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November 19, 2014

Deal on Drugs Yields Billions for Cystic Fibrosis Foundation

The Cystic Fibrosis Foundation's $150-million investment 15 years ago in a small biotechnology firm to develop new medications for the deadly lung disease has produced a $3.3-billion windfall for the charity, writes The New York Times. The foundation's sale of royalty rights for drugs resulting from research it funded, to be announced Wednesday, is believed to be the largest financial return ever for a nonprofit pursuing disease treatments.

The foundation's grants to Vertex Pharmaceuticals helped produce Kalydeco, a drug approved for use in 2012 that sells for more than $300,000 for a year's treatment. A growing number of disease charities are seeking similar arrangements with pharmaceutical companies in hopes of speeding drug development. Critics say such deals divert the groups from their primary mission of helping patients, with lucrative royalty rights giving charities an incentive not to work to keep prices down.

Cystic Fibrosis Foundation CEO Robert J. Beall said the charity expressed concern to Vertex about the cost of the drug but has no power to set prices. He said the rights sale will help the foundation ramp up efforts to develop new treatments, calling it "an amazing opportunity to accelerate the research we’ve already started."