Cancer Drug Royalties: Celgene Battles Boston Hospital

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Two blood cancer-fighting drugs from Celgene, Revlimid and Pomalyst are at the center of a lawsuit playing out in federal court between Boston Children’s Hospital and the pharmaceutical company, Celgene Corp. (NASDAQ:CELG), reports the Wall Street Journal. The two drugs from Celgene help to prolong the lives of patients with multiple myeloma, a rare form of blood cancer, but the treatments are both derivatives of thalidomide, a drug that rose to infamy in the 1960′s for causing a myriad of birth deformities in newborns. Boston Children’s Hospital claims that it is owed royalty payments for the work that the institution did to help uncover thalidomide’s cancer-fighting properties.

As of March 2013, Celgene ceased making payments to Children’s for the drugs in violation of an earlier, 2002 agreement with the hospital. News of the lawsuit is indicative of a larger issue in which pharmaceutical companies are increasingly relying on academic institutions for help with the research and development of new therapies. The partnerships benefit both parties, but the relationships are becoming increasingly rocky as academic institutions are becoming more staunch about defending their intellectual property.

The current contract, reached between the two partners in 2002, stipulated that Celgene pay Children’s a 1 percent royalty on future sales of Revlimid, which at the time was still under development, and a 2.5 percent royalty on certain derivatives of the drug, which Children’s says includes Pomalyst, which was approved for sale by the FDA in 2013. In the current lawsuit, Children’s says the 2002 contract requires Celgene to make royalty payments through 2013, and allows for an extra three years of payments if Revlimid’s patents are extended beyond their initial expiration, which they were, in 2008.

Robert Cook-Deegan, a research professor at Duke University says the conflicts are “the seamy side” of what on the surface appears to be a momentous and happy story. “You have this drug that caused birth defects that’s gone on to help treat cancer. But underneath that, everyone wants a piece of the action,” reports the Wall Street Journal.

Celgene’s former chief scientific officer David Stirling argues that the payments to Boston Children’s were “overly generous,” saying that “we were the only ones who did all the drug development in the classical sense,” while Dr. Robert D’Amato, a Boston Children’s Hospital researcher who was the first to theorize that thalidomide could be used to treat multiple myeloma by helping to cut off the blood supply to cancerous tumors. D’Amato is quoted as saying “the approval of Pomalyst is like seeing your child graduate from college.”

Boston Children’s Hospital is one of the leading pediatric care centers in the country; the 395-licensed-bed facility is home to more than 1,100 research scientists, as well as serving as a teaching hospital for Harvard Medical School, reports the Wall Street Journal. Winning the dispute could mean millions of dollars for the hospital; global sales of Revlimid are expected to top $4 billion this year, while sales of Pomalyst are expected to bring in $295.6 million, and grow by approximately a $1 billion per year by 2016, according to current analysts estimates per the Wall Street Journal.

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