President Biden is quietly weighing options to bail out Moderna after two biotech companies have filed a patent infringement lawsuit against them over the development of the COVID-19 vaccine. According to insiders, the Biden administration is weighing options to cite an antiquated 1900s law to argue the government should take liability for any patent infringement Moderna may be guilty of in regard to the COVID-19 vaccine’s development. Moderna received more than $10 billion in taxpayer dollars to produce its vaccine — and billions more in profits following its rollout. Now, taxpayers appear ready to foot the bill again — bailing out one of the most profitable biotech firms in the nation at the behest of the Biden administration.
By Thomas Catenacci & Jessica Chasmar; March 22, 2023
The Biden administration quietly inserted itself into a private patent infringement lawsuit two biotech companies filed against COVID-19 vaccine maker Moderna, in a move experts said could establish a dangerous precedent.
In a surprise filing last month, U.S. Attorney David Weiss issued a “statement of interest” in the case on behalf of the Department of Defense and Department of Health and Human Services (HHS), invoking a rarely-used early 1900s law to argue that the federal government should take on any liability for patent infringement Moderna may be guilty of related to the development of its COVID-19 vaccine.
“Where, as here, the Government directly contracts to procure the allegedly infringing goods or services in a contract that grants authorization and consent, the ‘benefit to the Government’ is inherent,” the filing stated. “Indeed, the contractor’s compliance with the contract’s obligations alone demonstrate the benefit: that the Government obtains goods and services for which it pays.”
The filing concluded that companies whose patents Moderna may have infringed during COVID-19 vaccine development should be limited to pursuing a claim against the federal government in the U.S. Court of Federal Claims.
Moderna – which received about $10 billion in taxpayer money to produce its COVID-19 vaccine and has since earned billions more in profits selling it – was sued in early 2022 by Genevant Sciences and Arbutus Biopharma Corp., which accused Moderna of using technology they have patented in its vaccine. The two companies have asked a federal court in Delaware to award them damages for the infringement.
Weiss then stepped in to support Moderna a year after it argued in court in a May 2022 filing that any damages should be paid by the federal government since it contracted the vaccine from the company amid a global health emergency. One week after Weiss’ filing, Moderna disclosed that it paid the federal government $400 million in a “catch-up payment.”
“What interested me was the fact of the government’s very strange procedural, I call it a gimmick,” Susan Braden, a former chief judge of the U.S. Court of Federal Claims, told Fox News Digital in an interview.
“I’m a former federal judge,” Braden said. “People don’t generally just pop up in the middle of a lawsuit unless they want to move to intervene, or they have something at stake in the case that would make them be a party.”
She noted that the Department of Justice (DOJ) has attempted to argue that a government use patent statute – 28 U.S.C. § 1498 – provides the legal basis for taking on patent infringement liability. The statute has generally been invoked by the government in cases related to its purchase of military equipment and, in one case, was used to stockpile an antidote for anthrax, a chemical weapon, in 2001.
In recent years, though, Democratic lawmakers have urged the HHS to invoke the statute to break pharmaceutical patents and force drug prices lower. In 2021, Sens. Elizabeth Warren, D-Mass., and Amy Klobuchar, D-Minn., urged the Biden administration to use the law to reduce pharmaceutical prices.
“The concept was that they wanted the HHS director to use 1498(a) to go to a generic company and say, ‘Go ahead and infringe this patent – just pick a drug of some sort – and don’t worry because, when they sue you, we will come in and tell the federal judge that we are assuming responsibility, and it should be adjudicated in the Court of Federal Claims,'” Braden told Fox News Digital, referencing the effort led by Warren.
“That was the court I was chief of for many years,” she continued. “That’s not a good way of running a railroad. And I think it’s a misuse of the law.”
Braden added that nearly every case she heard while serving on the claims court was related to military contracts. She said scientific experts will ultimately have to determine whether Moderna violated the patents held by Genevant and Arbutus, but that American taxpayers shouldn’t be on the hook for any infringement that might have occurred.
Earlier this month, Braden joined another former federal judge and several law professors in filing an amicus brief in the case. The brief stated that Moderna’s COVID-19 vaccine contract is not an example of a contractor using a patent “for the United States” since doses were distributed by private companies for private health care patients.
And, in a setback for Moderna, U.S. District Judge Mitchell Goldberg ruled for a second time on March 10 that the company hadn’t yet proven patent infringement liability should be shifted to taxpayers.
“The reason it’s problematic is because the government didn’t tell Moderna, ‘We need a vaccine to look this way,’” Gregory Dolin, an adjunct scholar at the Cato Institute and law professor at the University of Baltimore School of Law, told Fox News Digital. “The government told Moderna, ‘We need a vaccine however you come along with it whether it’s a mRNA vaccine or traditional vaccine.'”
“If they did infringe the patent, if there is a licensing fee or royalty fee to be paid, it makes no sense for it to be paid by the taxpayers when Moderna gets to reap all the benefits,” Dolin continued. “It seems odd that U.S. taxpayers would essentially immunize Moderna of every single dose of the drug they produced irrespective of where it was shipped.”
Meanwhile, Moderna CEO Stephane Bancel is slated to testify Wednesday morning before the Senate Health, Education, Labor and Pensions Committee, where he will be asked about his rising compensation during the pandemic and his company’s reported plans to hike the price of its taxpayer-funded COVID-19 vaccine.
Sen. Bernie Sanders, I-Vt., the chairman of the committee, has blasted Bancel and other pharmaceutical CEOs for their “unprecedented corporate greed” amid the pandemic. And Genevant said it hopes Bancel is questioned about Moderna’s effort to have taxpayers shield the company from its alleged patent law violations.
“We hope Mr. Bancel will provide some answers to the Senate committee as to why Moderna, which took billions in taxpayer money to develop its vaccine, is now seeking to put the responsibility for its infringement liability to those same taxpayers, a position the District Court has now rejected twice,” a spokesperson for Genevant told Fox News Digital in an email.
The DOJ declined to comment. Moderna didn’t respond to a request for comment.