Researchers in NIAID’s labs supplement their income with honoraria they earn by attending Pharma seminars and briefing pharmaceutical company personnel with inside information about research progress on new drugs in NIAID’s pipeline.9 Dr. Fauci’s underlings routinely perform private projects for drug companies in their NIAID labs and take contract work running clinical trials for Pharma’s new drugs. Journalist and author Bruce Nussbaum reports that it is standard practice for Dr. Fauci’s employees to pocket enough gravy from the deal flow to add 10–20 percent to their NIAID salaries from this sort of work. NIAID officials justify this controversial practice arguing that the influx of pharmaceutical dollars strengthens NIAID’s labs and allows the agency to retain talented staff. NIAID also deducts 40, 50, or 60 percent off the top of these contracts for “overhead,” cementing the agency’s partnership with the industry.10 It’s no surprise that a 2004 Office of Government Ethics investigation chided Dr. Fauci for failing to control the corrupting entanglements between his staffers and pharmaceutical companies.11,12 That report cited NIAID for failing to review and resolve possible ethical conflicts affecting two-thirds of NIAID’s workers who were moonlighting in private industry.
The investigators also found13 that NIAID had failed to obtain approval for a full 66 percent of “outside activities” the institute had undertaken over the review period. Outside activities, according to the NIH,14 are undertakings that “generally involv[e] providing a service to or a function for an outside organization, with or without pay or other compensation.” That could include generating income from a pharmaceutical patent from a drug company, consulting for industry, obtaining silent or equity involvement with biotech firms, or conducting paid lectures and seminars. Dr. Fauci’s management style thrives on creating many such opportunities for his agency and its employees to participate in profitable ventures with pharmaceutical companies.
Dr. Fauci’s drug development enterprise is rife with other corrupting conflicts. Most Americans would be surprised to learn, for example, that pharmaceutical companies routinely pay extravagant royalties to Dr. Fauci and his employees and to NIAID itself. Here’s how the royalty system works: Instead of researching the causes of the mushrooming epidemics of allergic and autoimmune diseases—the function for which US taxpayers pay his salary—Dr. Fauci funnels the bulk of his $6 billion budget to the research and development of new drugs. He often begins the process by funding initial mechanistic studies of promising molecules in NIAID’s own laboratories before farming the clinical trials out to an old boys’ network of some 1,300 academic “principal investigators” (PIs) who conduct human trials at university-affiliated research centers and training hospitals, as well as foreign research sites. After these NIAID-funded researchers develop a potential new drug, NIAID transfers some or all of its share of the intellectual property to private pharmaceutical companies, through HHS’s Office of Technology Transfer. The University and its PIs can also claim their share of patent and royalty rights, cementing the loyalty of academic medicine to Dr. Fauci.
Once the product gets to market, the pharmaceutical company pays royalties—a form of legalized kickbacks—through an informal scheme that allows Pharma to funnel its profits from drug sales to NIAID and to the NIAID officials who worked on the product. Under a secretive, unpromulgated HHS policy, Dr. Fauci and his NIAID underlings may personally pocket up to $150,000 annually from drugs they helped develop at taxpayers’ expense.15,16,17
The United States Department of Health and Human Services (HHS) is the named owner of at least 4,400 patents. On October 22, 2020, the United States Government Accountability Office (GAO) published a report titled: BIOMEDICAL RESEARCH: NIH Should Publicly Report More Information about the Licensing of Its Intellectual Property. In this document, the authors reported that the NIH has received, “up to $2 billion in royalty revenue for NIH since 1991, when FDA approved the first of these drugs. Three licenses generated more than $100 million each for the agency.”18
However, Dr. David Martin has reported that the NIH Office of Technology Transfer licensing records19 suggest that NIH was less than transparent with the GAO investigators. Conspicuously absent from the GAO report are over 130 NIH patents associated with active compounds generating billions of dollars in revenue.
NIAID grants have resulted in 2,655 patents and patent applications, of which only 95 include an assignment to the Department of Health and Human Services as an owner.20 Dr. Fauci assigned most of these patents to universities, thereby making the ultimate commercial beneficiaries entirely opaque while binding the invaluable loyalty of American medical schools and the nation’s most influential physicians to Dr. Fauci and his policies.
Somewhat fishily, one of the largest holders of NIAID-generated patents is SIGA Technologies (NASDAQ: SIGA).21 SIGA publicly acknowledges a close affiliation with NIAID, but the GAO omits all mention of SIGA in its report. SIGA’s CEO, Dr. Phillip L. Gomez, spent nine years working for Dr. Fauci at NIAID developing Dr. Fauci’s signature vaccine programs for HIV, SARS, Ebola, West Nile Virus, and Influenza before exiting to commercial ventures. While NIAID clearly developed SIGA’s technology, the company reports revenue from NIAID but no royalty or commercial payments to NIH or any of its programs.
Eight US patents list Dr. Anthony Fauci as an inventor. However, NIAID, NIH, and GAO do not list any of them in their reports of active licensing despite the fact that Dr. Fauci has acknowledged collecting patent royalties on his interleukin-2 “invention.”22
Furthermore, GAO reported none of NIAID’s patents despite clear evidence that Gilead Sciences and Janssen Pharmaceuticals (a division of Johnson & Johnson) have generated over $2 billion annually from sales directly resulting from NIAID-funded technologies.23 Missing from the GAO report are two patents for Janssen’s Velcade? that have generated sales in excess of $2.18 billion annually for many years. The GAO report also omits any mention of the patents for Yescarta?, Lumoxiti?, or Kepivance? in violation of 37 USC §410.10 and 35 USC §202(a). At least thirteen of the twenty-one patents in the GAO report, including Dr. Fauci’s Moderna vaccine, illegally fail to disclose government interest despite their indisputable NIH pedigrees.
How big is Dr. Fauci’s drug development enterprise? Since Dr. Fauci arrived at NIH, the agency has spent approximately $856.90 billion.24,25 Between 2010 and 2016, every single drug that won approval from the FDA—210 different pharmaceuticals— originated, at least in part, from research funded by the NIH.26
Following drug approval, Dr. Fauci continues to collaborate with his pharmaceutical partners on promoting and pricing and profiting from their new product. Over the decades since Dr. Fauci took over NIAID, the agency has formalized an elaborate process of negotiating against US taxpayers to allow Pharma to extract maximum profits back from NIAID’s germinated drugs. With NIAID’s help, the lucky pharmaceutical company walks the new drug through accelerated FDA approval. The CDC then sets obscene retail prices for these collaborative products in secretive negotiations. Such sweetheart deals—at taxpayer and consumer expense—and accelerated approvals can yield direct financial benefits to NIAID, to Dr. Fauci’s favored employees, and even to Dr. Fauci himself.27