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NIH: No Tax on Blockbuster Drugs

Trying to recoup profits from big-money drugs that were developed with government grants is a bad idea that would hinder drug innovation, according to a new report from the National Institutes of Health (NIH). NIH officials say the public is already getting a fair return on its investment.

Under current laws, researchers and their institutions may collect royalties on patents derived from federally funded research as an incentive to commercialize discoveries. Last year, amid growing concern over the high price of drugs, the Senate asked NIH to reexamine its role in the development of "blockbuster" drugs with annual sales topping $500 million (Science, 27 April, p. 614; 8 June, p. 1797).

Probing the Food and Drug Administration's latest list of 47 blockbuster drugs, NIH's Office of Intramural Research found four that were developed with NIH support (see table). But when NIH floated the idea of taking a cut of royalties on these drugs, it "met ... strong resistance from the academic community," which viewed it as "a tax" that "would undermine the research enterprise," the report says, by discouraging inventors and reducing support for tech transfer offices. Most of the money that universities collect from licenses goes to pay inventors and operate these offices.

The 20-page NIH report echoes the views of academic research chiefs, who say that it's critical to keep this private income flowing. "NIH did a very careful and thoughtful job [on the report]," says David Korn of the Association of American Medical Colleges, one of several academic and industry groups that provided NIH with input.

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Full text of the report