Patents and Innovation in Cancer Therapeutics: Lessons from CellPro

How scientific knowledge is translated into diagnostic and therapeutic tools is important to patients with dread diseases as well as to regulators and policymakers. Patents play a crucial role in that process. Indeed, concern that the fruits of federally funded research would languish without commercial application led to the passage of the Bayh-Dole Act (PL 96-517), which reinforced incentives to patent the results of inventions arising from federally funded research (Eisenberg 1996). Subsequently, rates of patenting among U.S. academic institutions have increased (Henderson, Jaffe, and Trajtenberg 1988). A recent survey by the Association of University Technology Managers counted 20,968 licenses and options from 175 academic institutions and 6,375 patent applications filed in fiscal year 2000 (Pressman 2002). Analysis suggests that the number of academic patents was already rising when the Bayh-Dole Act was passed in 1980 (Mowery et al. 2001), but it is clear that the act reinforced the patenting norm in research universities and mandated a technology transfer infrastructure at those universities that had not yet established a technology licensing office. Several concerns were raised when the Bayh-Dole Act was debated. First, patents have a potential danger, as they can be used to block products from the market and protect monopolies. Indeed, establishing a limited monopoly is the very purpose of patenting. The Bayh-Dole Act thus includes a provision intended to limit monopoly rights when they might undermine public health. Under certain circumstances, government agencies can “march in” to protect the public interest. The second concern refers to the impact of patenting on open science and academic norms. This was not heavily debated before Bayh-Dole passed, in part because the act's central focus was on small businesses and nonprofits rather than academic institutions. Now, however, the possible untoward effects of academic research institutions pursuing their business interests while hindering access to research tools and reducing open publication are receiving attention (R.R. Nelson, personal communication, January 2002). We present in this article a case study of intellectual property that affected cancer treatment. The case concerns the rise and demise of CellPro, which developed cell separation devices for making stem cell suspensions for bone marrow transplantation. CellPro was a Seattle-area start-up firm founded to develop the technology. The firm was the first to market and secure the approval of the U.S. Food and Drug Administration (FDA) of a cell separation device, but it ultimately went bankrupt and sold its technology assets after losing a patent battle with Johns Hopkins University, Baxter Healthcare Corporation, and Becton-Dickinson & Company. We address how patent law and science claimed this discovery in different ways and for different purposes. The CellPro case was the first time that any federal agency—in this case, the National Institutes of Health (NIH)—was petitioned to “march in” to compel licensing under Bayh-Dole. The relevant patents were owned by Johns Hopkins and exclusively licensed (and sublicensed) to large medical device firms. The case shows the Bayh-Dole statute in action and illustrates the role of patents, particularly the importance of patent licensing practices. We begin by describing the events according to the accounts of different stakeholders, then turn to observations about the policy decisions made during this process, and conclude with options for policy change. The story starts with the personal involvement of CellPro's former CEO, Rick Murdock, whose mantle cell lymphoma was treated clinically with CellPro's Ceprate instrument. The account continues through two federal district court trials in Delaware, presided over by Judge Roderick McKelvie, followed by the review of those decisions by the Court of Appeals for the Federal Circuit, which hears appeals for all patent cases in the United States. While the second trial was under way, CellPro petitioned the federal government to “march in” and compel the licensing of the Hopkins patents. We then look at the role of Johns Hopkins and make some observations about licensing and the role of federally funded research under the Bayh-Dole statute. Patents are important, and for Johns Hopkins University, they were a source of revenue. For the large device firms, particularly Baxter, patents protected them from competition and fostered investment in developing a cell separation device. For CellPro, however, the Hopkins patents spelled doom. Indeed, patents, particularly for pharmaceuticals, are coming under increased scrutiny throughout the world. Our purpose here is not to prove that patents are either good or bad but to show how patents encourage investment in research and development and can also hinder innovation. Their net impact on social welfare is uncertain. This article examines three features of patents: (1) the breadth of patent claims; (2) the way that patents are licensed and sublicensed, which is influenced by owners and licensees; and (3) the secrecy that limits accountability to the public, even when inventions result in part from federal funding and are conducted at academic institutions whose core values are open discourse and the creation and dissemination of knowledge. For two decades, under the Bayh-Dole statute, universities have drifted into practices that can pit their business interests against their academic values. The CellPro story raises difficult questions about the use of federally funded research and university-based intellectual property. It also shows how patent law may or may not play out differently in medical fields than it has in other high-tech economic sectors. Enhancing or obstructing computer technology or automobile manufacture is different from quashing a firm producing a life-saving cancer drug or device. Cancer therapeutics are subject to an additional layer of moral (and political) analysis. Although the principles of traditional patent law still apply, they collide with norms of fairness more often, and sometimes with greater effect, than they have done in other high-tech fields. Our story starts from Claim 1 of U.S. patent 4,965,204, issued and assigned to Johns Hopkins University on October 23, 1990: “A monoclonal antibody which specifically binds to an antigen on non-malignant, immature human marrow cells, wherein said antigen is stage specific and not lineage dependent, and said antigen is also specifically bound by the antibody produced by the hybridoma deposited under ATCC Accession No. HB-8483.”1 The syntax and circumlocution are typical of patent claims, which are constructed as factual assertions linked by verbs that may sound like standard English but often have a specific legal meaning. (For example, a DNA sequence “comprising” ACTG refers to any sequence that includes that sequence within it, whereas “consisting of” ACTG means exactly and only ACTG. That is, “comprising” has a much broader scope than “consisting of” does.) Awkward sentences like these can be worth billions of dollars. Claims define the boundaries of the intellectual property that its inventor controls. Patents cost tens of thousands of dollars to obtain (and many times that amount for worldwide rights) and can cost millions to defend in litigation. For example, the legal fight over patents on recombinant insulin cost around $30 million (Marshall 1997). In our story, Claim 1 killed CellPro and thereby eliminated Baxter's competitor, increased the price (and presumably Baxter's profits), and suppressed an alternative technological approach to cell separation devices. CellPro's technology now belongs to its nemesis, Baxter.