patent was filed 7 months prior to the actual submission of the invention report. The formal invention report was held up for almost a whole year so that a patent could be filed. But this is not all, for shortly after Dr. Guthrie filed for a patent, he entered into an exclusive licensing agreement for the life of the patent with Miles Laboratories. This agreement was supported by the Children's Hospital in Buffalo and was approved by two voluntary health associations which had contributed a total of $50,000, but was not approved, I am glad to say, by the Public Health Service. The justification for giving Miles Laboratories a monopoly was the usual one: to induce the company to bring the product to a commercial stage and to assure the widest and most effective utilization. The hospitals in Massachusetts and in other States were producing a kit for testing 500 infants, including all costs, for $6. The granting of a license to Miles would prevent the manufacture of such kits by anyone except Miles Laboratories. And Miles Laboratories' price was $262, over 40 times the cost to Massachusetts, Louisiana, and other States. The Chief of the Children's Bureau protested the issuance of the exclusive license as contrary to the public interest. A number of States were contemplating setting up the Guthrie tests on a routine basis and were planning to produce their own materials. Financially they could not carry out a statewide program unless they manufactured the necessary materials themselves. If Miles secured the monopoly and was able to force the States to pay through the nose, this would prevent many States from carrying out their plans. None of these States could afford to institute a program if they had to purchase the kits from the Ames Division of Miles Laboratories at the price demanded or if they had to pay royalties on the materials they would manufacture themselves. The exorbitance of the Miles' price is magnified by the fact that the Guthrie test kit had already been developed, promoted and tried. A charge which is 40 times what it cost Dr. Guthrie to produce the kits for the field trials, especially when all of the basic development and promotion had already been done, is, in my judgment, an outrage. Further investigation by the Public Health Service disclosed that at least five companies were interested in obtaining a license and producing the kits at a cost similar to Dr. Guthrie's. Accordingly, the Public Health Service determined that ownership to the invention belonged to the United States and the proper action was taken. Credit for this action on behalf of the public must be given to Dr. Luther Terry, the Surgeon General, Dr. David E. Price and all those staff people connected with this action. Dr. Guthrie himself was appalled by the price Miles wanted to charge. This case, Mr. President, illustrates several points: First. Allowing private patents on Government-financed research will inevitably result in delaying disclosure of new knowledge, inventions, and discoveries, at least for as long as it takes to prepare patent applications and file them. In most cases the delay will be much longer. I have already pointed out that firms in the aerospace industry withheld information for as long as 5 years. In the field of health a delay is especially reprehensible. Second. Allowing universities, hospitals, and nonprofit institutions to control and administer patents resulting from publicly financed research is contrary to the public interest. This activity is a Government function and must not be delegated to any nongovernmental institution. In the Guthrie case which I have just described, neither the university nor the Children's Hospital at Buffalo had the knowledge, the background, or the sophistication to know what is or is not in the public interest. It was also disclosed that Dr. Guthrie's application was filed by a patent attorney who was hired by the State university system of New York for this purpose, but who was actually a patent attorney for Miles Laboratories. Educational institutions are not sacrosanct. They have withheld information from the public; they have also violated the antitrust laws. A well-known case is the development of vitamin D at the University of Wisconsin with Government funds. The patent was assigned to the Alumni Foundation, against which the Department of Justice brought an antitrust suit and won. The Comptroller General of the United States revealed a few years ago how this same university-after having received almost $3 million from the Government, the American Cancer Society, and other nonprofit organizations-assigned patent rights on 5-FU, a cancer drug, to a company which, in turn, charged exorbitant prices even to the Government. The Department of Health, Education, and Welfare in this case, also, had to intervene and reclaim the patent on behalf of the public. With the Government paying for construction, equipment, and other facilities to universities and giving them grants for all kinds of research programs, there is no reason to give them patent rights, also. I cannot see why we should set them up in the business of patent licensing. If they are educational institutions and wish to take advantage of that status, they should stay out of business. Third. The third point is the falsity of the reason given for granting a monopoly. Further development was unnecessary. Creation of a new market was unnecessary. No unusual risks were involved. Other companies were willing to produce the Guthrie kits for testing of 500 infants for $6; and they would still be making a profit. Fourth. The case also illustrates what happens when a private company gets a monopoly. In this case its price was so exorbitant that many States would have had to curtail their programs with the ultimate sufferers being innocent, mentally retarded children, who could have been saved. Dr. Guthrie and the hospitals in Louisiana, Massachusetts, and other States could produce kits for testing 500 infants, including all costs, for $6. Miles Laboratories wanted $262 for the same thing. If this is not blood money, extracted at the expense of the taxpayer, I should like to know what is. Mr. President, it is very important for the American people to know about these governmental activities. Therefore, I ask unanimous consent that some of the documents concerning the subject which I have discussed be printed at this point in the Record. There being no objection, the documents were ordered to be printed in the Record, as follows: U.S. GOVERNMENT MEMORANDUM NOVEMBER 5, 1963. To: Mr. Herschel Clesner, Inventions Coordinator, Office of the Surgeon General, PHS. From: Katherine B. Oettinger, Chief, Children's Bureau. Subject: Miles Laboratory request for exclusive commercial arrangement to develop Guthrie PKU kit. We have considered the above request in the Children's Bureau and at this point would strongly recommend to the Surgeon General that such exclusive commercial rights not be granted to Miles Laboratories. In making this recommendation, we have taken into account the following factors: 1. Expenditure of public funds in the development, promotion, and distribution and trial of this kid. In addition to funds expended by the Public Health Service for the development of the assay which is utilized in these kits, the Children's Bureau has invested a total of $242,792.27 since fiscal 1962 in the actual development of the kit, in the promotion of field trials to test the efficiency of this screening method, and in the manufacture and distribution of sufficient kits to screen 550,000 newborn infants as a part of these field trials. These field trials are currently underway with over 300,000 babies already screened (32 babies detected and confirmed as having phenylketonuria). They involve 33 States and approximately 600 hospitals. In order to carry out the field trials, we estimate that the participating States will have spent an additional $250,000 of maternal and child health funds to collect the blood samples, to actually run the assays in the laboratories, and to run confirmatory tests on the presumptive positives which the screening procedure turns up. From our point of view therefore, approximately $492,000 of public funds will have been utilized in order to develop, promote, distribute, and try out these kits when the field trials are completed. 2. Current plans of the States. While the field trials have not as yet been completed, a number of States have already made a decision that from their point of view and regardless of the overall outcome, this screening procedure is worth while and should be developed within the State as a routine screening for all newborns. As you know, the State of Massachusetts instituted this some time ago, and at present all babies born in the State are screened for PKU with this procedure. In doing this, Massachusetts is manufacturing its own materials used for this screening. A number of other States contemplating setting up this type of screening on a routine basis have indicated that they too would manufacture their own materials. Financially they feel that they could not carry out a statewide program unless they manufactured the necessery materials themselves. It seems to us that the granting of exclusive commercial rights to the Miles Laboratories would prevent Massachusetts and some of the large States now contemplating setting up this screening as a routine, from carrying out their plans. None of these States could afford to institute a program if they had to purchase the kits commercially at the contemplated price, or if they had to pay royalties on the materials they would manufacture themselves. 3. The suggested sales price at which Miles would make these kits available appears somewhat exorbitant in view of the fact that these kits have already been developed, promoted, and tried. A charge which is 40 times what it cost Dr. Guthrie to produce these kits for the field trials seems to us to be out of line when all of the basic development and promotion has already been done. While we feel strongly that, particularly for some of the smaller States, a commercially available source of these kits is essential if these States are to develop a screening program, it does not seem that an exclusive arrangement with Miles Laboratories would result in such commercial availability at a reasonable cost. There are indications that a number of laboratories would be willing to manufacture these kits with adequate quality control at a reasonable cost if Miles were not granted an exclusive commercial arrangement. It is our feeling that the rights to this screening kit should be retained by the Government in view of the investment of public funds. Retention of such rights at this time would, we feel, allow a number of States to proceed with the manufacture of their own materials for statewide programs and would allow other commercial laboratories to produce the kits for some of the smaller States at a more reasonable price. STATE UNIVERSITY OF NEW YORK AT BUFFALO, SCHOOL OF MEDICINE, Buffalo, N.Y., December 4, 1963. RUDOLPH HORMUTH, Specialist in Services for Mentally Retarded Children, Division of Health Services, Department of Health, Education, and Welfare, Washington, D.C. DEAR RUDY: With reference to your letter of November 21, 1963, here are the answers to your questions to the best of my knowledge: 1. Our cost to produce a kit for the testing of 500 infants, including estimates of all costs (labor, materials, rental and maintenance of space, etc.), and not including materials for collecting blood spots or urine impregnated paper in the hospitals, $6. 2. During my visit to Miles Laboratory last June I was told that their price for the same kit to test 500 infants would be $262. This was explained to me as only 50 cents per test. 3. Other companies who have indicated their interest in producing kits are: Fischer Scientific, Pittsburgh, Pa.; Baltimore Biological Laboratories; Difco Laboratories; Sylvana Co., New Jersey; Dade Laboratories, Miami, Fla. I think this answers all your questions; if not, please feel free to call on me. Very truly yours, ROBERT GUTHRIE, Ph., D., M.D. THE COMMONWEALTH OF MASSACHUSETTS, HERSCHEL F. CLESNER, DEAR MR. CLESNER: Your letter to Dr. Edsall, which is concerned with a proposal that a certain company be granted a license for the exclusive marketing rights for the Guthrie PKU kits, has been referred to me. Since, as you state in your letter, the Commonwealth of Massachusetts does require the PKU test by law and we do make up our own kits in this laboratory for the assaying procedure here, we are appreciative of your courtesy in inviting our comments. First, I would have some reservations about parts of the sentence you quote in the first paragraph in your letter which reads, “That such time and expenditure is warranted and justified in order to have the company produce the product under the most exacting conditions of quality control in order to insure a high order of quality and consistency of reproducibility from batch to batch, also the company will have to continue development research on the product to the point of developing modifications or even substitution in order to provide a better diagnostic aid and that it will have to conduct an extensive educational and promotional effort to obtain the widest possible distribution and usage of the product." Actually, we have not found it particularly difficult to purchase and set up the various ingredients which go into the media used, nor the other supplies to complete the testing kits. We would feel that any properly qualified and reasonably resourceful laboratory would be able to adjust and standardize the reagents used and quite economically, as they perform the tests according to the published directions of Dr. Guthrie. Furthermore, a considerable educational and promotional effort has already taken place in one way or another resulting in more than half the States now trying out the test, although of course a much wider use of the screening test is greatly to be desired. Since the test is now mandatory and performed on a practically 100 percent basis in Massachusetts, we continue to find it most efficient and economical to make up our own kits in our laboratory here. We would be very strongly opposed, and I think with good justification, to the granting of any license which in any way prevented or curtailed our making up the ingredients and supplies into laboratory assaying kits. Our present system of preparing from available commercial sources the finished materials for doing the testing is working superbly well, and quite inexpensively. Indeed, our entire cost of running the PKU tests, including professional, subprofessional, and clerk salaries and the costs of making up both the laboratory kits and the hospital collecting kits we estimate as about 50 cents per baby tested. Of this total cost only a quite small portion goes into the laboratory assay kits. Dr. Guthrie, for instance, had told me that his costs have been $6 for producing kits to do 500 tests in the laboratories, i.e., 1.2 cents per test and our costs would be roughly comparable. In our opinion, it would not be in the public interest for any patent or license to in any way prevent or curtail our laboratory or any qualified laboratory in the manufacturing of PKU kits for its own use. Further, since we have a number of ethical, competing firms that produce a variety of excellent biological products and media, the problems and complexities many of which are as great or greater than for PKU kits, I would seriously question granting exclusive rights to any one firm. By so doing, it seems to me, we arbitrarily keep out of the market other firms that might conceivably produce a better product at a lower cost. Yours sincerely, ROBERT A. MACCREADY, M.D., Director, Diagnostic Laboratories. THE COMMONWEALTH OF MASSACHUSETTS, Mr. HERSCHEL F. CLESNER, DEAR MR. CLESNER: On returning last week from an overseas trip I found at hand your letter to me of November 27 and Dr. MacCready's reply. I completely agree with everything Dr. MacCready has said, but I feel that an even stronger statement could be added. In my considered opinion the proposal to grant a license for the PKU kit to a private commercial firm,' with exclusive marketing rights for 5 years, would be against the public interest and would be contrary to the existing principles regarding patents and similar "exclusive rights" provisions. The proposal is against the public interest because it could furnish the basis for a costly monopoly on an essential public health supply item, and because, I am certain, the granting of such exclusive rights for a device developed with the support of an NLH research grant would be contrary to the spirit-if not the letter-of the unwritten rules that govern the use of such public money. The proposal would, in my opinion, be unallowable because the device and the procedure in question have been in the public domain for well over a year, 1 Your letter says "Miles" but it has been my understanding that the Ames Co. was scheduled to be granted the exclusive rights in this case. They already have a "kit" on the market. hence the granting of exclusive rights to any one firm would violate the spirit, if not the letter, of the laws governing such arrangements. My legal references and opinions may be subject to legal question since I am not a lawyer. However, I believe that the views I express are shared by the majority of scientists, health workers, and educators, and I imagine that most lay persons would take the same position as regards public policy and the public interest. Sincerely yours, GEOFFREY EDSALL, M.D., Superintendent, Institute of Laboratories. U.S. GOVERNMENT MEMORANDUM MARCH 25, 1964. Case No.: N-G116-62. Grants B-1960 and B-3935. To: Mr. Herschel Clesner, Inventions Coordinator, PHS. Subject: Grantee Invention-GUTHRIE, Children's Hospital, Buffalo, "Bacterio logic testing method ('inhibition assay') for estimating the level of phenylalanine in blood": Attached is a determination on the subject invention. The invention report was not subjected to independent scientific review because of the involvement of the Children's Bureau and the National Institute of Neurological Diseases and Blindness. Also, the question of patenting was not an issue, since patent application had been filed before submission of the invention report. Support background is as follows: 15,000 20, 672 15,000 Commercial Solvents Corp.: Mar. 1, 1962-Feb. 28, 1963_. National Foundation: Jan. 1, 1962-June 30, 1963_ Playtex Foundation: Oct. 1, 1958-Sept. 30, 1960–– Children's Bureau: Indeterminate amount of funds allocated to ? Comments: It should be noted that we requested a formal report of invention from Dr. Guthrie on January 10, 1962. We did not, however receive the report until December 14, 1962, after four followup letters and telephone conversations. Please also note that the patent application was filed by their attorney on April 16, 1962, 4 months following the first request for a formal invention report and 7 months prior to submission of the report. MISS KATHARINE A. PARENT, MARCH 30, 1964. Division of Research Grants, NIH, Through: Dr. Eugene Con-frey, Chief, DRG, NIH, and Norman J. Letker, Patent Adviser, OD, NIH: Grantee invention-Guthrie, Children's Hospital, Buffalo: "Bacteriologic Testing Method (inhibition assay) for Estimating the Level of Phenylalanine in Blood." Your determination on the disposition of invention rights for this major breakthrough indicates that the grantee's request for a period of exclusive patent rights have been subjected to a thorough evaluation and is denied. Your de termination further indicates that U.S. patent application, Serial No. 187,707 should be asigned to the U.S. Government. There is nothing in the file indicating upon what your evaluation and determination is based. Further, there is no indication as to the disposition of foreign patent rights which are equally as important as the domestic rights. Has Miles Laboratories filed in foreign countries? |