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Executive Summary

BARR LABS GRANTED NONEXCLUSIVE AZT LICENSE BY NIH, contingent on whether ongoing litigation between Barr and Burroughs Wellcome determines that the National Institutes of Health is co-inventor of the drug. Under the nonexclusive licensing arrangement announced separately by NIH and Barr Labs on July 17, NIH also granted the generic drug firm the right to litigate the federal government's inventorship/ownership in the patents for the AIDS drug in Raleigh, N.C. federal court. "NIH acted on the grounds that government scientists, including Samuel Broder, MD, director of the National Cancer Institute, made vital contributions to the discovery of AZT's activity in humans against the AIDS virus," NIH Director Bernadine Healy, MD, stated. "These contributions entitle the NIH scientists to be named as co-inventors on the AZT patents." NIH's move to license the AZT patents to Barr follows a May 28 announcement by Director Healy that NIH likely would support the generic company's challenge of the Burroughs Wellcome patent. Healy made that announcement based on the grounds that "NIH believes that investigators at the National Cancer Institute should have been named as co-inventors on the AZT-related patents issued to Burroughs Wellcome." Healy based her belief on the National Cancer Institute's "unique contributions of scientific acumen and evaluation systems" to the AZT invention process ("The Pink Sheet" June 3, T&G-1). On March 19, Barr submitted an ANDA for generic AZT to FDA, requested a nonexclusive license from NIH and then notified Burroughs Wellcome on April 9 that it would challenge the company's Retrovir patent ("The Pink Sheet" April 22, T&G-4). Barr's patent action followed a March 18 suit by Public Citizen filed in D.C. federal court seeking invalidation of Burroughs Wellcome's six AZT-related patents on the grounds that the use of AZT as an AIDS therapy was discovered by NCI researchers ("The Pink Sheet" March 25, T&G-1). Burroughs Wellcome filed a motion to dismiss Public Citizen's suit May 13 and one day later sued Barr for patent infringement in Raleigh federal court. No court date has been set in the Raleigh suit. Barr and Burroughs currently are proceeding with discovery. Burroughs Wellcome's patents for the use of AZT for treating AIDS and HIV infection do not expire until Feb. 9, 2005. "Unless Barr succeeds in the North Carolina litigation, it cannot lawfully market AZT for treatment of AIDS before that date. If Barr is successful, however, it will be able to commence such marketing at the conclusion of the litigation, but under no circumstances prior to March 19, 1992" when Burroughs Wellcome's orphan exclusivity for AZT expires, Barr said in its July 17 statement. The nonexclusive nature of the NIH licensure leaves the field open to any generic manufacturer to file its own ANDA for AZT. Barr has estimated that a generic version of AZT would sell for about 40% less than current prices. A year's worth of AZT therapy is currently about $ 2,200-$ 3,000. Retrovir worldwide sales were $ 287 mil. in 1990. Calling the NIH/Barr licensing agreement "an unwise intrusion by government" into a pending lawsuit, Burroughs Wellcome reiterated in a July 17 press release its belief that company scientists were the first to conceive of the use of AZT for AIDS, asserting that "NIH has no rights in these patents, and therefore it has nothing which can be licensed or sold to Barr." Burroughs Wellcome continued: "The NIH actions raise a serious question about whether private companies, the source of most new drugs, can continue to collaborate with government scientists if they risk having proprietary rights and patents challenged years later, after the uphill battles for clinical success and commercial acceptance have been won."

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