16. Profits from Cisplatin
|Following the discovery by Barnett Rosenberg and coworkers at Michigan State University (see modules on electric fields, platinum electrodes, one scientists story) that certain platinum-containing compounds inhibited cell division and cured solid tumors resulting from cancer, cisplatin was approved by the Food and Drug Administration for the treatment of genitourinary tumors in 1978.1 Since then, Michigan State has collected over $160 million in royalties from cisplatin and a related drug, carboplatin, which was approved by the FDA in 1989 for the treatment of ovarian cancers.|
The distribution of the profits from these drugs has generated a great deal of controversy, resulting in two (unrelated) lawsuits. Let's provide some background, as well as some detail about these two lawsuits because they illustrate difficulties that can arise when universities and businesses cooperate.
After cisplatin was discovered by researchers at Michigan State, members of the university made an agreement with a pharmaceutical company, Bristol-Myers, to develop and produce the drug. This agreement was made possible with the help of a technology-licensing organization known today as Research Corporation Technology (RCT). RCT is a daughter company of Research Corporation, a charitable foundation founded in 1912, whose stated mission is to promote "the advancement and extension of technical and scientific investigation, research, experimentation, and education" by making grants.
In 1950, well before Barnett Rosenberg and his coworkers discovered the medical uses of cisplatin, Michigan State University and Research Corporation signed an agreement that stated that for any discoveries patented at Michigan State, the inventors would receive the first 15 percent of all royalties, and the remaining royalties would then be split evenly between the university and Research Corporation.2 In 1987, Research Corporation decided that investing and business activities related to "technology transfer" (such as the licensing agreements between universities where discoveries were made and companies where these inventions could be developed and marketed) could not be carried out by a charitable organization such as itself. For this reason, Research Corporation created a new daughter company to handle all its rights to patents and licenses. This new company was called Research Corporation Technology (RCT), an independent, nonprofit company that pays taxes and has no shareholders; the formation of this new company was made possible by the Tax Reform Act of 1986. Unlike its parent company, the new company (RCT) does not make grants; rather, revenues from RCT are used to finance licensing activities, patent litigation, and creation of new companies to commercialize inventions. RCT has agreementslike the one with Michigan Statewith over 100 universities.2
In 1995, Michigan State University attempted to terminate its contract with RCT by suing them. There were several reasons that the university wanted to become independent of RCT. First, representatives for Michigan State accused RCT of using its share of the profits of cisplatin and carboplatin to "unconscionably" enrich itselfparticularly because RCT was not using these profits to promote scientific research at universities; rather, RCT was using the funds to give salary bonuses to high-ranking officials at the corporation. In short, Michigan State contended that RCT was acting in a manner that was inconsistent with the charitable mission of its parent company, Research Corporation. Michigan State hoped to rectify the wrongs by seeking damages of $50 million each from Research Corporation and RCT. Second, representatives for the university stated that the services provided by RCT were no longer needed because there was enough in-house expertise at Michigan State. Finally, along with the damages sought by the university, there was a significant financial incentive for Michigan State to end its relationship with RCT.
Under the original agreement, the university and RCT evenly split the profits remaining after the inventors received their share. Under a termination clause in the original agreement, however, the university would be entitled to 70 percent of the remaining profits if its agreement with RCT ended. Both Michigan State and RCT profit handsomely from the royalty income generated by cisplatin and carboplatin: Nearly all of the universitys royalty income comes from cisplatin and carboplatin, and nearly 20 percent of RCT revenues comes from the two drugs.2 Because of this monetary component to the lawsuit, many peopleincluding officials at other universities having contracts with RCT, as well as Barnett Rosenberg, whose research group discovered cisplatin and carboplatinperceived that greed, not moral principle, was the primary driving force for the lawsuit. One official at another midwestern university having a similar agreement with RCT stated that "a contract is a contract" and that "it was good enough when they signed up." Likewise, Barnett Rosenberg, who has retired from Michigan State and now conducts research at a private research institute in Michigan, said that he didnt think that he "would have acted the way the university did." He is proud of his role in the development of these important anticancer drugs but has stated that his efforts have "led to the creation of a lot of selfish, money-hungry university personnel." He said that he puts most of the money he receives from royalties of the drugs toward research projects at the Barros Institute in Lansing Michigan of which he is president.2 Now, a settlement has been reached between Michigan State and Research Corporation Technology.
Exact details of the settlement are not available; however, it is known that RCT will continue to manage the patents and licensing for cisplatin and carboplatinbut under new terms. Furthermore, the allocation of royalty income from the two drugs has changed: Michigan State will now receive more of the royalties from carboplatin, which now earns nearly six times more money in royalties than cisplatin. (See Figure 1.)
Figure 1. After FDA approval of carboplatin for the treatment of ovarian cancers in 1989, it outpaced cisplatin in earning royalties. Reprinted with permission. 3Finally, RCT will pay Michigan State an additional $4.5 million over the next 2 years. Neither Michigan State University nor Research Corporation Technology commented extensively on the settlement, but each organization issued written statements that it had resolved its differences with the other.2 An additional benefit of the settlement for Michigan State is that the university will be represented by RCT in a second lawsuit arising from disagreements about profits from the anticancer drugs. In October 1996, a new patent was issued that allowed Michigan State to continue to receive royalties after the original cisplatin patent (issued in 1979) expired in 1996. In addition, Bristol-Myers Squibb will retain exclusive rights to the drug, as well as the obligation to pay royalties to Michigan State, until 2012. The second lawsuit has been brought by four generic-drug companies that want to manufacture their own, presumably less expensive, versions of cisplatin. Manufacture of these generic drugs would not require royalty payments to Michigan State. Lawyers for the four generic-drug companies contend that the 1996 patent should never have been issued because its fundamental claim is nearly the same as that made in the original patents. Double patenting is illegal. Because of their recent settlement with RCT, Michigan State will not be directly involved in this lawsuit because RCT is responsible for protecting the cisplatin patent.2 In short, cisplatin has produced not only physical, but also monetary, side effects. In the past few years, there have been two lawsuits contesting how the profits of cisplatin should be distributed.
(1) Pil, P., Lippard, S. J. In Encyclopedia of Cancer, J. R. Bertino, Ed. Academic Press: San Diego, CA, 1997, Vol. 1, pp. 392-410. (2) Blumenstyk, G. In The Chronicle of Higher Education, 12 Feb 1999, pp. A39-A40. (3) Stewart, J. In The Chronicle of Higher Education; 12 Feb 1999, p. A39.