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Ethics and Best Practices

Ethics and technology transfer do not always go hand-in-hand. Share your thoughts and experiences here.


A Sinister Plot

It was a "sinister" plot, at least that’s how a Georgia state judge described a plan by pharmaceutical giant Allergan to buy down the University of Georgia’s share of the profits from the breakthrough dry-eye drug Restasis®.


The plan was simple enough, entice the cash-strapped University of Georgia Research Foundation to sell its long term royalty stream for the promise of a quick cash payment. In the end, UGARF would sell its rights to their share of hundreds of millions of dollars in profits for $23 million.


Allergan may have seen UGARF as an easy mark, but inventor Renee Kaswan, who knew more about Restasis® and its market potential than anyone, could prove to be a hindrance to Allergan. To ensure Kaswan didn’t avert their plans, Allergan required that UGARF prevent her from learning about the ongoing negotiations until they were completed.


In a letter to UGARF dated Jan. 7, 2002, the company demanded assurances from UGARF that "currently you are the sole, authorized representative of UGA and Kaswan does not speak for UGA in this matter." UGARF did not give Allergan this assurance, but in court, Allergan misrepresented that they had received it.


In a subsequent letter to UGARF, Allergan said it appreciated UGARF’s cooperation in keeping "our negotiations for a royalty buy-out in confidence…and that no disclosure of such negotiations be made by either party to third parties including Dr. Kaswan."


Without Kaswan in the room, Allergan set a lowball strategy in motion, downplaying sales projections for Restasis®. They claimed that Restasis® would soon be threatened by similar products and then by generics, and that it could be forced from the market by a catastrophic failure like the cardiac complications that doomed Vioxx®.


Kaswan sued Allergan and UGARF but has been unsuccessful in her attempts to rescind the secret royalty agreement. Georgia Superior Court Judge David Sweat, who for technical reasons ruled against Dr. Kaswan in the case, acknowledged in open court that the scheme seemed a bit underhanded: "I mean it's certainly -- you can say, well, it's sinister," he said.



Comments : 7 - Last Post : Apr 15, 2009 12:51 PM by: Scott
re: A Sinister Plot
Posted by rowan32: Feb 20, 2009 3:20 PM

That's a lot of money for a university to lose. I can't believe this could happen!

re: A Sinister Plot
Posted by tregan: Feb 21, 2009 12:56 PM

I agree that it sounds sinister, and that makes it even more of a shame that the court didn't put a stop to it.

re: A Sinister Plot
Posted by tnelson: Feb 27, 2009 8:41 AM

What I do not understand is if the Judge was clear that this situation was "sinister", why could he do nothign about it?  How is this sort of thing prevented int he future?  There is a clear issue here, what are the next steps to prevent another inventor from suffering the same fate?

re: A Sinister Plot
Posted by Scott: Mar 20, 2009 6:55 AM

The judge said it was sinister, but technically not against the law for Allergan to manipulate the negotiations with UGARF. When a company acts underhandedly and a university is not committed to good faith dealing with its faculty researchers, things like this can happen. Dr. Kaswan is still trying to get the decision overturned.

re: A Sinister Plot
Posted by Lucy Rowland: Mar 27, 2009 5:48 PM

Sadly, legal technicalities do not always make sense.


The judge was making his decision on case law. Ethics came into play and believe me, I know all parties involved. It isn't over yet.







re: A Sinister Plot
Posted by buckro: Apr 15, 2009 10:55 AM

Is there any way Allergan can be forced to come back to the table and reopen negotiations? They should return some of the profits they should never have had back to the university, the taxpayers and the inventor! 

re: A Sinister Plot
Posted by Scott: Apr 15, 2009 12:51 PM

The court could still force Allergan back to table, or the company could demonstrate good corporate citizenship and do so voluntarily.

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