Assuring Fair Access Assuring Fair Access in Licensing of in Licensing of

University TechnologyUniversity Technology

Are there new strategies?Are there new strategies?

Lita NelsenLita Nelsen

Mass. Inst. of Tech.Mass. Inst. of Tech.

MATTOMATTO

July, 2007 July, 2007

The DilemmaThe Dilemma

Universities want to “do the right Universities want to “do the right thing” in the licensing their thing” in the licensing their technology—technology—which should include which should include assuring fair accessassuring fair access

But most university technology is But most university technology is very hard to license, because its very hard to license, because its practicality is unprovenpracticality is unproven

Exclusive licenses are usually Exclusive licenses are usually necessary to incentivize investmentnecessary to incentivize investment

““Unusual and burdensome Unusual and burdensome provisions” inhibit licensingprovisions” inhibit licensing

And Furthermore:And Furthermore: Most very new vaccine and drug Most very new vaccine and drug

technology will be licensed to small biotech technology will be licensed to small biotech companies (Big Pharma wants more companies (Big Pharma wants more proven technology)proven technology)

The biotech company will eventually need The biotech company will eventually need to form a strategic alliance with Big to form a strategic alliance with Big Pharma to bring the product through Pharma to bring the product through clinical trials and to marketclinical trials and to market

Going into the deal, Little Bio is particularly Going into the deal, Little Bio is particularly wary of “burdensome clauses” that might wary of “burdensome clauses” that might hinder future alliances with Big Pharmahinder future alliances with Big Pharma

And there are no “norms”And there are no “norms”

Universities have little guidance as to Universities have little guidance as to “practical, workable clauses” that will “practical, workable clauses” that will assure fair access without impeding assure fair access without impeding development of new technologydevelopment of new technology

Companies have no experience with Companies have no experience with “practical workable clauses” that “practical workable clauses” that assure access without impeding assure access without impeding profitable businessprofitable business

What Can Be Done?What Can Be Done?1.1. Educate university executives and Educate university executives and

tech transfer professionals of the tech transfer professionals of the need to assure fair accessneed to assure fair access

• but the “educators” must show but the “educators” must show knowledge of the practicalities, not just knowledge of the practicalities, not just preachpreach

2.2. Collect and publicize clauses and Collect and publicize clauses and model agreements model agreements that have workedthat have worked for both universities and companiesfor both universities and companies

3.3. Educate companies and investors to Educate companies and investors to “the norms” and even the “non-“the norms” and even the “non-negotiables” in university licensesnegotiables” in university licenses

Will Norm-Setting Work?Will Norm-Setting Work?

Analogous examples of consensus-Analogous examples of consensus-forming in university/industry relations forming in university/industry relations in:in:– Open publication of all research Open publication of all research

resultsresults– Full overhead payment for sponsored Full overhead payment for sponsored

researchresearch– University retention of title to patentsUniversity retention of title to patents– (evolving) Conflict of interest rules(evolving) Conflict of interest rules

Example of how Norm-Setting has Example of how Norm-Setting has been done in other contexts: been done in other contexts:

university/industry relationsuniversity/industry relations 1.1. A few elite institutions decide to “hold A few elite institutions decide to “hold

the line” (they have the power in the line” (they have the power in negotiating with industry)negotiating with industry)

2.2. A national dialogue develops on “what’s A national dialogue develops on “what’s right” right”

3.3. Societies of university professionals Societies of university professionals educate their memberseducate their members

4.4. More universities “hold the line”More universities “hold the line”

5.5. Industry learns to work with the rules Industry learns to work with the rules since “they are not negotiable”since “they are not negotiable”

Some evolving norms in Some evolving norms in university licensing for university licensing for

health researchhealth research Free access to materials for other Free access to materials for other

non-profit institutionsnon-profit institutions– No “reach through” to other universities’ No “reach through” to other universities’

inventionsinventions– [Dirty secret]: Access sometimes [Dirty secret]: Access sometimes

inhibited by academic rivalriesinhibited by academic rivalries University licenses beginning to University licenses beginning to

reserve rights for themselves “reserve rights for themselves “and and other non-profits” in exclusive other non-profits” in exclusive licenseslicenses

More evolving normsMore evolving norms

Research tools: “Should this particular Research tools: “Should this particular invention be exclusively licensed? invention be exclusively licensed? What’s the justification?”What’s the justification?”

Great care in licensing “future Great care in licensing “future inventions”: inventions”:

Limiting fields of use, where Limiting fields of use, where appropriateappropriate

Greater emphasis on diligence Greater emphasis on diligence provisions (Are they developing it or provisions (Are they developing it or sitting on it?)sitting on it?)

Examples of potential new Examples of potential new normsnorms

Forego patents in lesser developed Forego patents in lesser developed countries—countries—whenwhen it’s the “best way” it’s the “best way”– But that’s not always the “best” thing But that’s not always the “best” thing

to doto do– Sometimes it is necessary to offer Sometimes it is necessary to offer

exclusivity in order to create a big exclusivity in order to create a big enough market to justify product enough market to justify product developmentdevelopment Or even to justify scale up for Or even to justify scale up for

manufacturing and regulatory approval manufacturing and regulatory approval

Other potential clausesOther potential clauses

Restricting pricing of medical Restricting pricing of medical products sold to public sectors of products sold to public sectors of developing countriesdeveloping countries

““Products sold to the public sector Products sold to the public sector of developing countries shall be of developing countries shall be sold at prices no higher than the sold at prices no higher than the marginal cost of manufacture and marginal cost of manufacture and distribution, plus 10%, and distribution, plus 10%, and royalties shall not be paid on royalties shall not be paid on these sales”these sales”

More More

Limited terms for exclusive rights to Limited terms for exclusive rights to discoverydiscovery technology (not drugs) technology (not drugs)

Reserving “march in rights” for Reserving “march in rights” for medical products for sales to public medical products for sales to public sectors of [lower tier] developing sectors of [lower tier] developing countriescountries

Arbitration provisions for sublicensing Arbitration provisions for sublicensing when unexpected new applications when unexpected new applications arise—and exclusive licensee is not arise—and exclusive licensee is not developingdeveloping

A lovely example of what A lovely example of what TTO’s can doTTO’s can do

IAVI wished to sponsor a program to IAVI wished to sponsor a program to develop an effective cross-reactive develop an effective cross-reactive antigen for a multi-clade HIV Vaccineantigen for a multi-clade HIV Vaccine

Four different investigators at four Four different investigators at four universities had expertise to contributeuniversities had expertise to contribute

All universities had background IP (!!)All universities had background IP (!!)

Full open sharing of materials and Full open sharing of materials and scientific cooperation was criticalscientific cooperation was critical. . What to do?What to do?

What they didWhat they did

Agreement to share royalties from Agreement to share royalties from all foreground IP (extra share for all foreground IP (extra share for named inventing institution(s))named inventing institution(s))

Allowed IAVI to manage licensing of Allowed IAVI to manage licensing of foreground IP foreground IP

Made background IP available as Made background IP available as neededneeded

Implicitly allowed low or no royalties Implicitly allowed low or no royalties for sales in developing countriesfor sales in developing countries

A positive move: Out-A positive move: Out-LicensingLicensing

Modified from a proposal by Friedman et al. Modified from a proposal by Friedman et al. (Lancet 1/23/03)(Lancet 1/23/03)

Exclusive license to specifically allow Exclusive license to specifically allow outlicensing to generic manufacturers outlicensing to generic manufacturers for distribution only in (lower tier) for distribution only in (lower tier) developing countries. Multiple generic developing countries. Multiple generic licenses can foster price competition licenses can foster price competition and lower prices.and lower prices.

Agree that royalties will be reduced to, Agree that royalties will be reduced to, e.g. “no more than 20% of the reduced e.g. “no more than 20% of the reduced royalties received by licensee”—royalties received by licensee”—including zero royaltiesincluding zero royalties

Some CautionsSome Cautions

Fair access provisions must be Fair access provisions must be reasonable for both sides and reflect the reasonable for both sides and reflect the investment and risk in developmentinvestment and risk in development

Price controls have thus far proven Price controls have thus far proven impractical (viz. the NIH “fair pricing” impractical (viz. the NIH “fair pricing” provision)provision)

Special access for developing countries Special access for developing countries depends on non-corrupt prevention of depends on non-corrupt prevention of back-importing back-importing

U.S. Congress must appreciate the U.S. Congress must appreciate the fairness of “tiered pricing” for developing fairness of “tiered pricing” for developing countriescountries

We can make a differenceWe can make a difference

Raise awareness of developing Raise awareness of developing country health care needs and country health care needs and problems in licensingproblems in licensing

Discuss and learn from our licensing Discuss and learn from our licensing mistakesmistakes

Teach our administrations and Teach our administrations and licensees about our concerns—with licensees about our concerns—with sophisticated understandingsophisticated understanding

Teach each other about effective Teach each other about effective clauses and other mechanismsclauses and other mechanisms

Let’s start nowLet’s start now

We need examples of:We need examples of:– Written policies, if any, that address access Written policies, if any, that address access

to health products in developing countriesto health products in developing countries– Licensing clauses that address these issues Licensing clauses that address these issues

How do we get these aggregated? How do we get these aggregated? Who?Who?– AUTM (TMGH?)AUTM (TMGH?)– Other (the demise of MIHR)Other (the demise of MIHR)