Charity Sues Children’s Hospital for $500M

COLUMBUS, Ohio (CN) — A charity claims in court that Nationwide Children's Hospital ignored a donation agreement and partnered with a drug company, leaving the charity "out in the cold with nothing to show for its initial investment."

In a lawsuit filed Thursday in Southern Ohio Federal Court, Sophia's Cure Foundation claims that Nationwide Children's Hospital and its research institute "were starved for cash and needed funding to continue their research" into a drug to treat spinal muscular atrophy.

"Based on the promise that SCF would be the primary sponsor of the drug before the FDA, [they] agreed to fund the project. Then, as soon as the project looked like it would be a financial success, [Nationwide] pulled out the rug from under SCF," deciding to partner with the drug company AveXis Inc., which is now listed as the primary sponsor, according to the complaint.

SCF is a nonprofit formed by parents Vincent and Catherine Gaynor "after their daughter, Sophia, was diagnosed with spinal muscular atrophy. SCF was created to assist in the funding of [spinal muscular atrophy] clinical research," as well as to provide outreach and support for families, the charity says.

According to the complaint, the Gaynors met Nationwide Children's Hospital Research Institute faculty member Brian Kaspar, and began working with him to find a cure for the disease.

Kaspar also allegedly served as an executive and board member of AveXis. He and other AveXis executives "knew about SCF's sponsoring authority and the donation agreement, [and] they tortiously interfered with SCF's agreement with [Nationwide] so that AveXis could take over as sponsor," the lawsuit states.

SCF says Nationwide Children's Hospital recognized it as the primary sponsor in the donation agreement, which "required [Nationwide Children's Hospital] to name SCF as the 'primary sponsor' in 'all publications.'"

But when Nationwide submitted the investigational new-drug application, SCF was not named as the sponsor, the charity claims. The drug was then granted orphan-drug designation by the Food and Drug Administration.

Orphan-drug designation "confers on the drug's sponsor the exclusive right to market the orphan drug for seven years for use in treating the particular disease or condition," according to SCF.

The Orphan Drug Act explains that the seven-year period "is to allow the orphan drug's sponsor 'to recoup the cost of development by capturing all revenues from the sale of the drug for the rare disease.'"

SCF claims that soon after receiving orphan-drug status, Nationwide Children's Hospital "conspired with AveXis and Kaspar to induce SCF into signing a confidentiality and non-disclosure agreement that would remove SCF as the sponsor."

They then offered the gift of a clinic waiting area named for Sophia's Cure. SCF says it refused to sign the agreement or accept the gift.

AveXis cut all ties with SCF after it became the primary sponsor and it refuses to give Sophia's Cure any recognition, according to the complaint.

SCF is suing AveXis Inc., Nationwide Children's Hospital, Nationwide Children's Hospital Foundation, Research Institute at Nationwide Children's Hospital, Kaspar, John Carbona, Sean Nolan and Arvind Sreedharan for breach of contract and tortious interference.

It seeks $500 million in compensatory damages and specific performance designating it as the primary sponsor.

The charity is represented by John Climaco of Climaco, Wilcox, Peca, Tarantino and Garofoli Co. in Cleveland; Patrick Warner of Leist Warner in Columbus; and Paul Napoli with Napoli Shkolnik in New York City.

A Nationwide spokeswoman said it denies the allegations and looks forward to defending against the claims in court.

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