Back on January 18, 2010, we reported on the National Institutes of Health’s (NIH) refusal to exercise the government’s “march-in” rights under the Bayh-Dole Act with respect to the patent-protected drug Fabrazyme (agalsidase beta). The drug is an enzyme replacement produced from a recombinant mammalian cell line (i.e., a biologic) and is used to treat the symptoms of Fabry disease, a rare genetic condition that impairs the victim’s ability to metabolize fat and can lead to kidney failure and heart disease. Fabrazyme was developed at Mt. Sinai School of Medicine, which obtained two patents related to its manufacture and granted Genzyme an exclusive manufacturing license. After contamination at Genzyme’s facility led to a severe shortage and Fabrazyme rationing, a lawyer for three patients petitioned the NIH to march in and grant licenses to other manufacturers. As it has in all other cases, NIH denied the request.
Now, those same patients, joined by eight others, have sued Genzyme and Mt. Sinai (which the complaint erroneously describes as part of the public City University of New York, when in fact it is affiliated with the private New York University) over the shortage. The complaint (pdf) was filed on March 9, 2011 in the federal district court in Pittsburgh. The plaintiffs are represented by C. Allen Black, the same Pennsylvania patent lawyer who filed the NIH march-in petition.
Analyzing the Fabry Patients’ Complaint. The complaint asks that the case be treated as a class action, which means that the individually named plaintiffs would litigate on behalf of both themselves and all other patients who are similarly situated. Class actions in general can be dangerous for defendants because all the class members, not just the named plaintiffs, are eligible for damages. However, a case can proceed as a class action only if the court allows it. The process of class “certification” is long and legally complex, and there is no way to predict at this point whether this case will ever achieve class action status.
The complaint recites much of the same factual background as the march-in petition—a background that the NIH largely accepted in denying the petition. The complaint describes the disease and its treatment with Fabrazyme, as well as Genzyme’s contamination problems and the resulting rationing of doses to already diagnosed patients and denial of treatment to the newly diagnosed. (Of note, since the lawsuit was filed Genzyme has since encountered further difficulties with its Fabrazyme production, disclosing late last week that a nearly-final lot of the drug had to be scrapped due to problems at its Allston, MA plant. Genzyme informed the Fabry community that, “because inventory is so limited, loss of this specific lot of Fabrazyme will have an impact on some patients in the coming months.”)
The plaintiffs allege that as a result of reduced doses and/or denial of access to Fabrazyme, “Fabry patients have either had a return of symptoms, accelerated disease development, injury, and otherwise preventable disease progression, or have died during the shortage” (¶ 62). Ten different legal claims, or counts, all seek damages “in an amount in excess of $75,000.00.” That amount has no particular significance other than that it is the minimum damages threshold a plaintiff must allege in order to get a case like this into federal court.
The complaint also puts considerable emphasis on a recent report by the European Medicines Agency (EMA), a European Union analog to the FDA in this country. In an October 22, 2010 press release (which was followed by the issuance of a more extensive report in November), the EMA noted “an increase in reported adverse events in patients treated with the lower dose of Fabrazyme that has been introduced during the shortage.” Consequently, it recommended “that physicians switch back to the full dose of Fabrazyme according to the authorized product information, depending on the availability of enzyme replacement therapy and the severity of the disease.” The plaintiffs rely on the EMA announcement to show what the defendants knew or should have known about the effects of rationing, as well to establish their duty toward Fabrazyme patients (as discussed in the next two paragraphs).
Applying Tort Theories to a Drug Shortage. The plaintiffs’ legal theories fall into three main categories. There are several claims under tort law, the body of law that governs everything from car accidents to medical malpractice cases. One claim alleges that Genzyme and Mt. Sinai were negligent—failed to act with reasonable care—in specifying and/or consenting to a Fabrazyme dose below what the FDA approved, for selling a contaminated product, and for failing to warn about the dangers of the reduced dose. To this point, the allegations are standard negligence fare. But the next three claims are highly novel and likely to prove equally controversial: that the defendants were negligent in “unreasonably using a publicly funded invention,” in failing to provide adequate reserves of the drug, and in “failing to provide or license a second source of manufacture.”
Other tort claims in the complaint allege that the same conduct amounts to negligence per se (a kind of automatic negligence that arises from the violation of a statute), and that the defendants’ conduct gives rise to strict liability in tort, a form of liability that attaches—regardless of fault—when consumers are injured by defective or hazardous products.
Usually, negligence cases come down to questions of fact: What was the standard of care in this particular case? Did the defendant violate that standard of care? Was that violation of the standard the cause (both actual and foreseeable) of the plaintiff’s injuries? All of those issues will be relevant here, especially the first one. Does the owner of a drug patent or its exclusive licensee have a duty to foresee production problems and plan for shortages? When that exclusive licensee faces shortages, does tort law require the patent holder to abrogate the exclusive license and bring in other manufacturers?
But these negligence claims will also raise some novel questions of law. Most importantly, can the user of a drug developed and patented under the Bayh-Dole Act sue the developer for negligent exercise of its patent rights? Additionally, there will be issues concerning the interaction between state negligence law and federal law, including Bayh-Dole itself and the Federal Food, Drug and Cosmetics Act, in particular whether the federal law supersedes (or preempts) state law in this situation.
In the second category of claims, the negligence allegations are repackaged as violations of numerous state consumer protection and unfair trade practices statutes, and as breaches of “warranties of merchantability and/or fitness for a particular purpose” (¶ 62)—claims that are typically raised against manufacturers of mass-marketed consumer products. The claims in this category are likely to raise issues similar to those raised by the negligence claims, and to rise or fall with them.
The third category asserts a single and, to my knowledge, unprecedented legal theory: that the defendants’ “unreasonable” use of their publicly funded invention creates liability to injured patients under the Bayh-Dole Act itself. In legal terms, the theory presumes (1) that Bayh-Dole imposes a duty on private parties who use public funds to develop a patented product to use their invention in a “reasonable” (whatever that means) way; (2) that the duty extends to the intended beneficiaries of that product; and that (3) an intended beneficiary of the product who is injured by the developer’s “unreasonable” (again, whatever that means) use of the invention can sue (in legal jargon, has standing to sue) the developer. Since this claim is so novel, there are no standards for evaluating it or predicting how a court is likely to respond.
An End Run Around Bayh-Dole? Overall, the suit represents an effort to introduce private enforcement to Bayh-Dole. That is, Bayh-Dole has usually been viewed as defining a relationship among government funding agencies, grant recipients (like universities) and, at least indirectly, for-profit private companies. Government agencies fund research at universities. To promote rapid commercialization of research results, Bayh-Dole permits the universities to patent those results. The universities typically transfer or license the patents to private companies, often faculty-led spinoffs. To ensure that the public gets the benefit of publicly funded research (or, as Bayh-Dole puts it, to “protect the public against nonuse or unreasonable use of invention”), the government agencies retain an enforcement mechanism: the threat of marching in and exploiting patented inventions themselves or licensing others to do so. Except that the government has never marched in, even when—as here—compellingly affected members of the public ask them to.
Understandably frustrated by the NIH’s inaction in the face of a critical Fabrazyme shortage, these plaintiffs have tried to inject themselves into the Bayh-Dole scheme as private enforcement agents. The suit seeks to do an end run around government march-in rights by creating substantive standards for responsible exercise of patent rights facilitated by Bayh-Dole, and then allowing private parties to seek damages for violations of those standards. If successful, the case would revolutionize the management of private rights derived from federally funded research; whether for better or worse is hard to say at this point. I also emphasize the if: so novel and creative is this lawsuit that it is all but impossible to predict how it will unfold.
The defendants’ first response to the complaint is nominally due sometime in late March or early April, depending on when it was served, but that deadline is often extended by agreement. Whenever the response comes, look for legal challenges to all of the plaintiffs’ theories, likely beginning with a motion to dismiss the complaint.