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PRICING FORMULA AGREEMENT PRIOR TO NIH/INDUSTRY LICENSING DEALS

This article was originally published in The Gray Sheet

Executive Summary

PRICING FORMULA AGREEMENT PRIOR TO NIH/INDUSTRY LICENSING DEALS would be required under "The Federal Research and Product Commercialization Act," which was introduced by Rep. Ron Wyden (D-Ore.) March 11. In a statement accompanying introduction of the bill, Wyden said that "under my proposal, the federal government and its private grantees, including universities and research institutions...would be obliged to negotiate a pricing formula before entering an agreement" with industry. The bill (HR 1334), whose requirements would go into effect in FY 1994, also would require an applicant seeking a Cooperative Research and Development Agreement (CRADA) with NIH to "specify the royalties to be paid to the National Institutes of Health" that are "reasonably related to the amounts expended" by the agency. Wyden had indicated that he was preparing legislation to require up-front price negotiation for NIH licensing deals when he appeared as a witness before a Feb. 24 hearing of Sen. David Pryor's (D-Ark.) Special Committee on Aging. Under Wyden's legislation, NIH and its grantees would also be encouraged to enter co-licensing agreements with more than one company for the development and marketing of a product. Co- licensing, Wyden noted, would "ensure a greater level of price competition in the market." NIH would solicit multiple commercial parties for product development through a "competitive process of bidding," the bill stipulates. A solicitation of applications would be announced in the Federal Register. If NIH locates only one commercial party qualified to enter a CRADA, Wyden's intent is that the commercial partner bring the product to market at a price no higher than the median cost of currently marketed products for a similar indication. Upon selection of a CRADA partner, an announcement of the agreement would be published in the Federal Register. According to the bill, an agreement would not become "legally binding" until the expiration of a 90-day period beginning from the publication date of the register notice. Wyden staffers have indicated that they are interested in receiving comments on the legislation. Based on the comments, a revised version of the bill may be introduced at a later date.
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