If you want to stifle innovation and drive up the cost of medical therapies, stick with the current arrangements for sharing the wealth from government-funded research, say some critics.
Or you can open up research findings to stimulate even more research or attempt to require therapies to be made available those who might not be able to afford them, as done by the grant program funded by Microsoft billionaire Bill Gates.
Discussion of those options and more are contained in a background paper to be presented to state lawmakers Monday at a hearing in San Francisco conducted by the Senate and Assembly Health Committees.
Sen. Deborah Ortiz, D-Sacramento and chair of the Senate Committee, is leading the hearing into ways the state can share the wealth expected to be generated by its $6 billion investment in stem cell research.
The staff report (see item below for the full text) examines the background of Prop. 71, the limits of bond financing, the impact of the Bayh-Dole Act, legislation related to Prop. 71 IP policy, the IP report by the California Council on Science and Technology and policy options for the state. Those include tiered or reasonable pricing arrangements, socially responsible licensing, direct royalty sharing and patent pooling, among other things.
Following the report's overview of the Bayh-Dole Act (BDA), it notes that "critics have reported significant unintended consequences of the BDA. A key concern among critics is that the BDA has hindered dissemination of and access to basic research findings. They argue that the BDA has made research more difficult and more costly by keeping basic research out of the public domain. Upstream patenting can limit downstream innovation through, among other things, 'patent thickets.' Patent thickets can arise when too many owners hold intellectual property rights in previous discoveries that constitute obstacles to future research and downstream inventions.
"Another concern is that the focus of research in United States universities has shifted away from fundamental research in order to focus on research targeted to commercial applications. The BDA, critics argue, may have created incentives that undermine the representation of the public interest in the calculus of determining which technologies should be patented and how they should be licensed. They contend that as a result, investment in health-related research and development gravitates toward illness or symptoms that offer the greatest potential returns on investment, regardless of actual needs. Others argue that the commingling of the academic and commercial sectors in part facilitated by the BDA has created a bias in scientific findings and undermined public trust in medical research. BDA 'has resulted in egregious conflicts of interest, especially in the biomedical sciences, and has contributed to the near-extinction of the norm of disinterestedness.' "
"Finally, critics of the BDA have questioned the wisdom of having United States taxpayers pay for products twice, first through federally funded grants to their inventors and then for the products themselves, particularly when they argue that the BDA has had no impact on affordability or accessibility of inventions paid for by taxpayer's dollars."
In addition to citing the Gates Foundation's policies, the report briefly discusses the International Aids Vaccine Initiative, which Ortiz has mentioned as a model to be considered. The legislative staff report said the Aids program "generally retains the rights to inventions developed with its funding and collaborates with commercial partners for development of vaccines and treatments using the inventions."
"In its partnerships, (the Aids effort) seeks commitments that resulting vaccines and treatments will be made available in developing countries at reasonable prices and in sufficient quantities, and has successfully negotiated a number of agreements containing those conditions. In effect, the commercial entity agrees to discount the price of the product in certain markets while retaining the right to price it freely in others," the report said.
In the item immediately below, we discuss the report's look at the royalty-tax issue that the Chronicle reported on earlier this week. Following that is the full text of the staff report.
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