Saturday, March 25, 2006

WARF Under Assault For Excessive Royalties

The latest criticism of Wisconsin's control of patents on embryonic stem cells is well-covered in a piece in the Wisconsin State Journal that comes as California is facing new claims from WARF for a piece of the action in the Golden State.

Earlier this month, WARF's chief counsel told a stem cell conference that she expects to see California pay royalties to her agency. That's because CIRM-approved rules give the state roughly 25 percent royalties on inventions developed by CIRM-funded research at non-profit institutions. CIRM is scheduled to consider IP rules for grants to commercial firms next week.

Reporter Ron Seely of the Wisconsin newspaper wrote the article about patent complaints by Jeanne F. Loring, a stem-cell researcher with the Burnham Institute in San Diego,, and Cathryn Campbell, a patent attorney with McDermott, Will & Emery, a Washington, D.C., law firm.

Their charges were contained in an article in Science magazine that said WARF patents are "a more daunting barrier to progress in the field" than President Bush's restrictions on embryonic stem cell research.

Seely wrote:
"But the authors of the Science article also take issue with how WARF distributes the cells and the fees it charges for their use.

"Initially, WARF charged academic investigators $5,000 for the cells. After an agreement with the National Institutes of Health, which made WARF the main distribution center for the cells, that fee was reduced to $500.

"The price is steeper for private laboratories. WARF charges an upfront fee of up to $125,000 to private commercial labs for the cells, plus an annual maintenance fee of up to $40,000 to retain the license."
Seely quoted Carl Gulbrandsen, executive director of WARF, as saying,
"I'm not embarrassed at all to say that I hope the University of Wisconsin will make a whole lot of money from these patents."
Seely also carried a more detailed defense by Gulbrandsen of his position.

Loring has leveled charges at WARF previously. Nature magazine reported in May 2005 that she said her startup firm collapsed because she could not get access to embryonic stem cells at a reasonable price from WARF. That matter was discussed briefly in an article by Merrill Goozner in February in PLoS Medicine that explored the problem of patent thickets and stem cell research, particularly in California.

(Goozner's article is available without charge, but the piece by Loring in Science and the article in Nature require paid subscriptions. We should also note that Loring is a key figure in creation of the nation's first public embryo bank, which she said will make embryos available to qualified researchers at no cost.)

Seely's piece on Loring's most recent allegations appears to be the most comprehensive one available today. Most of the country and California saw this Associated Press piece.

One interesting sidelight on the patent dispute comes from Kathleen Gallagher of the Milwauke Journal in an article she wrote in 2004. She said,
"Significant discoveries involving stem cells may be 10 years away. Then it could take another five to eight years to get therapies through the U.S. Food and Drug Administration, said Carl R. Clark, director of marketing and licensing for the Medical College of Wisconsin Research Foundation. That means WARF's initial patents could expire before any royalties are generated.

"One of the companies best-positioned to bring stem cell therapies to market is Geron Corp. of Menlo Park, Calif.

"Geron funded much of the early research at the University of Wisconsin-Madison leading to James Thomson's first-ever isolation of human embryonic stem cells in 1998.

"The company has certain rights to develop therapeutic and diagnostic products involving certain stem cells. Geron has said it hopes to be in clinical trials by the end of 2005 or early in 2006 for therapies for spinal cord injuries.

"That makes Geron a fan of WARF's patent.

"'If 50 new companies are spawned in California in the next five years, those are licensing royalties to Madison and Menlo Park,' said Thomas B. Okarma, Geron's president and chief executive officer."
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