BIO Survey on Technology Transfer Shows Complexity of University-Industry Relationships

 I sat down with Cartier Esham, Director, Emerging Company Health and Regulatory Affairs at BIO, to discuss BIO’s new survey on licensing trends between universities and companies, part of a larger process of technology transfer. BIO will release the survey at this year’s BIO Investor Forum Technology Transfer Symposium, October 28, 2009. You can learn more about by visiting www.bio.org/ip/techtransfer.

 

Let’s start at the beginning – what makes the process of technology transfer interesting to those who care about innovation in America? What does technology transfer have to do with getting products out to people who want and need them?

Developing research into products and technologies for use by the public is a long and complex process. In the biotechnology sector once a company obtains a license for a discovery they will spend up to or more than a decade and hundreds of millions of dollars developing that discovery into a commercially available product that also meets all required regulatory standards.   Innovation, especially in the biotechnology sector, often requires that the public and the private sectors work together.  Since enactment of the Bayh-Dole Act in 1980 – which gave U.S. universities the right to retain rights to inventions made with government funding – more discoveries are being moved out of the laboratory into the public and providing enormous economic, health, an environmental benefits to our citizens.  Prior to this Act  only 5% of publicly-funded research were ever developed into publically available products.  It is imperative that we protect the laws and policies that have stimulated the transfer of technology and foster public and private sector interactions so that key discoveries in our laboratories are developed  into products/technologies available to the public.  We need to cultivate the dialogue among universities, the federal government and the private sector and work together to identify practices that will ensure the effective transfer of technology in the United States.

 

What’s so hard about making a deal about a technology?

There are always difficulties in public and private sector negotiations since while many of the goals are the shared some of the perspectives may differ.  And really, there is no one size fits all approach.  BIO recently conducted a  survey among its members on technology transfer and in-license agreement negotiations.  The survey showed that  monetary terms was the most difficult part of the in-license negotiation process.  We then asked several questions of our members on what types of payment structures they have for their license agreements and what metric they typically use to calculate value.  We will be unveiling this survey during BIO’s first annual Technology Transfer Symposium in California on October 28th.  It is our hope that by collecting this data we can facilitate discussions and collect information from the biotechnology industry and university and federal labs on best practices for in-license negotiations.

 

Licensing can be a pretty complicated process, from what it sounds like. You have lots of cooks in the innovation kitchen, so to speak… what wasn’t known about licensing that you hoped to understand with the survey?

I think one of the more startling findings of the survey is the lack of license agreements the biotechnology industry has with the federal government.  Given that the Unites States has some of the best research facilities and premier scientists working on break through research in the health, energy, food and environment fields, it seems critical that we work to ensure this research – where appropriate – should not sit in a lab but be developed in a way that will benefit the public.

 

Final question: if you were an inventor of a stellar, unfunded platform technology, how would you approach today’s market, given these licensing trends?

A fundamental part of successful transfer of technology is finding the right partner – this goes for universities who seek companies to license their technology and companies looking for a specific technology that fits into their research and development pipeline.  BIO would like work on how to improve communications between the public and private sectors on how to identify and find licensing opportunities.

GAO Report on Bayh-Dole: Leverage to Promote Commercialization of Federally-Funded Inventions

The General Accountability Office submitted its report to Congress today on the administration of the regulations found under the Bayh-Dole Act, the foundation of all federally-funded research in the United States and one of the key factors in the creation (and boom) of biotechnology as both a research field and industry in the 1980s.

A little background on Bayh-Dole:

Technological innovation is widely seen as responsible for much of the economic growth and increased standard of living in modern societies. Patent rights give inventors, or other patent owners, exclusive control over the use of their inventions for about 20 years, which promotes commercialization of new ideas and allows inventors to profit from their ideas. Patent rights ownership encourages the additional, and often substantial, investment of time and money needed to transform the technological innovations developed in the laboratory into goods, services, and processes available in the marketplace.

Since its enactment in 1980, the Bayh-Dole Act has provided recipients of federal research and development funding…the option to retain patents on the inventions they create, provided they adhere to certain requirements. A main goal of the act is to promote the utilization of inventions arising from federal supported research or development, and observers have judged the act a success in their regard. Prior to 1980, when the government routinely retained the patents on federally sponsored inventions, only 5 percent of these patents were ever used in the private sector. In contrast, some stakeholders, including federal and technology transfer officials, today believe that invention that arise from federally funded research are routinely commercialized, although comprehensive data are not available on how often this happens…

The report was prompted  by a single issue not many outside of legal circles understand: march-in rights, or in vernacular, the government’s ability to “march-in” and revoke ownership of federally-funded research under certain, rare circumstances:

In exchange for the right to retain ownership of federally sponsored inventions under the Bayh-Dole Act, contractors must agree to certain reporting requirements. More specifically, contractors agree to notify the funding agency within 2 months after the contractor learns that an invention has been created and to notify the funding agency within 2 years after this notification of the contractor’s decision to retain title to the invention. In addition, contractors agree to apply for a patent on the invention typically within 1 year of the election of title, attempt to commercialize the invention, and to provide additional reports. These additional reports, if requested by the agency, can provide such information as utilization of the invention and patent-related information such as the filing date, patent application number and title, and patent number and issue date for the invention in any country in which the contractor has applied for a patent. Failure by the contractor to disclose the invention, elect title to it, or file a patent application within the times specified, or failure to follow through with the patent application process, allows the relevant federal agency to obtain ownership of the invention.

The Bayh-Dole Act also reserved certain rights for the government to protect the public’s interests. Specifically, the government retains “a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world,” also known as a nonexclusive royalty-free license. In addition, the act provides the government march-in authority. Under this authority, the federal agency that funded the development of an invention has the right to require the contractor or exclusive licensee to grant a license in any field of use to a responsible applicant upon terms that are reasonable under the circumstances, if the agency determines that:

• the contractor has not made, and is not expected to make, efforts to commercialize the invention within an agreed upon time frame;

• public health or safety needs are not reasonably satisfied by the contractor or licensee;

• the use of the invention is required by the federal government and the contractor or licensee cannot meet the government’s requirements; or

• the owner of an exclusive license is not ensuring that the invention is “manufactured substantially” in the United States and has not obtained the necessary waivers to do so.

Indeed these situations are so rare they’re non-existant, as the report points out:

None of the four agencies we reviewed has chosen to exercise march-in authority under the Bayh-Dole Act. DOD, DOE, and NASA have neither discovered nor received information that would lead them to initiate a march-in proceeding or exercise their march-in authority during the last 20 years. In contrast, NIH has been petitioned formally to exercise its march-in authority three times, but in each case determined that the statutory requirements for march-in proceedings had not been met. Nevertheless, officials at three of the four agencies told us they value the authority because, together with other tools, it provides them leverage to promote commercialization of federally funded inventions. In contrast, DOE officials do not believe march-in authority has significant value as leverage, in part, because no agency has ever exercised the authority.

Specifically, the report details the history of repeated and failed attempts to use march-in rights to gain access to patented technologies after they have been commercialized, including a recent petition in 2004 regarding public health care and access to technology:

In 2004, NIH received two more petitions, in which the petitioner expressed concern that the price of two drugs—one to treat HIV/AIDS and the other to treat glaucoma—made them unaffordable for many people living with these diseases, posing a threat to their health and safety. However, NIH determined that the drugs were already on the market and widely prescribed, and therefore marching in would not alleviate health and safety needs that were not already being satisfied by the producer [italics added]. NIH also stated in its decisions that drug pricing is an issue more appropriately left to the Congress. Furthermore, as NIH noted in its decision on the 1997 petition, the agency is “wary of forced attempts to influence the marketplace for the benefit of a single company.”

Since August 2007, however, a change of administration creates cause for concern:

As a result of changes mandated by the America COMPETES Act, the Technology Administration has been disbanded and Commerce has shifted responsibility for the Bayh-Dole Act to the National Institute of Standards and Technology (NIST). Officials from two technology transfer organizations told us that, as a result of this change, the department currently has little expertise on the march-in process. Specifically, technology transfer officials told us they were concerned that NIST did not have the knowledge and experience of the Technology Administration with regard to oversight of march-in procedures and officials at one organization believed that this might cause some ambiguity in facilitating agencies’ implementation of the act.

NIST officials acknowledged that no one currently in their office has any experience with the march-in authority and said the process appears to be very time-consuming and complex. However, these officials told us that when the Technology Administration was disbanded, the same lawyers who worked on Bayh-Dole issues continued to provide their services, which allowed continuity in the overall legal aspects of oversight for the act. They also noted that most of the questions they have addressed for agencies concern aspects of the act other than the march-in authority. They also believe that because agencies are not required to contact NIST with questions related to the Bayh-Dole Act, that NIST’s role in any future march-in proceedings will likely be very limited.

For further background, you can read BIO’s response to the 2004 petition here; also; read BIO’s statement to the House Science & Technology Committee in 2007 titled, “The Bayh-Dole Act: The Next 25 Years” here .

For July 4: Let’s Thank the Inventors

For this week’s IP News Weekly, I emphasized stories about research breakthroughs and U.S. healthcare reform. In honor of this July 4, I’m taking a moment thank the researchers, business entrepreneurs and investors, and inventors who, as encouraged and protected by the U.S. Constitution, work tirelessly to create solutions to global health and environmental needs.

While I watched “The Fashion Show” on Bravo last night, one of the contestants proclaimed that “a designer is only as good as his last fashion show.” Its easy to forget that the United States’ economy (read = our jobs and homes) is only as strong as our last innovation. Further, everyone (from artists like clothing designers to high-technology workers) understands that it takes a long time to create the next “masterpiece.”

The complexity of creating biotechnology products is especially investment and time-consuming, and both the research process and the final product have a fragile relationship with human health and the environment. The intellectual property framework protects biotechnology innovators when they need it most, during the research and development process and the period of time the patent holder uses to recoop the investors funding. This protection creates a safe environment for investors that increases the possibility of the inventor producing a sustainable, high-quality product.  Americans do not prefer low-quality, high-risk solutions to the biggest problems of our time.

I hope that the current members of Congress will take it upon themselves to appreciate the need for data and patent protection for follow-on biologics, intellectual property rights and enforcement in international trade agreements, and increased funding for the NIH, FDA and PTO. No government can force innovation that comes out of the natural creative capabilities of its citizens, even in times of need.

My hope for America this July 4? I hope, in 100 years, the response time to human and environmental suffering will be immediate. Until that day arrives (thanks to scientific breakthroughs funded  by individual citizens) — let’s thank the scientists, investors, and inventors around us.

Finally, let’s also thank the founding fathers for knowing America’s innovative potential without seeing it for themselves.

For U.S. Healthcare Reform and Global Health Crises, Both Public and Private Efforts Needed

This morning Laura and I attended 2 sessions about the benefits of collaborative public-private partnerships at the International Convention.

The first was the super session “Global Biotechnology Innovation: Connecting the Laboratory, the Field, and the Marketplace” with speakers from the Food & Drug Administration, National Cancer Institute, the Centers for Disease Control and Prevention – moderated by former U.S. Secretary of Health & Human Services, Louis Sullivan. The speakers discussed how discoveries created through collaborative initiatives have accelerated biotechnology innovation to address global health disparities. The second session, “Time for Action: A prescription for Health-Care Reform” was moderated by BIO’s President & CEO and included speakers from the American Cancer Society, Regence BlueCross BlueShield, and the American Medical Association. The speakers presented their association’s perspectives on how U.S. healthcare reform could become a reality under the Obama Administration after decades of Congressional failures to comprehensively address rising costs and limited access to care.

The two panels addressed what are seemingly different topics: one global heath, and the second national healthcare reform. What struck me was the need to sustain new, complex collaborations between all stakeholders in order to encourage finding solutions to “old” problems.

The old view of global health programs states that logistical issues, including a lack of needed resources and capacity, require a top-down strategy with governments leading the efforts. Yesterday’s idea about healthcare reform, taken up by many a Congress the past 20 years, asserts that only the grassroots efforts of individual Americans can encourage permanent, sustainable solutions in communities where the government is unable to keep up (and often times hurts innovation rather than helping).

The truth is, for both global health goals and national healthcare reform, innovation requires both a “grass-top” and a “grass-roots” approach. I stole that phrase from the CEO of the American Cancer Society, John Seffrin. Seffrin is also CEO of the ACS Action Network. Both branches of the ACS facilitate efforts at the individual level (encouraging prevention and wellness efforts, for example) and the national level (analyzing Congressional proposals for reform). Both entities working together help solidify the foundation upon which the war on cancer can be won.

Indeed, the driving factor of encouraging biotechnology innovation to meet health care goals comes from the individual human beings who suffer, manage, and cure their own or another’s illness. Individuals collectively bring their unique experience and knowledge as patients, physicians, researchers, venture capitalists, university administrators, and government policymakers to public discourse, and by working together, benefit each other and accelerate finding a solution to health needs.

Some examples taken from the 2 sessions:

1. Gardasil, the blockbuster cervical cancer vaccine appeared under the guidance of collaborative efforts via the CDC.

2. The hope of collaboration helped the FDA form the basis for what would become the Critical Path Initiative for clinical trials.

2. Collaboration was the key for the American Medical Association’s work to address streamlining patient care by studying inefficiencies inequalities in the healthcare system, as Dr. Patrice Harris described this morning.

3. AMA, BIO, and ACS joined together to create the “Health Economy Now” website, which puts the focus of U.S. healthcare reform efforts on the need to lower costs through health information technology, changes in the reimbursement system, and encouragement of prevention & wellness. Jason Daughn of Regence remarked that “real reform lets innovators innovate, and preserves competition through public-private partnerships.”

4. James Curran, Dean of the Rollins School of Public Health at Emory University described that when the HIV/AIDS epidemic first emerged in 1981, it was thought that we would never find the cause or be fully able to characterize the disease. Since then, we can now screen the blood supply, extend the lives of those infected with HIV with antiretroviral therapy, prevent pregnant women from passing the virus to their unborn children, and measure the viral load of an infected individual’s blood.

 Both public and private entities are needed at the table of public discourse, not one or the other. We can address health needs in both the United States and developing countries at the same time by working together via open, fair, and collaborative partnerships. It saves money, time, effort and – most important of all – lives.

This post was co-written by Margarita Noriega and Laura Sambataro at BIO.

A Stimulated NIH Discovers the Devil in the Grant Details

In February, Congress awarded the National Institutes of Health with stimulus funds to the tune of $10.4 billion through the American Recovery and Reinvestment Act of 2009 (Recovery Act). The funding is directed towards helping the United States improve its “scientific infrastructure”: education initiatives, research, “investment in biomedical research and development, public health and health care delivery” (NIH Press Release), including $400 million for comparative effectiveness studies.

Acting National Institutes of Health Director, Raynard S. Kington, MD, has done an excellent job of diversifying the kinds of projects that funding will support, as well as looking for solutions to some of the more, well, I’ll call them opportunities for growth (read: beaurcratic red tape).

Science Magazine further describes these opportunities in the April 17 edition article “NIH Stimulus Plans Triggers Flood of Applications—and Anxiety.”

Grant applicants question whether the NIH has the capacity to manage the tsunami of applications.  Researchers in the Science article also ask if the NIH baseline funding “will grow at anywhere close to the rate needed to handle the blizzard of new ideas and expanded scientific work force” that the Recovery Act funding will produce once the stimulus funds expire. This would allow the projects to continue, if further research was recommended.

Additionally, an April 24 Burrill Report podcast (http://www.burrillreport.com/article-1311.html) interviews Reg Kelly, Director of the California Institute for Quantitative Biosciences (QB3), about whether the stimulus could slow down discoveries. University researchers, seeing state and alumni funding cuts, will spend all of their time preparing grant applications.  Researchers are forced to ignore current projects during the application process. Even if they do receive funding, they will face a technology transfer system that isn’t quite ready for a grand influx of fresh ideas just “waiting” to get picked up for further research & development. Kelly further asks if the technology transfer community is collectively incentivized (and collectively capable) of prioritizing funding for stated NIH priorities like personalized medicine, vaccines (read today: swine flu), cancer, and HIV/AIDS research.

While the stimulus created an “innovation backlog”, it can only be a good thing. For the next two years, NIH programs like “Grand Opportunities” and “Challenge Grants” will enable today’s bright minds to forge new paths into health and environmental sustainability – at least for the next 2 years, when the grant rivers run dry.  In 2012, the new challenge will be utilizing the innovation boomtown the stimulus will have inevitably created. 

If the stimulus succeeds in providing researchers enough funding to help form ideas to improve the world, it will take just as much effort for the biotechnology industry to turn that research into tangible products for a global audience.

Next question: Are the other United States federal agencies (FDA, USDA, and USPTO among them) ready to usher these innovations into the economy?