UW-Madison
Hector DeLuca, right, in a 1985 photo. He told Isthmus in 1992: “Everything that was done was absolutely above board.”
Allegations of misconduct in a recent federal court ruling against the Wisconsin Alumni Research Foundation, or WARF, closely parallel those in a prior case involving the same researcher, famed UW-Madison biochemist Hector DeLuca.
In a November ruling that was just publicly released, a U.S. District Court in Delaware ordered WARF, which patents and licenses discoveries by UW researchers, to pay nearly $32 million to Washington University in Missouri for breaching its royalties contract on a patent for a drug used to treat kidney disease. Judge Joseph Bataillon concluded that WARF “improperly favored its own affiliated university and its own inventors at the expense of Washington University” and “actively concealed” critical information in order to improperly keep nearly all of the patent royalties.
The allegations, which the Wisconsin State Journal reported on Dec. 30, date back to the early 1990s, the same time another case involving allegations of scientific misconduct involving DeLuca and WARF was being covered extensively — and almost exclusively — in Isthmus. It included one of the biggest civil lawsuits in Wisconsin history, a multi-million-dollar settlement, high-level probes into alleged scientific misconduct, Congressional inquiries and even a hunger strike by a federal fraud researcher.
DeLuca has always maintained his innocence in the vitamin D case, telling Isthmus in 1992 that “Everything that was done was absolutely above board.” And in the end, an investigation headed by a federal judge exonerated DeLuca and his UW colleague Heinrich Schnoes of wrongdoing, in a finding later affirmed by the investigative arm of Congress. But the first panel of scientists tapped by the UW to look into the matter reached a different conclusion: that serious misconduct had occurred.
Curiously, one of the central allegations in both cases — and the grounds on which the UW-appointed panel concluded misconduct had occurred — was that DeLuca clandestinely misused papers from other scientists to his and WARF’s advantage.
In the more recent case, one of the Washington University researchers in January 1995 “sent Dr. DeLuca a draft of a journal article discussing his research” and seeking input, according to Judge Bataillon’s 192-page ruling. At the time, WARF had an agreement with the pharmaceutical company Abbott to produce a kidney drug but was said to be missing some key research.
DeLuca suggested minor changes on the paper, information from which was allegedly used to secure a WARF patent. Bataillon found that WARF repeatedly failed to convey “material information” to Washington University about the importance of its contribution, even as it pocketed $426.5 million in royalties earned during the life of the patent, while remitting a little more than $1 million to Washington University.
In the earlier lawsuit, DeLuca was accused of expropriating a process for making valuable derivatives of vitamin D from a paper sent to him in early 1972 for confidential peer review. The paper was written by scientists with the Research Institute for Medicine and Chemistry, a Massachusetts-based company. This disclosed process was then allegedly used by DeLuca and Schnoes to make the compound, for which WARF had already obtained a patent.
Afterward, WARF vigorously opposed the efforts of the Massachusetts company to obtain its own patent on the process. The company determined, and the UW later admitted, that the process patented by the UW did not in fact work. But DeLuca argued that he was able to produce the compound anyway because an “accident intervened” in the laboratory while it was being made.
In 1985, after years of being denied the ability to patent its discovery, the Massachusetts company sued WARF in federal court. It was only afterwards, through civil discovery, that the company learned DeLuca had received a copy of its paper on the process for confidential peer review.
In June 1987, after 19 months of pretrial proceedings — the filings in Madison’s federal court filled more than 25 boxes — the case was settled, with WARF paying what Isthmus later determined to be at least $6 million to the Massachusetts company. The patents have earned tens of millions of dollars for WARF.
Even before the settlement was reached, DeLuca and Schnoes notified UW that serious allegations of misconduct had been made against them during this lawsuit and asked the university to investigate. But there was no indication that UW-Madison took any action until March 1988, around the time that it learned Isthmus was about to publish an article on the case, which until that point had evaded media attention.
Donna Shalala, the UW-Madison chancellor at the time, denied that the university dragged its feet, asserting that “we moved as soon as it came to our attention.”
In April 1988, UW announced the appointment of a panel of three outside scientists to look into the matter. That September, the panel reported back that it had reluctantly concluded that DeLuca had “acted improperly by sharing knowledge in a manuscript sent to him for review” and that DeLuca and Schnoes had improperly claimed credit for a synthesis of one derivative.
DeLuca and Schnoes strongly objected and the UW directed the scientists to remove the misconduct findings from their report. The panelists were told they had no authority to reach such judgments; they could either clear the scientists or conclude that further investigation was needed. They did the latter, though a copy of the initial report was later obtained by Isthmus through an open records request.
In February 1989, UW tapped federal Judge John W. Reynolds, a former Democratic Wisconsin governor, to conduct a new investigation. About a year later, he released a report concluding that the evidence was insufficient to support a finding of misconduct, which UW hailed as “a complete exoneration.”
But the National Institutes of Health was reluctant to accept this finding and clashed with UW over access to key documents, which the university refused to provide. Eventually, the NIH closed its case without reaching any public findings.
Here’s where the story gets even odder. Walter Stewart, an investigator of scientific fraud with the National Institutes of Health, in early 1992 told Isthmus that the probe conducted by Reynolds was “an obvious and complete whitewash.” He called what transpired at UW “the case of fraud of the 20th century [and] one of the most egregious cases ever.” And he accused then-Chancellor Shalala of orchestrating a “scandalous cover-up.”
In April 1993, shortly after Shalala was appointed by President Bill Clinton to head the U.S. Department of Health and Human Services, the fraud-fighting office run by Stewart and his colleague Ned Feder was shuttered and its files put into storage. Stewart, in protest, launched a 33-day hunger strike. That prompted Republican Sens. Charles Grassley of Iowa and William S. Cohen of Maine to request that the General Accounting Office, the investigative arm of Congress, look into the DeLuca case allegations and whether shuttering the office violated the federal government’s Whistleblower Protection Act.
On July 5, 1995, the General Accounting Office concluded that there was no evidence that Stewart’s reassignment was in retaliation for his comments about the probe, or that the probe itself “lacked thoroughness or objectivity.” Eight days later, WARF filed an application for the patent that Judge Bataillon recently ruled unfairly took credit for Washington University’s work.
Shalala went on to become president at the University of Miami in Florida and was recently elected to Congress as a Democrat in that state. Stewart, who retired from NIH in 2003 and now lives in Austin, Texas, is struck by the similarities between the two cases, based on his brief review of the decision involving Washington University.
“WARF is once again taking the path that gets it the biggest financial advantage,” he says. “It’s just astonishing that, in both cases, they claimed patents for compounds they could not make.”
DeLuca, the namesake of the UW’s Hector F. DeLuca Biochemical Sciences Complex, has been an emeritus professor since 2011. He did not respond to an email sent Sunday to his university account, seeking comment on the similarities between the two cases. Attorneys for WARF have filed papers indicating their intention to appeal the judge’s ruling in the Washington University case.
“We respectfully disagree with Judge Bataillon’s interpretation of the facts and his decision,” writes WARF spokeswoman Jeanan Yasiri Moe in an email. “WARF built a responsible, productive relationship with Washington University more than 20 years ago, which was documented in our mutual agreement signed with them in 1995. The contract was carried out by both parties without complaint for most of the life of the patent in question.”
She added, “WARF is deeply proud of our decades-long history of bringing new medicines to patients many of which came from the multiple vitamin D patents originating in Professor Hector DeLuca’s lab. This patent was one of many.”
