Share the fruits of state research

Published on

The Albany Times-Union (New York)

The following Op-Ed commentary from the Albany Times-Union, published on January 14, 2007, was written by John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, a Santa Monica, Calif.-based nonprofit, nonpartisan consumer advocacy group. His e-mail is [email protected]

Over the past decade, New York has dramatically increased the amount of public money spent on scientific research. If Gov. Eliot Spitzer’s new plan to fund $2 billion in stem cell and other medical research is enacted, the state’s commitment and the taxpayers’ stake will soar even higher.

Who should control, profit and otherwise benefit from discoveries made in publicly funded laboratories across the Empire State? How you settle such matters is known as intellectual property policy. And like most states, New York doesn’t have one.

Four assemblymen — William Magnarelli, Joseph Morelle, Mark Weprin and Robin Schimminger — are sponsoring a roundtable discussion of the issue Wednesday in Albany. It’s the second such forum to tackle IP policy for the state. Though it’s unclear when legislation will emerge, the legislators should be commended for addressing the issue.

It is not surprising New York has no comprehensive IP policy. One reason is that for years the federal government funded most scientific research. But as states like New York have increasingly increased their contributions, appropriate policies and safeguards are essential at the state level. Otherwise billions of dollars in public funds will only benefit big companies that will turn around and overcharge the public for the products their taxpayer dollars went to invent and develop in the first place.

Representatives of universities and industry will likely point the assemblymen to the federal Bayh-Dole Act as a model for New York’s IP policies. But the fact is that the policy followed by the federal government for the past 25 years is flawed. It has given ownership of any discovery to the research institution where it is made even though taxpayers paid for the research. The institution — usually a university — patents the discovery and then licenses it to a private company and receives royalties. There is no payback for the people who funded the research, the taxpayers.

Too often under Bayh-Dole, private drug companies have reaped huge profits while benefiting from taxpayer-funded research. Take the case of Xalatan, a blockbuster drug to fight glaucoma. Key research for the drug was done with a $4 million federal grant by a little-known science professor, Laszlo Z. Bito at Columbia University. His discovery was patented and licensed exclusively to Pharmacia Corp. (now Pfizer) for less than $150,000.

Pharmacia made $507 million on Xalatan in 1999 alone, charging U.S. patients $50 a bottle for ingredients that cost only pennies to produce. The university received $20 million in royalties. Professor Bito’s share was one fifth of that. U.S. taxpayers got nothing for their investment except a drug that’s twice as expensive as it is in Europe.

Or consider the California biotech company Genentech. It is charging $100,000 a year for its cancer-fighting drug Avastin even though it received $44.6 million in federal funds from the National Cancer Institute to develop it.

Companies like Genentech act like committed socialists when it comes to taxpayers and the government bearing the risk of drug development. But they are greedy capitalists when it’s time to parcel out the profits.

When venture capitalists provide money to companies they require clearly spelled out conditions and expectations. There is no reason it should be any different when New York’s taxpayers put their hard-earned dollars on the line to fund research. They are entitled to insist upon maximum public benefit for their investment. Here are four principles that will ensure that:

First, when a discovery has been funded by the public, it’s only fair that the public share in any profits. As an example, the recently enacted IP rules in California’s landmark $6 billion stem cell research initiative provide that if there is revenue to a research institution as the result of publicly funded research, 25 percent goes back to the state.

Second, if the public has paid for key discoveries, then IP policies should guarantee affordable access to those discoveries. To ensure this, New York’s IP rules must enable the state to intervene if a drug or other invention developed with public funds is priced unreasonably.

Third, if New York has funded an invention, but the patent holder does not commercialize it, New York should be able to license the invention to someone who will.

Fourth, the results of all New York-funded research should be available to all researchers in New York — and any other researchers designated by the state — for further research without a licensing fee. Once taxpayers pay to develop a technology, researchers in the state ought to have free access for further

The premise of a sensible state IP policy is simple: The public should share equitably in the fruits of the research for which it paid.

Consumer Watchdog
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