. In addition, NIH can stake claim to more than 200 various health-related products, 25 of which have been approved by the US Food and Drug Administration; and rakes in anywhere from $80 million to $100 million in licensing royalties per year.
Regarding licensing royalties, Rohrbaugh told meeting attendees that the NIH is required by law to pay a portion to the scientist inventors. Although he did not disclose the percentage of this payment, Rohrbaugh said that it is capped at $150,000 per year. The average kick-back, however, is much less than that, and also much less than what university inventors typically receive in royalties from university-negotiated licensing deals. The rest of the money goes back to individual NIH institutes and is funneled into research.
In addition, he said that the majority of the NIH’s licensing revenues are a result of exclusive licenses, with a major exception being an NIH-developed HIV test kit, which Rohrbaugh said the agency has licensed to more than 20 entities worldwide.
Despite this, close to 70 percent of the NIH’s licenses are non-exclusive, while the remaining 30 percent are exclusive. This is because the agency wants to ensure that technologies have ample opportunity for commercialization. “We strive to carve up our IP and use it as broadly as possible to move the technology forward and spur its development in as many fields as possible,” Rohrbaugh said.

“We can take away some of the risk from industry involved in drug development.”

For instance, if a company wants to in-license a cancer drug for a specific application, NIH will typically grant it a license for that indication only, and offer the drug to other companies that may have an interest in different applications. Rohrbaugh said NIH is fairly flexible in its licensing provisions depending on the size of the company, and that it is more likely to grant an exclusive license to a company in a situation where there is a large unmet medical need.
Beyond the US Borders
Rohrbaugh said that the institution favors US companies in licensing deals, but does license about 15 percent of its technologies to non-US-based businesses.
On this latter point, Rohrbaugh said that NIH sees itself in an educational role as a means for furthering worldwide drug discovery and development.
“We feel we have an important role in training others worldwide how to manage intellectual property, and presenting the US model of technology commercialization to other countries, especially developing countries,” he said.
International visitors to NIH offices frequently inquire about how IP management works in the US, and “despite some criticism from other countries in this area, many of them do want to imitate it,” he said.
In particular, he said, aspects of the US technology commercialization cycle that many countries would like to instill include university, government, and industry collaborations; a system for rewarding and capturing innovation as enabled by the Bayh-Dole Act; a strong venture capital and angel investment network; and the availability of a broad array of entrepreneurial expertise.
In addition, he said that the US maintains a culture of balanced risk taking and acceptance of failure that may be missing in other countries. For example, if an entrepreneur begins a start-up company here to commercialize a drug, and the company fails, it is often viewed as gained experience and a good bet for additional investment; whereas in many countries such a scenario may mean the end of a career.

Lastly, Rohrbaugh said that the US maintains a relatively transparent regulatory approval system. “Your product may not be approved here, but at least you know why,” he said. “In some systems, you have no idea why you’ve been denied approval.”

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