NIH Scientists Receive Royalties from Big Pharma

Under 15 U.S. Code § 3710c, federal researchers, whose work was patented and commercialized, receive royalties at the rate of at least 15% of what the US government receives from the licensees, capped at $150,000 per person, per year. NIH and CDC pay their scientists 25% (on amounts over $50,000). These royalties are paid even after the person leaves the government employment and continue after his or her death.

NIH, NIAID, or CDC researcher who contributed to the development of a novel drug or therapy, and was named as one of the inventors on a commercialized patent, may be entitled to $3 million in royalties over the 20-year lifespan of the patent. 

Federal agencies and laboratories, including NIH, NIAID, and CDC, are also encouraged to spread collected royalties among employees “who are not an inventor of such inventions but who substantially increased the technical value of such inventions”.

These royalties directly conflict with the main purposes of the National Institutes of Health and federal medical labs:

 – to have the ability and independence to honestly evaluate drugs developed by private pharma companies

 – to undertake research and development for which the private sector has no incentives.

Since Dr. Fauci and other top government healthcare scientists, who are responsible for recommending specific drugs & therapies, receive substantial income from commercialized patents, they have huge conflicts of interest, largely unknown to the public. 

Different government scientists receive royalties from different patents, and they might trade favors among themselves. Also, the drugs interact in the market. Introduction or expansion of recommendation for a drug X might decrease sales of a competing drug Y and increase sales of a complementary drug Z, providing royalties income to one or another government scientist or bureaucrat. The temptation to add a few millions of dollars to one’s net worth by changing a couple of words in a document used in the decision making process might be too strong.

Also, the patent system already incentivizes pharma companies to develop novel drugs and treatments, which can be protected by patents and sold for $$$. The industry has no incentives to research vitamins, Zinc, and old drugs like HCQ. The NIH is supposed to research them. However, due to these royalties, the NIH has the same incentive structure as private pharma. This explains institutional hostility to vitamins, old simple  drugs, and who knows what else.

These royalties and their size are a big surprise to me. I have never heard of such arrangements for employees in the private sector.

This is not a claim that Dr. Fauci hasa conflict of interest of this kind.