US Govt. OWNS HPV vaccine (Gardisil) patents & Bayh-Dole spawned the biotech industry

[Guest guest]

http://www.vaccineawareness.org/index.php#38

US Govt. OWNS HPV vaccine (Gardisil) patents

August 20th, 2007

Financial Disclosures: Drs Schiller and Lowy report that they are named

inventors on US government–owned HPV vaccine patents that are licensed to

GSK and Merck and are entitled to limited royalties as specified by federal

law. Dr Dubin is employed by GSK Biologicals, the manufacturer of the

vaccine used in this trial. No other financial disclosures were reported.

JAMA 8/15/07

Today Barbara Mullarkey, president of Illinois Vaccine Awareness Coalition

(IVAC) and Director, National Coalition of Organized Women of Illinois and

Eileen Dannemann, former director NCOW, presents our research to you FYI:

Below is the current (Aug 15, 2007) JAMA contribution on the effect of HPV

vaccine on infected women using Costa Rican citizen as the subjects of the

experiments. It is very interesting to note that the US government owns the

HPV vaccine and licenses it to GSK and Merck.

We are wondering what division of royalties are assigned to the inventor,

GSK, Merck and the US Government. We pose these questions: If the US

Government, via Federal funding, owns the patent:

1. Which agency/department is registered on the patent?

2. What percentage of royalties does the US government receive? The

inventors? The manufacturer?

3. Does the taxpayer receive any advantage since the taxpayer is the funder

of origin?

4 Is there a study to determine how much the US Government receives by

mandating their own vaccines?

6. What other vaccines are patented or co-patented by the US government?

7. How much royalties has the US government received from vaccines heretofore?

We have posted prior to this the Bayh-Dole Act that changed the royalty

arrangements with the consequence now that Universities are the “research”

arms of the BioPharmacuetical Industry. VERY IMPORTANT TO READ.

Trials done on Costa Rican citizens:

Funding/Support: The Costa Rican HPV Vaccine Trial is a long-standing

collaboration between investigators in Costa Rica and the NCI. The trial is

sponsored and funded by the NCI (grant N01-CP-11005), with funding support

from the National Institutes of Health Office for Research on Women’s

Health, and conducted with support from the Ministry of Health of Costa

Rica. Vaccine was provided for our trial by GSK Biologicals, under a

Clinical Trials Agreement with the NCI. GlaxoKline also provided

support for aspects of the trial associated with regulatory submission

needs of the company under grant FDA BB-IND 7920.

http://www.vaccineawareness.org/index.php#37

Bayh-Dole Act

August 20th, 2007

GOVERNMENT

http://www.fortune.com/fortune/fortune75/articles/0,15114,1101810-2,00.html

The Law of Unintended Consequences

Twenty-five years ago a law known as Bayh-Dole spawned the biotech

industry. It made lots of university scientists fabulously rich. It was

also supposed to usher in a new era of innovation. So why are medical

miracles in such short supply?

Wednesday, September 7, 2005

By Clifton Leaf

Even in the mute efficiency of international wire transfers, $540 million

makes a noise when it lands in your bank account. To Kent , that

sound was a thud-and in this case “not one single thud, but a lot of

different thuds.” All afternoon on July 21, 2005, , who is Emory

University’s general counsel, president Jim Wagner, and other senior

members of the school’s administration were receiving e-mailed reports from

the finance de- partment: “121 million just hit!” And then, 50 minutes

later, “183 million just hit!” Half an hour after that, an even richer

stash arrived. Thud. “It was an out-of-body experience,” says ,

46. “By any definition, it’s a huge deal. As one of our trustees was

saying, ‘It doesn’t get any bigger than this on Wall Street.’ “

The deal in question had closed only days earlier, when a pair of biotech

companies, Gilead Sciences of City, Calif., and Royalty Pharma of

New York City, outbid several other parties for Emory’s roughly 20% stake

in the powerful anti-retroviral drug Emtriva, which is used to treat HIV.

The drug was developed more than 15 years ago by three of the university’s

scientists, working on federal research grants, but received FDA approval

only in July 2003. Now, however, Emtriva (a modest seller in its own right)

was being married to another antiviral in a single pill. The combination

drug, called Truvada, was expected to have a worldwide market of nearly $1

billion in 2006. Emtriva was becoming a blockbuster. Citigroup set up the

auction and hammered out the terms with bankers from Lazard. A white-shoe

law firm, Covington & Burling, calculated the drug’s projected royalty

streams through the year 2021, when the patent life was scheduled to end.

The hard work was over, and now it was time for a champagne toast and a

brief “end-zone dance,” as president Wagner described it. In a short while

they could start thinking about how to reinvest their windfall-around $320

million after fees and the 40% cut that belonged to the three Emory

inventors. The cash would enhance Emory’s leadership in AIDS-vaccine

research-and help Wagner’s plan to turn the university into a top-tier

“destination” school. “This is just such a win-win-win story,” Wagner says

jubilantly. “We have an invention here that addresses a real international

scourge, and we are now taking these resources and reinvesting them in

American research and education. It’s a pretty happy story.”

Well, not entirely.

The Emtriva case may sound like yet another innovation in an unending

stream of medical miracles, from “smart drugs” to gene therapy. But believe

it or not, it’s an example of a profound system failure. For a century or

more, the white-hot core of American innovation has been basic science. And

the foundation of basic science has been the fluid exchange of ideas at the

nation’s research universities. It has always been a surprisingly simple

equation: Let scientists do their thing and share their work-and industry

picks up the spoils. Academics win awards, companies make products,

Americans benefit from an ever-rising standard of living.

That equation still holds, with the conspicuous exception of medical

research. In this one area, something alarming has been happening over the

past 25 years: Universities have evolved from public trusts into something

closer to venture capital firms. What used to be a scientific community of

free and open debate now often seems like a litigious scrum of

data-hoarding and suspicion. And what’s more, Americans are paying for it

through the nose. Let’s go back to Emtriva for a moment. Schinazi,

a virus specialist at Emory, got the idea for the drug after hearing a

lecture by a Canadian researcher, Bernard Belleau, at a 1989 AIDS

conference in Montreal. Belleau had discovered a compound that helped shut

down the virus’s genetic machinery, and Schinazi soon realized that with

some chemical wizardry, the substance could be transformed into something

far more potent. Thanks to a bit of “serendipity,” Schinazi says, he and

two Emory colleagues were able to do just that: create a compound that may

be orders of magnitude more active than Belleau’s. In the end, the

difference between the two substances came down to one atom of fluorine.

It’s a perfect example of how one inspiration can build on another.

This combination of open exchange and fervent competition between great

researchers helps bring about scientific advances. And when the system

works, the sum of each contribution is greater than the whole. But what

happened next in the Emtriva saga was a race to the patent office. Emory

got there - a week.

That filing in 1990 triggered a morass of lawsuits over Emtriva and a

related compound. Belleau’s biotech employer sued; so did pharmaceutical

giant Glaxo Wellcome (now GlaxoKline), which had licensed what it

thought was Belleau’s discovery. Emory found itself embroiled in litigation

that a veteran patent attorney called the most complex he’d ever seen. (One

federal case had 36 individual “lead attorneys.”) Emory’s squadron of

lawyers not only had to fight through those cases but also skirmish through

four long challenges at the U.S. Patent & Trademark Office (USPTO) and

repeat those battles in Europe, Australia, Japan, South Korea, and Canada.

All told, the disputants wrangled on for nearly a decade and a half and

consumed millions of dollars in attorney’s fees.

And that’s just for one dispute. From 1992 to September 2003,

pharmaceutical companies tied up the federal courts with 494 patent suits.

That’s more than the number filed in the computer hardware, aerospace,

defense, and chemical industries combined. Those legal expenses are part of

a giant, hidden “drug tax”-a tax that has to be paid by someone. And that

someone, as you’ll see below, is you. You don’t get the tab all at once, of

course. It shows up in higher drug costs, higher tuition bills, higher

taxes-and tragically, fewer medical miracles.

So how did we get to this sorry place? It was one piece of federal

legislation that you’ve probably never heard of-a 1980 tweak to the U.S.

patent and trademark law known as the Bayh-Dole Act. That single law, named

for its sponsors, Senators Birch Bayh and Bob Dole, in essence transferred

the title of all discoveries made with the help of federal research grants

to the universities and small businesses where they were made.

Prior to the law’s enactment, inventors could always petition the

government for the patent rights to their own work, though the rules were

different at each federal agency; some 20 different statutes governed

patent policy. The law simplified the “technology transfer” process and,

more important, changed the legal presumption about who ought to own and

develop new ideas-private enterprise as opposed to Uncle Sam. The new

provisions encouraged academic institutions to seek out the clever ideas

hiding in the backs of their research cupboards and to pursue licenses with

business. And it told them to share some of the take with the actual

inventors.

On the face of it, Bayh-Dole makes sense. Indeed, supporters say the law

helped create the $43-billion-a-year biotech industry and has brought

valuable drugs to market that otherwise would never have seen the light of

day. What’s more, say many scholars, the law has created megaclusters of

entrepreneurial companies-each an engine for high-paying, high-skilled

jobs-all across the land.

That all sounds wonderful. Except that Bayh-Dole’s impact wasn’t so much in

the industry it helped create, but rather in its unintended consequence-a

legal frenzy that’s diverting scientists from doing science.

Birch Bayh is likable-eminently so. He has a kind face, easy laugh, and

enough self-deprecating charm to get a proud liberal Democrat elected (and

reelected twice) in Indiana-a state as Republican red as Birch Bayh is,

well, likable. That was a wonderful gift to have in the U.S. Senate, and it

no doubt partly accounted for the fact that his patent bill overcame

tremendous suspicion (as being “anti small business”), opposition by

President , and the Reagan Revolution, which cost Bayh his Senate

seat in 1980.

At the time, the gospel of the U.S. government, or at least of the longtime

Democratic majority in Congress, was that if the government paid for it,

the taxpayers owned it. That was the thinking that drove some of the

nation’s proudest achievements-the splitting of the atom, the development

of antibiotics, the moon shot, and the nuclear Navy.

Bayh sought to turn that policy on its head, essentially giving away all

this taxpayer property for free-and, some worried, creating potentially

thousands of new private monopolies in the process. It was a heretical view

(for a liberal, no less), but Bayh was convinced that government ownership

was squashing innovation and the nation’s productivity. The stagflation of

the 1970s was already clouding the new decade of the ’80s; America’s

economic engine seemed to be choking; and the domestic automobile, steel,

and electronics industries were fast losing their global dominance. There

seemed to be a productivity malaise descending on the homeland-and some

kind of catalyst for change was needed.

It was a report by the Comptroller General of the U.S. that offered, if not

the remedy, one culprit for the national gloom: unlicensed patents. A 1979

audit of government-held patents showed that fewer than 5% of some 28,000

discoveries-all of them made with the help of taxpayer money-had been

developed, because no company was willing to risk the capital to

commercialize them without owning title. “Discoveries were lying there,

gathering dust,” says Bayh today, from his office at the Washington law

firm Venable LLP. “So the taxpayers weren’t being protected. We’d spent $30

billion in research for ideas that weren’t helping anybody.”

When the bill was finally passed, against all odds, on the last possible

day of a lame-duck session of Congress, it didn’t make a whiff of news

beyond the Beltway. Even Bayh had no clue what effect the new amendments

would have. “I don’t think anybody could have reasonably anticipated the

enormity of the chain reaction that followed,” says Bayh today.

A dozen schools-notably MIT, Stanford, the University of California, s

Hopkins, and the University of Wisconsin-already had campus offices to work

out licensing arrangements with government agencies and industry. But

within a few years Technology Licensing Offices (or TLOs) were sprouting up

everywhere. In 1979, American universities received 264 patents. By 1991,

when a new organization, the Association of University Technology Managers,

began compiling data, North American institutions (including colleges,

research institutes, and hospitals) had filed 1,584 new U.S. patent

applications and negotiated 1,229 licenses with industry-netting $218

million in royalties. By 2003 such institutions had filed five times as

many new patent applications; they’d done 4,516 licensing deals and raked

in over $1.3 billion in income. And on top of all that, 374 brand-new

companies had sprouted from the wells of university research. That meant

jobs pouring back into the community.

A modern alchemy was at work: Ivory towers were being turned into gold, and

society was benefiting from hundreds of novel treatments introduced for a

host of diseases. After years of intense study and living grant to mouth,

investigators at the University of California at San Francisco, for

example, had come up with a treatment for infants with respiratory distress

syndrome, an ailment that affects some 25,000 babies a year. A startup by

University of Florida researchers got $15 million from some VCs in Menlo

Park last year to develop a gene therapy for a type of emphysema called

Alpha-1. Physicists at the University of Wisconsin in Madison figured out a

way to turn static MRI views of blood vessels into videocamera-like images.

The anecdotal reports, fun “discovery stories” in alumni magazines, and

numbers from the yearly AUTM surveys suggested that the academic

productivity marvel had spread far and wide. But that’s hardly the case.

Roughly a third of the new discoveries and more than half of all university

licensing income in 2003 derived from just ten schools-MIT, Stanford, the

usual suspects. They are, for the most part, the institutions that were

pursuing “technology transfer” long before Bayh-Dole.

Even so, every school labors under the fantasy that it’s going to find the

next Emtriva-or Gatorade, a huge success that came out of the University of

Florida. The jackpot is too rich not to go for it.

In 2001, economists Jensen from Notre Dame and Marie Thursby of the

Georgia Institute of Technology published a survey of university licensing

activity over a five-year period in the 1990s. They asked administrators

and faculty researchers at 62 universities, “What’s the most important

outcome of technology transfer?” The top answer by far given by university

officials was “revenue.” Yes, it was nice to see important discoveries

commercialized and the knowledge disseminated as widely as possible. But

hey, we’re in this for the money.

That certainly seemed to be the message in a recent court case involving

Columbia University. Last year Columbia threatened to revoke the licenses

of several leading biotech and pharmaceutical companies for the use of a

critically important process in drug discovery and development called

co-transformation. (The companies sued, and the cases ended up in a federal

court in Massachusetts.) In the late 1970s three Columbia researchers,

Axel, Wigler, and Saul Silverstein, all working with

funding from the NIH, figured out a way to vastly improve the efficiency of

a technique used in genetic engineering. They filed for patents in February

1980-prior to Bayh-Dole. But the NIH assigned the title to Columbia once

the university promised to “use all reasonable effort to bring the [Axel

patents ] to the commercial market through licensing on a non-exclusive,

royalty-free, or reasonable royalty basis.” The federal agency even

admonished Columbia not to engage in “repressive” licensing practices.

The Axel patents were amazingly huge moneymakers for Columbia (and yes, the

three inventors got rich too), bringing in a total haul of about $600

million during their 20-year patent life. The university had licensed

co-transformation to 11 drugmakers and collected royalties on 19 different

drugs for various diseases. Amgen had used the Axel technology while making

its bestselling anemia drug, Epogen; Bayer and Wyeth each made hemophilia

drugs; Genentech used it in making its blockbuster breast-cancer drug,

Herceptin.

But when the patent life ran out, Columbia announced that-surprise-it had

secured a new patent, issued in 2002, that won’t expire until 2019. (The

patent application was filed in secret in 1995.) And the invention, as it

turns out, comes out of the original taxpayer-funded work done by Axel,

Wigler, and Silverstein long ago (and somehow not included in the three

patents Columbia had already received). University lawyers had pulled off

the trick by filing a secret “continuation” application (which keeps an

original patent disclosure alive for possible new claims to be added) and

then abandoning it-repeating this procedure again and again until the clock

was about to run out. So the patent granted in 2002, noted federal district

court Judge Mark Wolf, “relates back to its

great-great-great-great-great-great-grandparent application” in 1980. The

aim of this new “submarine” patent, says Boston attorney Ware, who

represented several of the plaintiffs, was to enable Columbia to surface

with a claim “covering new advances the biotechnology industry had made

during the intervening years.” By delaying their filing as long as

possible, they could get many more years of patent protection. And revenue,

of course.

U.S. patent laws were amended in 1995 precisely to prevent this method of

gaming the system. (Patents now expire 20 years after the original filing,

or “priority date,” rather than 17 years after the issue date, as they used

to.) But Columbia managed to file two final applications on June 7,

1995-the day before the new law was to go into effect. When Judge Wolf

indicated he was inclined to rule in favor of the plaintiffs, Columbia

promised it would no longer attempt to charge the companies a licensing

fee. (The case was then dismissed.)

No one at Columbia University would speak on the record about the Axel

patents. The university’s outside counsel, Gindler, of the Los

Angeles firm Irell & Manella, insists the school did nothing improper. “I

don’t think Columbia had a strategy to do anything other than get the full

patent protection to which it’s entitled,” he says. “Universities should be

able to get the same thing that companies get.” Gindler elaborates: “It’s

perfectly proper for Columbia to do what any of the other biotech companies

would do-to request companies take licenses to the patent and pay a

reasonable royalty.”

And later Gindler elaborates further: “Columbia acted no differently than

the rest of the business community in the United States.”

Columbia is hardly the only academic center to fancy itself a hard-charging

corporation. Court dockets are now clogged with university patent claims.

In 2002, North American academic institutions spent over $200 million in

litigation (though some of that was returned in judgments)-more than five

times the amount spent in 1991. Stanford Law School professor emeritus

Barton notes, in a 2000 study published in Science, that the indicator that

correlates most perfectly with the rise in university patents is the number

of intellectual-property lawyers. (Universities also spent $142 million on

lobbying over the past six years.) Attorney Gindler defends the legal

wrangling as part of a global good: “The money that comes into universities

like Columbia for licensing is plowed back into the mission of the

university to conduct more research,” he says. “It’s not used to pay

shareholders or to fill corporate coffers. It’s used for a really noble

purpose.”

So what do universities do with all their cash? That depends. Apart from

the general guidelines provided by Bayh-Dole, which indicate the proceeds

must be used for “scientific research or education,” there are no

instructions. “These are unrestricted dollars that they can use, and so

they’re worth a lot more than other dollars,” says University of Michigan

law professor Eisenberg, who has written extensively about the

legislation. The one thing no school seems to use the money for is

tuition-which apparently has little to do with “scientific research or

education.” Meanwhile, the cost of university tuition has soared at a rate

more than twice as high as inflation from 1980 to 2005.

The enormous investment by tuition-paying students, parents, and taxpayers

of all ages might be worth it if the university research was paying off

huge dividends. But here’s the hard, surprising truth: In one crucial area

of science-productivity, which Bayh-Dole was intended to supercharge-it isn’t.

Measuring productivity, in general, is a difficult thing. In science it is

nigh impossible. How can you tell whether an idle experiment in a basement

lab somewhere is going to pay off one day with a cure for Parkinson’s

disease or ALS? You can’t. And yet scientists try to measure their own

scientific “output” all the time, and the unit of measurement is the number

of papers that run in top-tier journals. Publish a lot in, say, Nature or

Cell, and chances are you’ll get your grant or tenure. It’s a crude

measure, but one that’s quietly accepted in academic circles.

Each year, the National Science Foundation calculates which countries are

contributing to the global knowledge pool by tallying up the number of

their researchers’ published papers in key journals all over the world. The

U.S. traditionally holds an edge, not least because the vast majority of

influential academic journals are published in English (and often edited

and “peer-reviewed” by American scientists).

Trouble is, even with that advantage, the U.S. contribution to global

knowledge has been stagnating. While the number of journal articles

produced by American researchers has risen slightly since 1988, the rest of

the world has raced ahead (see chart).

Or you could forget such squishy “knowledge indicators” and go to the hard

stuff: drugs. FDA scientists have an entire vocabulary for describing new

compounds that come into its office. When something is considered truly

novel and innovative, the FDA calls it a new molecular entity, or NME. Many

of the other drugs regulators see are reformulations, old compounds with

new indications for use, or “me too” drugs that are similar to several on

the shelf. But even the label NME doesn’t mean a drug necessarily fills a

critical gap in health care.

When regulators see promising clinical data for a drug that really is

needed by patients right now-as with the HIV drug Emtriva in 2003-it gives

the drug a “priority review.” The idea is to get it out to doctors as

quickly as possible. So those who want to measure the performance of the

world’s drug manufacturers should look not only at the total number of

FDA-approved compounds and biologics in a current year, but also at how

many priority NMEs are making it through. By both measures, the

productivity picture is much worse than it was in 1996 (although 2004 seems

to have had a bumper crop). From 2000 through the end of 2003, the average

number of priority NMEs each year was eight; in the previous four years, it

was twice that.

For a number of common diseases, it seems that progress has stalled. Since

the advent of genetically engineered human insulin in 1977, there has been

relatively little new help for diabetics. Age-adjusted death rates for

those with the disease have gotten worse, not better, during the past 25

years. Patients with Parkinson’s, Alzheimer’s, and multiple sclerosis have

waited anxiously for anything promising to appear in the pipeline. And in

cancer, one remarkable study led by the FDA’s cancer czar, Pazdur,

seems to say it all: A full three-quarters of the 71 cancer drugs approved

by the agency from 1990 through 2002 did not show any survival benefit over

the old, standard care.

What about the explosion in the biotech industry over the past 25

years-aren’t those firms churning out innovative products? Here again, the

numbers suggest otherwise. Consider the Nasdaq biotech index, which is a

fair proxy for the industry. The combined market cap of its 157 companies

is around $319 billion. This huge stake held by public shareholders is the

direct result of Bayh-Dole, which gave these brave new firms something of

value-intellectual property-to take to the market. The legislation also

made it possible for venture capitalists to bring companies public quickly

and thus see a return on their initial investment.

What the law didn’t do was give the companies something worthwhile to sell.

Only 36 of the 157 companies on the index are profitable. And judging by

the cold, hard measure of revenues, it’s clear that few have produced drugs

that doctors view worthy enough to prescribe. Forty percent of Nasdaq’s

bio-wonders had sales under $20 million in the past 12 months; 22% had less

than $5 million. For every Genentech success story, there are dozens of

teetering failures, with laser-fast burn rates and very little to show the

buy-and-hold believers who purchased shares on the open market. Indeed, the

industry as a whole has lost more than $45 billion since birth.

How could a law] with so much intuitive promise to liberate research and

boost productivity have the opposite effect? You can put part of the blame

on the nation’s patent policies-which began their own strange evolution at

the same time as-you guessed it-Bayh-Dole. The Supreme Court’s decision in

1980 to allow for the patenting of living organisms opened the spigots to

individual claims of ownership over everything from genes and protein

receptors to biochemical pathways and processes. Soon, research scientists

were swooping into patent offices around the world with “invention”

disclosures that weren’t so much products or processes as they were simply

knowledge-or research tools to further knowledge.

The problem is, once it became clear that individuals could own little

parcels of biology or chemistry, the common domain of scientific

exchange-that dynamic place where theories are introduced, then challenged,

and ultimately improved-begins to shrink. What’s more, as the number of

claims grows, so do the overlapping claims and legal challenges. This isn’t

merely a hypothetical situation, a “worst-case scenario” painted by

academic hand-wringers. It has already happened, as two professors at the

University of Michigan Law School, Heller and Eisenberg,

observed in a seminal 1998 article in Science magazine.

Now technology-transfer offices instruct faculty to go over the most

embryonic of discoveries “in-house,” to see if there is anything

potentially marketable in the work before they talk to colleagues.

Researchers are told, always, to file provisional patent applications

before publishing a paper or speaking at a conference. (Such public

disclosures, according to European patent laws, immediately nix any chance

to patent the finding overseas, where much of the licensing market is.)

Before sharing resources like cell lines, reagents, tissue specimens, gene

expression data, or knockout mice (those bred without certain genes to

simulate a disease process), researchers at different universities are now

asked to sign a “material transfer agreement,” or MTA, and that means first

having to run the contract by one’s department head or a university lawyer.

Then there is the most vexing of all patent-law confections: the

“reach-through licensing agreement,” or RTLA. These contracts grant the

owner of a patented biomedical tool the right to a royalty on any compound

that’s ultimately discovered through its use. Imagine a carpenter having to

pay Black & Decker a percentage of every kitchen he rebuilds.

Heller and Eisenberg dubbed this new dismal state of affairs the “Tragedy

of the Anticommons.” And that’s what it is-a tragedy that’s still in the

making.

In October 1990 a researcher named - King at the University of

California at Berkeley told the world that there was a breast-cancer

susceptibility gene-and that it was on chromosome 17. Several other groups,

sifting through 30 million base pairs of nucleotides to find the precise

location of the gene, helped narrow the search with each new discovery.

Then, in the spring of 1994, a team led by Mark Skolnick at the University

of Utah beat everyone to the punch-identifying a gene with 5,592 base pairs

and codes for a protein that was nearly 1,900 amino acids long. Skolnick’s

team rushed to file a patent application and was issued title to the

discovery three years later.

By all accounts the science was a collective effort. The NIH had funded

scores of investigative teams around the country and given nearly 1,200

separate research grants to learn everything there was to learn about the

genetics of breast cancer.

The patent, however, is licensed to one company-Skolnick’s. Myriad

Genetics, a company the researcher founded in 1991, now insists on doing

all U.S. testing for the presence of unknown mutation in the two related

genes, BRCA1 and BRCA2. Those who have a mutation in either gene have as

high as an 86% chance of getting cancer, say experts. The cost for the

complete two-gene analysis: $2,975.

Critics say that Myriad’s ultrarestrictive licensing of the technology-one

funded not only by federal dollars but also aided by the prior discoveries

of hundreds of other scientists-is keeping the price of the test

artificially high. Skolnick, 59, claims that the price is justified by his

company’s careful analysis of thousands of base pairs of DNA, each of which

is prone to a mutation or deletion, and by its educational outreach programs.

Whatever the answer, it’s clear who pays for it. You do. You pay in the

form of vastly higher drug prices and health-care insurance. Americans

spent $179 billion on prescription drugs in 2003. That’s up from … wait for

it … $12 billion in 1980. That’s a 13% hike, year after year, for two

decades. Of course, what you don’t pay as a patient you pay as a taxpayer.

The U.S. government picks up the tab for one in three Americans by way of

Medicare, Medicaid, the military, and other programs. According to the

provisions of Bayh-Dole, the government gets a royalty-free use, forever,

of its funded inventions. It has never tried to collect. You might say the

taxpayers pay for the hat-and have it handed to them.

What might progress have looked like without the law? No one can answer

that for sure. But one possible scenario is what happened to that other

high-technology, university-incubated industry: the computer business.

Intellectual property was and is important in information technology. But

very few electronic hardware, software, or Internet-related inventions are

licensed through university intermediaries. Even companies that swear blood

oaths against each other don’t tie themselves into knots licensing bits and

pieces of their technologies in airtight, exclusive deals. Rather, they

broadly license their entire patent portfolios. In a piece of hardware that

may straddle technology covered in a hundred patent claims, the strategic

value of a single patent is low, says Mowery, a professor at the Haas

School of Business at UC-Berkeley. “One reason you see these big

cross-licensing deals is because the effort required to determine the value

of every patent in Sun’s pile as opposed to IBM’s as opposed to HP’s is so

great relative to the likely value of any single patent. So they come in

with their proud stack and they just say, ‘We’ll let you have access to

ours if you let us have yours.’ “

This necessary sharing of resources has created giant new businesses and

business models. And the effusive crosstalk between rivals is one driver in

the lowering of prices for technology components (see chart). Semiconductor

prices have fallen by an astounding 28% a year since 1974, in near

synchronicity with ’s law, coined way back in 1965. Meanwhile, the

American consumer has benefited from one paradigm shift in technology after

another.

Universities believe, however, that biomedical discoveries-which account

for more than half their invention disclosures and most of their licensing

revenue-are simply a riskier proposition than computers. Not only are the

failure rates sky high, there’s also the FDA to worry about. No company

would invest the huge capital to turn what was essentially a theory into a

compound if it knew that rivals could come along later, after the hard work

was done, and sell the same pill. Besides, exclusive deals let the schools

offload their patent costs-often as much as $25,000 for the first

filing-right away.

Those fears aside, the truth is that even if some skittish VCs stay home,

the science will get done. In other words, Bayh-Dole has served mostly as a

nervous mother for a science that never needed one. New biomedical

discoveries are now coddled and kept out of the rain-and it’s hurting

progress.

The NIH recently said it thinks research tools should be freely licensed,

for example, but there are no teeth in its policy. According to the

provisions of Bayh-Dole, federal agencies do have the power to “march in”

when necessary technology is not being disseminated into the public domain.

In 25 years, however, the NIH has never used that power.

A better solution is simply to amend the law. The right to make a profit

from a taxpayer-funded discovery should come with an explicit demand: The

patent holder has to license the invention as broadly as possible-which

would make exclusive deals the rare exception, not the rule. The fact is,

the right people will always find a way to turn a good idea into something

tangible. If you have any doubt, spend an afternoon in Cambridge, Mass.

“There are doughnuts in the conference room this morning,” says

Preston. “A Saudi crown prince is coming for a visit.” Preston, a senior

lecturer at MIT’s Entrepreneurship Center, former head of the university’s

technology licensing office, and a true pioneer in tech transfer, isn’t the

least bit excited about the prominent guest. It is hard to tell-but he may

be excited about the doughnuts.

Here in his ground-floor office in the Muckley Building, next door to

Kendall Square, Preston, 55, is drinking from a mug that’s marked nerd

prize. It’s a pet name for the Entrepreneurship Center’s now somewhat

famous “$50K Competition”-in which students and even faculty researchers

vie for seed money based on the quality of their business plans. The

contest, now in its 16th year, has showcased some notable winners-and

losers. (The top prize in 1998 went to Internet search engine Direct Hit,

which was later sold to Ask Jeeves for $447 million; the loser, Akamai, now

has a market cap of $1.9 billion.)

The “$50K” is just one of scads of MIT projects to bring out the inner

entrepreneur in campus denizens. At MIT, the discourse between university

and industry isn’t merely pervasive, it’s a central feature of the culture.

Every student has to do research; every faculty member gets a day off a

week to consult for industry.

A 1997 BankBoston (now Bank of America) study tried to trace the effects of

MIT’s commitment to “useful knowledge,” as the school’s founder put it in

1861-tallying up all the companies founded by at least one MIT alum or

faculty member, in addition to those spun off from an MIT lab. The study

identified 4,000 companies, employing 1.1 million people, which together

have $232 billion in annual worldwide sales. Among the bounty: blue-chip

names like Hewlett-Packard (co-founder Bill Hewlett, class of 1936),

Raytheon (Vannevar Bush, class of 1916), Intel ( Noyce, ‘53),

Gillette, Tyco International, Digital Equipment Corp., and Soup.

All these big companies formed way before Bayh-Dole.

Many of the companies (and jobs) remain in the Boston area, attracting more

talent, venture funding, and commercial investment-which, in turn, creates

new companies. The loop feeds on itself, and a “cluster,” that El Dorado of

economic development, is born.

MIT understood that dynamic before anybody else. Forty years before

Bayh-Dole, in fact, it set up a university office to license home-grown

discoveries. By the mid-1980s-in part, thanks to a national attitude shift

after the law’s enactment-MIT wasn’t merely granting rights to its

technology, says Preston, but also aggressively taking equity positions in

startups and doing its best to nurture young companies with money,

management help, and the advice of seasoned MIT entrepreneurs. Even

Preston-a big fan of Bayh-Dole-admits that the science would have probably

come anyway.

Later, tooling around in Preston’s Saab 9-5, the evidence of past economic

booms and boomlets is unearthed like an archeological dig. History seems to

fold upon itself in the redbrick building at 700 Main Street (what used to

be called 28 Osborn). This is the place to which Graham Bell made

his first long-distance phone call in 1876. Later, in another flush time,

the building was used to make railroad cars, then Federal-style furniture

for the Brahmins across the River . The faded white lettering from

the factory still calls out from the façade. The building was then rented

by Edwin Land in the 1930s to house a research facility for what would one

day be a newfangled camera called Polaroid. And then, at the turn of the

millennium, it became the home of Transkaryotic Therapies, a homegrown

biotech that was acquired in July by British company Shire Pharmaceuticals.

American ingenuity, it seems, never needs much of a jump start. Just a good

sign painter.

Research AssociateDoris Burke

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Sheri Nakken, former R.N., MA, Hahnemannian Homeopath

Vaccination Information & Choice Network, Nevada City CA & Wales UK

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