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LES Nouv. Author manuscript; available in PMC 2013 November 12.
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LES Nouv. 2013 March 1; : 21–30.

Cystic Fibrosis Patents: A Case Study of Successful Licensing

Mollie A. Minear*, Cristina Kapustij#, Kaeleen Boden^, Subhashini Chandrasekharan*, and
Robert Cook-Deegan*
*Center for Public Genomics, Duke Institute for Genome Sciences & Policy (IGSP)

#Congressional
Fellow with the American Society for Human Genetics and National Human
Genome Research Institute, formerly with the Center for Public Genomics
^Case Western Reserve University, and IGSP summer student fellow, 2009

Abstract
From 2006–2010, Duke University’s Center for Public Genomics prepared eight case studies
examining the effects of gene patent licensing practices on clinical access to genetic testing for ten
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clinical conditions. One of these case studies focused on the successful licensing practices
employed by the University of Michigan and the Hospital for Sick Children in Toronto for patents
covering the CFTR gene and its F508 mutation that causes a majority of cystic fibrosis cases.
Since the licensing of these patents has not impeded clinical access to genetic testing, we sought to
understand how this successful licensing model was developed and whether it might be applicable
to other gene patents. We interviewed four key players who either were involved in the initial
discussions regarding the structure of licensing or who have recently managed the licenses and
collected related documents.
Important features of the licensing planning process included thoughtful consideration of potential
uses of the patent; anticipation of future scientific discoveries and technological advances;
engagement of relevant stakeholders, including the Cystic Fibrosis Foundation; and using separate
licenses for in-house diagnostics versus kit manufacture. These features led to the development of
a licensing model that has not only allowed the patent holders to avoid the controversy that has
plagued other gene patents, but has also allowed research, development of new therapeutics, and
wide-spread dissemination of genetic testing for cystic fibrosis. Although this licensing model
may not be applicable to all gene patents, it serves as a model in which gene patent licensing can
successfully enable innovation, investment in therapeutics research, and protect intellectual
property while respecting the needs of patients, scientists, and public health.
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Introduction
From 2006–2010, Duke University’s Center for Public Genomics* prepared case studies on
whether and how gene patenting and licensing practices affected clinical access to genetic
testing, at the request of the Secretary’s Advisory Committee on Genetics, Health, and
Society (SACGHS). Eight case studies covering ten clinical conditions were published in the
April 2010 Supplement to Genetics in Medicine1–8. One case study focused on genetic
testing for cystic fibrosis (CF)2. In the process of preparing this case study, we found no
evidence that the licensing practices employed by the patent holders were impeding access

*The Center for Public Genomics is a national Center of Excellence for Ethical, Legal and Social Implications Research, funded by
the National Human Genome Research Institute under grant P50 HG 003391. From 2004–2009 it was also co-funded by the US
Department of Energy. The Center for Public Genomics is administered by Duke’s Institute for Genome Sciences & Policy, and also
includes the DNA Patent Database, a core facility at Georgetown University.
 Minear et al. Page 2

to genetic testing. In order to learn more about how this successful licensing model came
about, we expanded the previous case study by interviewing key players in the process:
• Francis Collins, M.D., Ph.D.: co-discoverer of the CFTR gene and its important
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F508 mutation that causes cystic fibrosis;

• David Ritchie, Ph.D.: Senior Technology Licensing Specialist at the University of
Michigan Office of Technology Transfer (now retired) who managed the licensing
agreements for the CFTR patents from 1998 to 2011;
• Anne C. DiSante, MBA, CLP: former Senior Technology Licensing Specialist at
the University of Michigan’s Technology Management Office (now the Office of
Technology Transfer) who was present during the CFTR patent application filing
and licensing discussions; and
• Diana Wetmore, Ph.D.: who was the Vice President of Development and Alliance
Management for the Cystic Fibrosis Therapeutics Foundation at the time of the
interview.
This paper summarizes what we learned from these interviews and offers suggestions for
implementation of a similar licensing model for other gene patents. It begins with a brief
overview of CF and the science exploring the genetic basis of a devastating disease.
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Identifying the genetic basis of cystic fibrosis

Cystic fibrosis (CF) is a genetic disorder long known to be inherited as an autosomal
recessive character, and to be highly variable in its severity, duration, and spectrum of
symptoms. It can be devastating, but treatment has improved dramatically in the past several
decades. An early diagnosis is the first step in effectively managing the disease, and genetic
testing has been used in carrier screening, prenatal genetic testing, and diagnosis.

CF affects an estimated 70,000 people worldwide9, over 30,000 of whom are in the United
States10 which makes this one of the most common genetic disorders in the United States.
CF is most common among those of European descent, with an estimated 1/25 non-Hispanic
Caucasians carrying a CF risk allele11. CF is caused by mutations in the cystic fibrosis
transmembrane conductance regulator (CFTR) gene on chromosome 7, which encodes a
chloride ion channel. That is, mutations affect a large protein pore responsible for
conducting negatively charged chloride atoms through the cell membrane. Mutated CFTR
protein results in a buildup of thick, viscous mucus in the lungs, digestive tract, and
reproductive system. This mucus makes it difficult for patients to clear lung infections,
which are the leading cause of death in CF. Indeed, improved management of pulmonary
infections is one of the main reasons that mortality and morbidity of CF have dramatically
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fallen. Other symptoms include malnutrition caused by an inability to adequately absorb

nutrients because pancreatic enzymes cannot reach the intestines, salty-tasting skin,
wheezing and/or persistent cough, abnormal bowel movements, and infertility (especially in
males)12.

The most frequent mutation in CF is known as F508, which is a deletion of three

nucleotides that removes a single amino acid, phenylalanine, from the CFTR protein. This
single mutation is present on 67% of chromosomes of Caucasian patients with CF
worldwide13 and patients with two copies of this mutation (about half of all patients) have a
severe form of CF14. Part of the variability in CF is due to a large number of genetic
mutations that have variable effects on CFTR protein function. In July 2012, the Human
Gene Mutation Database listed 1538 mutations in the CFTR gene15. Some variants do not
cause CF symptoms; others are quite severe. Interaction with other genes and medical

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management of symptoms, like taking measures to prevent infections, add to mutational

variability to make the clinical course of CF unpredictable.
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The search for the genetic underpinning of CF began in the 1950s with unsuccessful
attempts to identify linkage with known blood groups16,17. As genetic mapping technologies
improved, especially in the 1980s with the discovery and implementation of restriction
fragment length polymorphisms, the pace of discovery rapidly increased. In 1987, Dr.
Francis Collins, then at the University of Michigan (U of M), and Dr. Lap-Chee Tsui and
Dr. John Riordan, both then at the Hospital for Sick Children (HSC) in Toronto, formed a
“very intense” collaboration to speed up the pace of discovery by pooling their
complementary approaches and skills18. Two years later, in 1989, the collaboration paid off:
discovery of the F508 mutation and CFTR gene was announced in three sequential papers
in Science by Lap-Chee Tsui19, John Riordan20, and Francis Collins21.

Initial discussions on CFTR patenting and licensing schemes

When the CFTR gene was discovered, Francis Collins called Anne DiSante at the University
of Michigan (U of M) Technology Management Office (now the Office of Technology
Transfer) to tell her the news; even 20+ years later, she still gets chills thinking about that
phone call.22 While the initial plan was to file a patent application prior to the publication of
the findings, there was a news leak that the CF gene had been found so the technology
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licensing offices had to rush to file the application. DiSante recalls that they only had 2–3
days to complete the patent application so that it could be filed before they could publicly
confirm that the gene had been identified. (In the United States, an inventor can publicize
the discovery or invention before filing a patent application, but many other jurisdictions do
not have such a grace period and any public announcement vitiates the subsequent ability to
get worldwide patent protection.)

All of the interested stakeholders, including the U of M, the Toronto HSC, the Cystic
Fibrosis Foundation (CFF) as represented through Robert Beall, and the Howard Hughes
Medical Institute (which funded Dr. Collins as an HHMI Investigator), supported filing for a
patent to protect this discovery. It was obvious that diagnostic and therapeutic applications
might develop from understanding the molecular details of the gene mutated in CF. The
development of therapeutics, in particular, would require substantial investments over long
periods, and might benefit from patent incentives. Therefore, patenting made sense to the
scientists, their nonprofit institutions, and disease advocacy groups.

In spite of the rush to file the patent application, considerable thought and attention were
devoted to constructing an appropriate licensing strategy to allow use of the CFTR gene
sequence in various applications, including carrier screening, diagnostics, therapeutics, and
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research. The primary issue considered during these deliberations was anticipating who the
potential licensees might be as well as how they might use the technology. One group of
potential licensees was clearly interested: clinics and hospital laboratories that wanted
licenses to perform CF testing. The U of M and the HSC wanted to make a distinction
between the companies and hospitals that would do in-house testing (so-called “homebrew
diagnostics” or laboratory-developed tests) and companies that would manufacture and sell
diagnostic kits. Broad access to diagnostics was important to the U of M, the HSC, and the
CFF, and Anne DiSante recalls that they wanted to make sure that everyone who wanted to
do “homebrew diagnostics” had the right to do so. This meant that the license had to be
affordable to small nonprofit operations.22 Moreover, it was clear that although the F508
mutation was present in 70% of CF cases, there were an unknown number of additional
mutations that would be discovered in the future that would also need to be screened for
diagnostic and carrier screening purposes. The optimal test approach might depend in part

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on mutational complexity that was not known when the patent application was filed. Francis
Collins recounts that “it was not clear over the long term what the actual diagnostic platform
would be that would be most appropriate for getting the highest sensitivity for detecting CF
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carriers.”18 If the F508 mutation was exclusively licensed to a single entity, the platform
for detecting CF mutations might not evolve as rapidly as technological changes would,
thereby potentially “squash[ing] the field in the long run by tying yourself to one company
that might not have the best technology…[to] reduc[e] cost and improv[e] accuracy”18.

Licensing the CFTR patents was also a tool for managing the quality of genetic testing on at
least one occasion2. In that instance, the U of M was informed that a laboratory was
advertising CF testing, while not adhering to quality control standards or the professional
medical guidelines for testing and counseling. David Richie from the U of M called the
laboratory, letting them know about the U of M’s patent rights and suggesting they get a
nonexclusive license, but also noting that such licensing came with commitments to abide
by professional standards23. No notification letter was sent, and apparently the laboratory
quietly withdrew from the market, or at least stopped advertising its CF testing service so
publicly. Discussions with several other non-licensed companies are currently ongoing,
suggesting that enforcement issues are always present with any patented technology.

Considerations for therapeutics were entirely different. Companies wanting to develop CF

therapeutics would face a long slog. Not much was known about whether a potential protein-
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based therapeutic could be developed, since the function of the CFTR gene was not yet
known, other than hints it was an ion channel for chloride. However, gene transfer was a
very hot technology in the late 1980s and hopes were high that gene transfer could become
gene therapy, a “cure” for CF, by replacing the defective CFTR gene in mucus-secreting
cells of the lung epithelium and other tissues. Because the development of any therapeutic
would require significant investment from a biotechnology or pharmaceutical company to
bring a product through proof of clinical mechanism, clinical testing, and U.S. Food and
Drug Administration (FDA) approval, companies researching therapeutic options would
want some form of exclusivity to protect those long-term, large investments. Indeed,
DiSante recalls receiving many phone calls from biotechnology companies interested in
taking out exclusive licenses for gene therapy research. However, the main challenge posed
by conferring exclusivity to a gene therapy company was that there were several potential
venues through which exclusivity could be granted: (1) the CFTR gene sequence itself that
would be inserted into a CF patient, (2) the vector or other delivery vehicle that would
deliver and insert the new gene into cells, or (3) the CFTR protein. There were many
different biotech companies at the time, exploring different delivery vehicles and with
different technical approaches, and some U of M/Toronto patents were potentially relevant
to these approaches. The U of M and the HSC had no way of knowing which of these
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approaches had the best chance of treatment success—Anne DiSante recalls that she asked
Francis Collins which of the companies had the “right vector” and he didn’t know, so she
thought “…well if Francis can’t figure it out then how the heck am I going to figure it
out?”22 Since different companies were pursuing their own delivery vehicles and vector
control mechanisms, the expertise each company had with their vehicle gave them a “de
facto exclusivity”22 that didn’t seem to warrant an exclusive licensing agreement on the
gene sequence. As DiSante recalled, “We felt the exclusivity [with respect to gene therapy]
would come [with] the delivery vehicle.”22 There was one exception, a patent that was
exclusively licensed. It was a U of M patent (US patent, 5,240,846) stemming from the
original August 22, 1989 patent, but as granted it only included James Wilson and Francis
Collins as inventors, both from the U of M. It was exclusively licensed to Wilson’s startup
firm when he moved to the University of Pennsylvania. Exclusive licensing is quite common
as an incentive to startups, and in this case a particular vector system was covered. But the U
of M did not want to exclusively license the gene itself, because that would block

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development of alternative delivery and insertion systems for gene transfer, as well as using
the CFTR gene or CFTR protein as therapeutic targets.
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The inclusion and active participation of the CFF patient advocacy organization was another
important factor in the initial patenting and licensing discussions. It distinguished the CF
licensing process from patenting and licensing of Canavan Disease4 and BRCA5 patents for
genetic testing, where patent-related controversy dogged the history of genetic diagnostics.
CFF’s Diana Wetmore said that the foundation felt very strongly about non-exclusive
licensing for the CFTR gene patents, a message relayed back to the U of M through Francis
Collins, who advocated on behalf of the CFF.24 DiSante recalls that even though the final
decision was not up to Collins, “his thoughts, his feelings, his concerns were very important
to us, so we listened to those.”22,25† Wetmore notes that the CFF was at the table during all
of the important discussions about how to license the patent, and U of M “listen[ed] to us
when we said that we felt strongly that [the license] needed to be non-exclusive.”24 Anne
DiSante of the U of M also recalls that the CFF was “very active in the licensing process.”22
When asked whether she thought the licensing scheme would have ultimately had a non-
exclusive component had the CFF not expressed its position, Wetmore responded “I don’t
think that’s a given.”24

One further, somewhat surprising, feature of the CF licensing scheme was the humanitarian
licensing of some of the same patents for developing ways to prevent or manage diarrheal
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diseases. Diarrheal disease is a major cause of mortality in resource-poor regions, killing an

estimated 1.5 million children each year26. It turns out that chloride channel biology may be
relevant to some common diarrheal diseases, and inhibiting the CFTR ion channel’s action
might help manage symptoms, even when caused by infectious agents. The U of M licensed
some CFTR patents to OneWorld Health, a nongovernment organization focused on
fostering products and services for developing countries2. The U of M gets a small payment
if OneWorld Health sub-licenses to a developer, but gets no running royalties on products or
services. One result of this was a three-year development agreement that Novartis and
OneWorld Health signed in 2009 to develop anti-diarrheal therapies27. From the perspective
of the U of M’s technology licensing office, this left management of CFTR licensing to a
trusted nonprofit entity with much greater expertise in global health, while promoting the U
of M’s goal of ensuring worldwide use of the technology. This comported with Point 9 of
the “Nine Points to Consider” document28, and in the spirit of global health technology
licensing for humanitarian purposes proposed in many guidance documents by the
University of California, Berkeley; University of British Columbia; Technology Managers
for Global Health; Universities Allied for Essential Medicines (UAEM)29; the Association
of University Technology Managers (AUTM)30,31; the “ipHandbook of Best Practices”32
assembled by the Centre for Management of Intellectual Property (MIHR) and Public
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Intellectual Property Resource for Agriculture (PIPRA) and other groups wanting to
promote global health through sophisticated use of intellectual property.

A final important factor that played into the licensing discussions was the mission of the U
of M Technology Management Office. DiSante recalls that their office’s primary mission
was not to maximize revenues for the U of M, but rather to benefit the public. Since the U of
M is a public university, the main goal was to get the gene sequence and associated
technology out so that it could reduce the health toll of CF for the public’s benefit. If the
technologies were successful, then the university would benefit in other areas, through
advancing and enhancing its reputation and providing a royalty stream to support education

†Dr. Collins also donated all of his patent royalties to the CFF, rather than accepting them as personal income. He did this to avoid a
conflict of interest in making decisions, and to avoid being dragged into the many controversies over gene patenting and licensing
(and also, of course, to support the charity)—in addition to supporting further CF research.

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and research. DiSante recalls that there wasn’t a particular individual or institution that they
were trying to target with their licensing strategy; the main thing was to help the public and
CF patients.22
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Licensing strategy developed for the CFTR gene patent

The licensing strategy developed by the U of M and the HSC had a three-pronged approach
intended to satisfy the needs of key stakeholders. A single exclusive license would be issued
for the vector and for therapeutics developed from it to James Wilson’s startup firm, non-
exclusive licensing would be done for gene therapy (for many delivery systems and vectors
and for the gene sequence itself) and other therapeutics development, and non-exclusive
licensing would be used for diagnostic purposes with different fees applying to in-house use
and kit manufacture. In addition, a “most favored nation” clause was added to the non-
exclusive licensing terms, so that licensees would be assured they would get the same deal
as others if licensing terms changed. The U of M holds all licenses within the U.S. and the
HSC holds the licenses for the rest of the world. However, because the F508 licenses are
executed by both institutions, both institutions share their royalty streams from these
particular license agreements with one another. The patent landscape is complex and
includes many other patents jointly held by the HSC and the U of M, a few patents only
assigned to the HSC or the U of M, and patents awarded to Third Wave Technologies, Johns
Hopkins, and others (see Appendix 1 of Chandrasekharan, et al., 20102). While the U of M
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administers all U.S. F508 licenses, the U of M granted the CFF a license allowing the CFF
to sub-license limited fields of the technology to interested parties.

DiSante was flooded with phone calls from companies interested in securing an exclusive
license from the U of M. There was pressure to select one of these companies for an
exclusive agreement, in part because it would have been more lucrative initially. Yet in spite
of this pressure, only one exclusive license was ever issued, to James Wilson’s startup firm
for use of a particular adenovirus vector that carried the CFTR gene, for a particular
approach to gene therapy. This was largely because the vector’s inventor moved from
Michigan to Pennsylvania and wanted to start a biotech firm.23 If successful, this would
have been a very expensive product to develop and test for safety and effectiveness, and so
exclusive licensing made sense, while it did not block others from developing alternative
vector systems or doing research on CFTR as a therapeutic target. Beyond this single
exclusive license, DiSante does not recall “ever exploring the terms and conditions of an
exclusive arrangement.”22 All other license agreements for gene therapy research, three in
total, were non-exclusive for the use of DNA to be incorporated into a vector.23

Diagnostics
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The U of M developed two license agreements for diagnostic purposes, one for hospitals,
clinics, and diagnostic companies for in-house genetic testing, and the other for companies
to manufacture and sell diagnostic kits. The terms for these two agreements were different:
the overall price of an in-house testing license was less than a kit license, and this made
entry into CF diagnostics less expensive23 thereby making CF genetic testing more readily
accessible to patients. The up-front payment for kits was $25,000, and for laboratory-
developed tests was $15,000 (and could be negotiated); the standard royalty for laboratory
developed tests was 6% but depending on volume and other factors, the actual royalty rate
was often in the range of 3.6%2. Ritchie and Wetmore both believe that making this
distinction between laboratory-developed tests and commercial test kits was a crucial
decision; Wetmore “suspect[ed] that the CFF would have tried to advocate for more
reasonable pricing”24 if the in-house diagnostic license fees were prohibitive; however, the
price appeared to be reasonable since several companies took out diagnostic license
agreements with the U of M2. Several firms also developed different multi-allele or full gene

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sequence-based tests or test kits that became available commercially. The patents did not
therefore produce a single-source testing service, the business model adopted by Athena
Diagnostics, Myriad Genetics, and others that has been accompanied by intense controversy
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(see case studies on genetic testing for long-QT and other cardiac channelopathies1, breast
and ovarian vs. colorectal cancer5, and Canavan vs. Tay-Sachs disease4).

The licensing practices used for CFTR patents followed the “Best Practices” suggested by
NIH’s Office of Technology Licensing. The U of M licensing officials were familiar with
discussions at NIH. Many of the licenses predated the 2003–2004 development of “Best
Practices Guidelines” that were eventually published in the Federal Register. The CFTR
licensing scheme is an illustration that some of the ideas later promulgated by NIH’s Office
of Technology Transfer were already in the air. The nonexclusive licensing for CFTR
genetic testing comported well with recommendations of the Nuffield Council on Ethics in
its 2002 report on “The ethics of patenting DNA,”33 as well as the 2006 “Guidelines for the
Licensing of Genetic Inventions”34 developed by the Organization for Economic
Cooperation and Development in Paris, and with Point 2 of the “Nine Points.”

“Most favored nation” clause

A “most favored nation” clause states that the licensor (here, the U of M/HSC) agrees to
give a licensee (here, a biotech company or other institution) the best terms it makes
available to other licensees. Although such a clause was not initially written into the non-
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exclusive license, the first licensee insisted that such a clause be added to the terms of the
license agreement. The clause was incorporated into every license the U of M has issued
since. Ritchie argues that this clause helped maintain the long-term viability of the CFTR
licensing structure by serving as a valuable tool during negotiations with companies.
Although a company may try to argue for better licensing terms by using arguments like
“the technology is over 15 years old and therefore is not worth much,” or “the F508
mutation is just one of thousands of mutations that can cause CF and therefore should be
worth a smaller percentage of the overall royalty stream,” Ritchie counters with the fact that
the “most favored nation” clause has been a part of all of their licensing agreements and that
the U of M is not willing to change that because it would require a cascade of changes for all
licensees.23 However, this clause is only present in the diagnostic kit manufacturing license
agreement; it is absent from the in-house diagnostics license, which means that the upfront
license fee and royalty rates can be more easily adjusted for in-house diagnostic purposes to
make it easier for hospitals and companies to offer CF genetic testing services.23

Sub-licensing through the CFF

According to Wetmore, the CFF holds a license from the U of M and HSC that gives CFF
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the right to sub-license to entities that wish to create reagents using the CFTR gene and for
the application of a cell line that contains the CFTR F508 mutation to identify modulators
of CFTR activity. This license is for research purposes only; the CFF license is not for
diagnostic purposes. Wetmore says that there was “no need” for the CFF to hold a
diagnostic license24 since the non-exclusive diagnostic license agreements developed by the
U of M enabled companies to compete in the diagnostic market, thus preventing a monopoly
that might have driven up the price of diagnostic testing. This lower diagnostic testing price
has had the additional benefit of enabling many states to implement CF screening into
newborn screening programs.

Part of the CFF’s goal of developing better treatments and cures for CF patients is to fund
basic research. The cell line that carries the F508 CFTR mutation can be used as a tool to
help screen small molecules so that those with the ability to correct the CF ion transport
defect can be identified and pushed into further clinical testing. This cell line is covered by a

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U of M patent, so if the CFF funded this type of research without sub-licensing rights, the
funded company would have to apply for a license with the U of M to do their research.
Instead, because the U of M gave the CFF the right to sub-license, companies only need to
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deal with the CFF, thereby reducing the amount of time they have to deal with obtaining a
license from the U of M and expediting their research by a few months. Furthermore, as a
part of their agreement with the U of M, the CFF pays an up-front fee for each sub-license it
grants; this earns a small royalty stream for U of M but does not limit CFF’s freedom to
operate, and its licensing costs are small and predictable. Thus, CFF research funding can be
directly used for research purposes without concern for downstream licensing risks. The
CFF, in turn, gives the U of M an annual report detailing its active licensees. Other CFTR
licenses from the U of M, beyond the CFF and OneWorld Health examples cited in this
report, do not have sub-licensing rights; additionally, the license agreement between the U
of M and the CFF is not exclusive, meaning the U of M can issue additional non-exclusive
licenses to other entities.23,24

One of the benefits of this arrangement for the U of M is that the CFF handles all the
administrative aspects of non-exclusive licenses for CFF research collaborations. Although a
few companies have gone directly to the U of M for a non-exclusive research license, the
university prefers that companies work through the CFF.24 Because the university wants to
benefit the public by helping the CFF achieve their mission of helping CF patients, they
have a lower licensing fee for the CFF license than they otherwise might have obtained
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because keeping costs low helps the CFF fund research projects to which they then offer
sub-licenses. The sub-license fees are paid by the CFF on an annual basis, which gives them
an opportunity to make sure that sub-licensees are actively working on the research project;
if work ceases then the CFF stops paying the sub-license fee for that company. In addition,
when working with a company the CFF is able to offer an enticing deal—a license that will
be needed for research on CFTR that will be “free” to the company since the CFF will pay
for it, the CFF will handle the administrative burden of obtaining that license, and the CFF
will fund the research project.24

The diagnostic-therapeutic nexus

The recent development of the drug ivacaftor (Kalydeco®, Vertex Pharmaceuticals) is worth
noting, because it illustrates the tight linkage that is emerging between some genetic
subtypes and treatment. It is also a major success in the two-decade quest for better CF
therapeutics building on the CFTR gene discovery. In January 2012, the Food and Drug
Administration approved ivacaftor to treat the roughly four percent of CF patients with the
p.G551D mutation in the CFTR gene35. This is one of several mutations clustered in exon
11 of CFTR that was covered by a patent (US 5,407,796) held by Johns Hopkins University
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(JHU) on mutations discovered several years after the more common F508 mutation. The
Hopkins patent expired in April 2012. The drug has only been approved for those with a
p.G551D mutation who are over 6 years old, although it is now being tested for other uses
and in children as young as 2.

The drug developed from a long collaboration between CFF and Vertex, including funding
from both institutions. Use of the drug is tied directly to subtyping through genetic testing.
This story has a successful ending, but it also shows how the complex patent landscape
could have thwarted its development, because the final treatment necessarily involves
several patented technologies. The original CFTR patents held by the HSC and the U of M,
the exon 11 CFTR patents from JHU, and the patent on the inhibitory drug itself (US patent
7,495,103, expiring May 20, 2027) are all embodied in the clinical decision pathway. The
final therapeutic patent is exclusively controlled by Vertex (with a royalty agreement to
CFF), but if the CFTR DNA sequence, method, and mutation patents had been exclusively

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licensed, developing and using ivacaftor would have been contingent on clearing diagnostic
rights, making the situation more complex. Such multi-lateral licensing schemes are
possible, indeed they are becoming more common, but they also require negotiation,
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additional cost, and a risk of failure.

It is also worth noting that the drug resulted from a partnership between a disease advocacy
organization and a for-profit firm, and the three-month priority approval process at FDA was
expedited by trials that involved 213 patients, ages 6 to 11. Only 1200 total US patients are
estimated to have the requisite mutations. The two clinical trials thus required access to
patients and their families, a drug-development team, and rigorous clinical efficacy and
safety trials that drew heavily on the resources and organization of the collaborating
partners, as well as illustrating the new model of therapeutics developed for genomic
subtypes. The story of ivacaftor development has been detailed by Feldman & Graddy Reed,
in a paper presented at the “Making Quantum Leaps in University Technology Transfer”
Workshop held at Johns Hopkins University, Baltimore, MD on April 19, 2012.

Long-term success of the CFTR licensing strategy

As of 2009, the U of M was issuing about 1–2 license agreements each year, a rate that has
stayed constant since 1998 when David Ritchie joined the U of M’s Office of Technology
Transfer. There were 18–20 active licenses at the time of our 2009 interview. Three or four
licenses had lapsed because research on gene therapy failed to progress to market.23 The
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CFF had six active sub-licenses in 2009, five of which were for therapeutic research and the
sixth for generating a cell line.24 The nonexclusive terms of the license also avoid the
potential problem of patents on individual genes hindering whole-genome or all-exome
analysis, a topic of current concern for genes that have been exclusively licensed.

After ten years of working with the CFTR licensing strategy, Ritchie thinks that there is very
little, if anything, that he would change about it, and that this strategy would be suitable for
other universities and institutions to use:
“…the fact is that this was a well-designed license agreement. It’s held up well
over these years through maybe 20 different negotiations with different companies,
and companies end up doing the license agreement with it. A lot of times they’ll
want to come back and will want to change multiple aspects of it, but in the end
after sometimes six months of negotiations we end up with kind of the same
language. … [I]t’s done its job well.”23
Although this particular licensing strategy is currently only used by the U of M with respect
to the CFTR patent, Ritchie does draw from it to help draft other licensing agreements with
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other entities:
“There are often times situations that arise during negotiations that I may have with
another company where…my mind will immediately revert to certain terms in the
CF license. And I can use that license as kind of a separate template to carry on
further discussions in terms of offering the company here’s an alternative to the
licensing design for the agreement we’ve been talking about, ‘Let’s try this other
thing, okay?’ One example is that sometimes companies will want to do both in-
house testing as well as make products and so I’ll immediately suggest that we do
two separate licenses for that, when they initially want to come in and do one
license. We don’t use CF as a template for all other agreements, but we take bits
and pieces out of it here and there to fit into our standard agreement if, in fact, a
situation warrants.”23

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Applicability of the CFTR licensing strategy to other gene patents

Although the licensing strategy developed by the U of M, the HSC, and the CFF has worked
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well for CF and the CFTR gene patent, this strategy would not necessarily be successful
when applied to other diseases or other gene patents. A major factor in the strategy’s success
is the involvement of the CFF, a patient advocacy organization that took on some of the
administrative aspects of licensing to make this process more streamlined for companies
engaging in therapeutics research. The CFF was founded in 1955 and has grown to become
a savvy non-profit organization with the staff and resources required to take on the
administrative burden of sub-licensing; not all diseases have such sophisticated patient
advocacy organizations with the resources to take on this burden. Additionally, the CFF was
able to attract more interest in therapeutics research by performing a market analysis to
predict how much a pharmaceutical company might expect to make if it were to develop a
successful CF treatment.24 Another factor is the prevalence of CF. It is common enough to
attract attention, and indeed the success of ivacaftor shows there was sufficient commercial
interest to develop a therapeutic for a genetic subtype of low prevalence (earning Orphan
Drug designation). Prior to this analysis, there was an assumption that with CF being a rare,
orphan disease that any CF treatment would not generate much revenue. However, by
showing that there were enough patients, that CF would require a chronic therapy (as
opposed to a one-time therapy or one used just when symptoms are exacerbated), and that a
therapy would add to CF patients’ life expectancy, an estimated $200–800 million per year
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could be generated by a CF treatment.24 Not all of these factors will hold true for rarer
diseases or for diseases that would not require a chronic therapy. And indeed the ivacaftor
model will be held up as a success only if it generates sufficient revenue to warrant future
similar investments, and if its high cost does not hinder utilization. Furthermore, if a patient
advocacy organization lacks the monetary resources required to fully fund the initial stages
of therapeutic research and to cover the cost of sub-licensing, then this licensing strategy
might not be as successful as it has been for the CFTR patents.

Conclusions
Discovery of the CFTR gene and its CF-causing F508 mutation in 1989 culminated an
intense years-long “race” to find the gene mutated in those with cystic fibrosis. Despite the
rush to publicize an important discovery and a news leak that forced quick action to preserve
world-wide patent rights, careful deliberation and engagement of key stakeholders enabled
the U of M and the HSC to develop a licensing strategy that held up well over time. It
enabled continuing research, wide-spread CF diagnostic testing and newborn and carrier
screening, and facilitated development of CF therapeutics. One vital aspect of this licensing
strategy was the engagement of the CFF, a patient advocacy organization that reached a
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licensing agreement with the U of M that enabled it to offer sub-licenses to companies that
wish to pursue CF therapeutic research, with the caveat that the CFF fully fund the initial
stages of such research. This agreement benefits the U of M since the CFF takes over the
administrative burden of handling non-exclusive licenses, and it benefits the CFF by having
a low sub-licensing fee agreement with the U of M. Different license agreements between
in-house diagnostic testing and kit manufacture and sale make it possible for many hospitals
and clinics to offer in-house CF genetic testing by removing the large financial barrier
imposed by a high licensing fee. The patent royalties received by one patent inventor,
Francis Collins, are donated to the CFF and have provided the CFF with a revenue stream
that helps funds therapeutic development, as highlighted by the recent success of the drug
Kalydeco®. Although this model may not be successful when applied to patents that cover
genetic mutations that influence rare diseases or diseases without a stable and savvy patient
advocacy organization, it has held up well over the past two decades through negotiations
with a variety of companies.

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Perhaps the most impressive detail to emerge from this case study is the change in CF
patients’ life expectancy. When the CFF was founded in 1955, a child born with CF was not
expected to survive until elementary school; in contrast, the life expectancy today is over 37
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years, and is increasing at the rate of about one year per year.24 Obviously, many factors
contribute to this progress, but one important factor has been earlier diagnosis that enables
early aggressive management of CF symptoms and lung infections. The successful
nonexclusive licensing structure developed for the CFTR gene has made CF genetic testing
widespread, thus enabling newborn screening to help diagnose CF early in life. Additionally,
development of novel therapeutics like Kalydeco® has helped to increase the lifespan of CF
patients with the p.G551D mutation.

The precise molecular definition of CF led to genetic subtyping; to earlier and much more
precise diagnosis, and thus improved medical management; and to the first genotype-
specific treatment. Wide access to genetic testing and screening made it easier for states and
hospitals to implement newborn screening programs; earlier detection of CF meant that
patients could be started on nutritional supplementation sooner; and medical care providers
could more aggressively intervene to prevent lung infections, a leading cause of death
among CF patients. Had CF diagnostic testing not become as accessible as it was, these life
expectancy improvements may have been less impressive or happened later. Patenting and
licensing are only a small part of the story. They are perhaps most important for how they
managed to keep out of the way—how the licensing strategy retained freedom to do research
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and creative use of the patent incentive to promote promising therapeutics while also
permitting many approaches to screening and diagnosis by many providers and generating
modest revenue for further research and education.

Acknowledgments
This research is funded by the National Human Genome Research Institute (P50 HG 003391), and the Ewing
Marion Kauffman Foundation. The contents of this publication are solely the responsibility of the Center for Public
Genomics (Duke University) and not necessarily the views of NIH, NHGRI, or the Kauffman Foundation.

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