Some Government Contracts for COVID-19 Products Dodge Affordable Pricing Laws, Report Says

At least five drug developers working on COVID-19 therapeutics and vaccines with U.S. government funding have contracts that bypass laws that ensure taxpayer-funded drugs and vaccines are affordable, a new report says.

The Department of Defense (DOD) and the HHS Biomedical Advanced Research and Development Authority (BARDA) signed contracts with the companies using so-called Other Transactions Agreements (OTAs) that give the government fewer rights with regard to the pricing of any products, according to the advocacy group Knowledge Ecology International (KEI).           

The OTA contracts generally involve a renegotiation of provisions, such as the ownership of patent rights and the Bayh-Dole Act provisions that authorize the federal government to intervene if pharma companies charge unreasonable prices for federally funded drugs, biologics, vaccines and other medical products.

In March, Congress passed the CARES Act, which suspends a Bayh-Dole Act provision that required BARDA to get approval from HHS before using OTAs that are worth more than $100 million.

Details of the contracts were obtained via U.S. Freedom of Information Act requests. The contracts are with:

• Johnson & Johnson subsidiary Janssen for a vaccine;
• Jannsen contract for a therapeutic;
• Roche subsidiary Genentech for a therapeutic (the use of biologic drug tocilizumab, marketed as Actemra, for COVID-19);
• Regeneron Pharmaceuticals for a COVID-19 therapeutic; and
• Ology Bioservices (previously Nanotherapeutics) for a vaccine.

“While heavily redacted, the contracts shed considerable light on the extent to which the federal government has limited or eliminated altogether its rights in intellectual property and data arising from the COVID-19 research and development that it is funding,” said KEI in a statement.

“Genentech takes the responsibility of pricing our medicines very seriously, taking into consideration the value they bring to patients and society and the critical importance of enabling access for those who need them,” the company said in response to the allegations.

None of the other companies contacted commented on the report. — Suz Redfearn