Former VA Scientist Responds to Lawmaker's Suspicions over Drug Sale

A former Veterans Affairs Department scientist says he is willing and able to defend his reputation against lawmakers or others who suggest he invented a highly successful hepatitis C treatment using agency resources and later earned millions by selling it to a private company.

The drug shown to cure hepatitis C is sold by Gilead Sciences of California under the brand name Sovaldi, but it was developed at Pharmasset, a private lab owned by Dr. Raymond Schinazi while he worked for the VA Medical Center in Atlanta and Emory University.

Today, skeptical lawmakers question whether Schinazi got rich using VA resources and funding. He sold Pharmasset, and with it the drug, to Gilead in 2011 for $11 billion.

"If, in fact, it is found that it was a [VA] employee that did, in fact, discover the drug ... I think it's important that this committee ... really try to get to the bottom of it," Jeff Miller, a Republican from Florida and chairman of the House Veterans Affairs Committee, said during a Wednesday hearing on Capitol Hill.

VA Under Secretary for Health Dr. David Shulkin, meanwhile, assured Miller's committee that internal and external department reviews will "get to the bottom of this."

Noticeably absent from the hearing was the man at the center of VA and congressional scrutiny. Schinazi requested to retire on Jan. 21 -- the same day Miller informed the agency it was inviting him to attend the hearing. He left the department on Feb. 1, two days before the meeting.

"It's quite obvious he was invited and decided to retire after he was invited," a committee source speaking on background told Military.com.

But in the first of several emails to Military.com Schinazi, 65, made it clear he is ready to defend his reputation and his work.

"I never received the letter or was asked by the VA to attend this meeting," he told Military.com in the first of several emails on Feb. 3. "I decided to retire from the VA well before all this. My labs are now based at Emory University and I am now 65 years old."

He added, "If I was invited to DC I would have attended and participated even as a non-VA employee. I can always defend my reputation well. It seems there is a lot of jealousy about my success and hard work. If the drug had failed, no one would be talking to me and believe me I've had many failures. There is a cemetery full of drug failures for treating and curing HCV (hepatitis C virus)."

The committee's letter was addressed to Shulkin, but included Schinazi and other officials.

The VA would not say whether Shulkin or anyone else at the department was responsible for informing Schinazi of the invitation.

"[Congress] invited Dr. Schinazi to the hearing, not VA," VA spokesman James Hutton told Military.com.

‘Miracle Drug'

Shulkin called Sovaldi, which has the generic name Sofosbuvir, a "miracle drug," for its high success rate. It cures as many as nine out of 10 patients with hepatitis C -- in many cases after only two months of treatment.

It's also expensive in the U.S., where a standard course of treatment can cost more than $80,000. The VA gets a discount for veterans -- paying about half of that figure, or $40,000, for the eight-week course per veteran.

Gilead is riding high after taking in billions of dollars in annual revenue from sales of the drug. The high price of the drug, however, has been a target of criticism.

Nearly a year ago Jeffrey Sachs, director of the Earth Institute at Columbia University, cited research by Liverpool University indicating the Sovaldi's actual production costs for a 12-week course is between $68-$136.

"In other words," Sachs wrote in Huffington Post, "the U.S. price-cost markup is roughly 1,000 to 1!"

Lawmakers want to know why VA shouldn't be receiving a portion of the sales if one of its employees or its resources were used in Sovaldi's discovery. The agency has a longstanding interest in a cure for hepatitis C, with more than 300,000 veterans -- many of them Vietnam vets -- suffering from it.

Taken in combination with other drugs such as Ribavirin and Peginterferon alfa, Sovaldi has a solid record of curing hepatitis C patients through a course lasting as briefly as eight weeks. The cure rate has generally been greater than 90 percent, according to Gilead.

Previous treatments could take as long as a year and with a survival rate of about 60 percent, reports HEP magazine, an online and print publication about hepatitis.

However, the cost to the VA to treat hepatitis C patients with the drug is significantly higher than the $900 for the same course of treatment in some other countries.

Under its technology transfer program, the agency may assert an interest in products it helps to fund or for which it provides resources to develop. Depending on its level of involvement, the department can claim 100 percent of the rights, assert no rights, or enter into negotiations with the scientists and any partner universities to determine an interest, Shulkin told Congress.

With a successful claim of interest, a portion from product sales returns to the VA to continue research programs.

Schinazi is aware of the program -- pointing out that he once developed two drugs for HIV treatment with VA funding that the agency declined to assert any rights to.

Declining to Assert Rights

It was during the 1990s Schinazi helped develop two of the most widely-used drugs for combating HIV. According to Emory University, where Schinazi is the director of the Biochemical Pharmacology Laboratory, more than 90 percent of HIV-positive patients in the world use one of the two drugs.

"We put them on the map with my work on antiviral agents, especially HIV," he said, "which, by the way, was funded by VA.

"But they never claimed ownership for any of my HIV discoveries," he said.

VA gave him back all the rights to the drugs, Schinazi said, and he in turn gave them over to Emory, "since I am an employee of Emory."

He's emphatic that the department had zero claims on Sovaldi. Emory, meanwhile, has unsuccessfully sought a claim on the drug.

The invention and development of the drug, whose scientific name is "2'-fluoro-2'-methyl nucleosides," took place at Pharmasset and was the work of a scientist who worked for him there, Schinazi said.

"The VA never funded any HCV research for me or my group or, for that matter, anyone I know in research at the Atlanta VA," he said.

"I founded Pharmasset and my family and I benefited from their discoveries and paid a huge amount in taxes from the windfall," Schinazi said. That windfall amounted to more than $440 million after the Gilead deal went through.

But by the time of the sale, he said, he was not even involved in Pharmasset, having quit the board five years earlier. He also noted he had no role in prices set by Gilead.

Over his career with Emory, in private practice and with VA, Schinazi said he has published more than 500 professional articles, seven books, and patented 90 drugs in the U.S.

Until now, nobody at the agency seemed to have any issues with Schinazi or his work.

A little more than six months ago, the VA awarded Schinazi the 2015 William S. Middleton Award for his pioneering work in discovering drug treatments for infectious diseases. It's the highest award given by the VA Biomedical Laboratory Research and Development.

"Now this politician [Miller] claims I cheated or something to this effect -- amazing after 33 years of service to the VA and great work," he said.

"With respect to the congressman, I think he should talk to me in three years' time, when all our veterans are cured of this devastating disease called hepatitis C," Schinazi said. "I think he will find that this [cost of treatment] was the best spent money ever at the VA."

-- Bryant Jordan can be reached at bryant.jordan@military.com. Follow him on Twitter at @bryantjordan.