~ When your enemy’s making mistakes, don’t interrupt him. Billy Beane (General Manager of the Oakland A’s) in Moneyball
~ Can’t anybody here play this game? Manager Casey Stengel in anguish over his 1962 New York Mets. The team went 40-120– the most losses by any team since 1899.
As an avid baseball fan nothing makes me crazier than seeing my team lose because of dumb unforced errors. And anyone who follows the Pittsburgh Pirates has seen more than their share of these (like on Friday the 13th under a full moon when our pitchers walked 6 batters in the 9th inning blowing a comfortable lead). Countries, like sports teams, make inexplicable unforced errors leading to loses that are a lot more significant than just losing a game. Two recent articles and one anecdote caution that if the US loses its technological lead it could be because of our own blunders rather than what our competitors are doing.
The first article illustrates the significance of one of our greatest resources: our unequalled system of publicly supported R&D. Patents as proxies: NIH hubs of innovation published in the June edition of Nature Biotechnology documents the tremendous potential federally-funded inventions have to help move the life science industry forward. Of course, potential is a double edged sword: every day teams with more potential lose to those who play the game smarter, avoiding unforced mistakes.
Patents as proxies looks at medical innovation which employs one million Americans, generates $84 billion in wages and salaries and $90 billion in exported goods and services. The U.S. biomedical industry dominates the world largely because of successful partnerships between our public and private sectors. Taxpayer supported inventions made in universities and federal laboratories are licensed under the Bayh-Dole Act to the private sector for commercial development. The article notes the resulting impact as universities created 1.7 new companies per day and 657 new products from their patent licensing in 2010 alone. It estimates “that approximately 30% of the total value of NASDAQ has roots in academic research.”
“When I use a word,” Humpty Dumpty said in a rather scornful tone, “it means just what I chose it to mean- neither more nor less.” ~ Lewis Carroll
Humpty Dumpty with Alice, from “Through the Looking Glass.”
Far be it from me to criticize anyone’s skills in using a foreign language as my greatest challenge in getting out of college was the requirement to learn one. I did OK when we talked about French, Spanish or German culture and history—but those discussions were in English. The problem began when the instructor insisted that we try to talk in the other language. My brain immediately went numb. I used to sit in the very back of the class sweating bullets that the clock would finally tick down before the professor could call on me. I can still recall the terrified feeling as our German class wound down to the last 5 minutes and the kid next to me was speaking. “Please, talk slow,” I prayed. If that failed, I went to my “prevent defense” asking the professor to repeat the question as seconds slowly ticked off. When that failed, I was in deep kimchi (one foreign word I can say successfully, but that didn’t get me any points in French, Spanish or German).
Perhaps my greatest academic achievement was finding a degree that didn’t require learning a language. Otherwise, I’d be like Zonker Harris in the comic strip Doonesberry who’s been in college for 40 years. You have to wonder how much he owes in college loans by now, but that’s another story.
After seeing how the federal agencies intend to implement the recommendations from The White House Lab to Market Summit the difference between product and process oriented people really hit home.
Product people burn with a passion to get the job done. Process people focus on rules and procedures to minimize risk. Thus, product people are like the accelerator and process people are the brakes. You need both in your car, but if the brakes run the show you’ll never get out of the driveway. Similarly, whenever deal makers are subservient in a system to process people, frustration is sure to follow.
Last year the White House put together its Lab to Market Summit and asked Diane Palmintera and me to co-chair a panel of external experts to review several innovative agency technology transfer programs and come up with “transformational, not incremental” ideas to increase the commercialization of $140 B of federally funded research.
Steel yourself, gentle reader. This month we go hunting the living dead: arguments that keep climbing out of the grave to bite and infect the unwary.
Four months after NIH rejected the latest attempt to misuse the Bayh-Dole Act to control drug prices zealots have risen from the crypt claiming the law should be used to haunt drug developers. March-in rights were designed to force universities to issue additional licenses if effective efforts are not being made to commercialize a federally funded invention; if the licensee cannot meet national health, safety or regulatory needs; or if the licensee fails to make the product in the U.S. despite a pledge to do so.
Critics claim there’s another trigger: if they don’t like the price of a drug. While the cost of new drugs is a concern, their solution sucks the life blood out of a system leading the world in protecting public health. It’s time to drive a stake through that spectre.
This month’s column is based on my remarks to the Association of University Technology Managers (AUTM) at their annual meeting in San Francisco.
First of all, congratulations! You made TheWashington Post and they even spelled your name correctly. Unfortunately, AUTM was specifically called out in an article titled Patent Trolls Have a Surprising Ally: Universities.The name of another article appearing at the same time Patenting University Research Has Been a Dismal Failure, Enabling Patent Trolls: It’s Time to Stop while long winded speaks for itself. And two innocuous sounding reports from the Brookings Institution Building an Innovation Based Economy and University Start-Ups: Critical for Tech Transfer say that Congress should amend the Bayh-Dole Act to give the federal government control over whether you can grant exclusive licenses, that you have been unsuccessful as most technology transfer offices are not self-supporting, that your business orientation conflicts with the mission of a university and your alleged model of “licensing to the highest bidder” has failed. The New York Times accurately summarized the intended message in its headline Patenting Their Discoveries Does Not Pay Off for Most Universities.
For a profession that keeps a low profile and goes out of its way not to antagonize people, you may wonder what in the world’s going on that you are gaining such notoriety. The answer is that you are in the sights of several groups who do not wish you well. Some want to weaken the patent system for their short term benefit, some believe society would be better off if inventions were freely available without patents; some don’t think it’s moral for universities to work with industry, and others believe they should determine who reaps the rewards of innovation. While operating on diverse belief systems, they all have one thing in common: they don’t like you.
The report makes some good recommendations for increasing support for start-up formation, but implies that most university technology transfer offices (TTO’s) are not worth their cost because they are not self-supporting through patent licensing income. As Brookings acknowledges, universities spend the vast majority of their licensing revenues rewarding inventors or funding new research, not in supporting technology transfer operations. Brookings recommends that universities shift focus from patent licensing to start-up formation.
Ironically, recommendations from a preceding Brookings study would make both start- up formation and patent licensing more difficult.
Baseball is a good analogy for politics, which is why political talk shows have names like “Hard Ball.” A defining moment for any hitter is realizing that a 95 mile an hour fastball has just been deliberately thrown at your head. Pitchers throw the “beanball” is to see if a batter has the courage to play the game knowing that the risk of serious injury is literally an inch away. As former Dodger pitcher Sandy Koufax said: “Pitching is the art of instilling fear.”
A similar challenge is delivered to those who get in the way of well-funded lobbyist’s campaigns. An equivalent of the beanball is the attack article in the Washington Post, the paper of record for the political class. So it should not be surprising that as soon as universities announced that they could not support the House patent reform bill in its current form that a beanball was immediately headed their way.
“The pitcher has to find out if the hitter is timid. And if the hitter is timid, he has to remind the hitter that he’s timid” said Don Drysdale, a pitcher who built a career successfully intimidating batters. In baseball and politics the message behind the pitch is the same: “Kid, are you sure you want to take me on?”
The National Institutes of Health recently made its long anticipated ruling on a petition seeking to use the “march in” provisions of the Bayh-Dole Act as a mechanism for the government to control prices on drugs derived from federally-funded research by issuing compulsory licenses.
NIH correctly ruled that such actions are not sanctioned under the law. Three succeeding NIH directors have reached the same conclusion: the march in rights provision was never intended as a price control mechanism. Hopefully, the third time is the charm.
The petition was a reiteration of one dismissed in 2004 seeking to have the government march in to control the price of Norvir, part of the AIDS “cocktail.” Norvir was invented by Abbott Laboratories with partial NIH funding, thus it falls under the Bayh-Dole Act which grants ownership of federally funded inventions to universities and industry contractors so they can be developed for public use.
Before Bayh-Dole not a single drug was commercialized when the government took patent rights away from inventing organizations. Under the law at least 153 new drugs and vaccines are now alleviating human suffering world-wide.