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Assuring Fair Access in Licensing of University Technology

Assuring Fair Access in Licensing of University Technology. Are there new strategies? Lita Nelsen Mass. Inst. of Tech. MATTO July, 2007. The Dilemma. Universities want to “do the right thing” in the licensing their technology— which should include assuring fair access

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Assuring Fair Access in Licensing of University Technology

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  1. Assuring Fair Access in Licensing of University Technology Are there new strategies? Lita Nelsen Mass. Inst. of Tech. MATTO July, 2007

  2. The Dilemma • Universities want to “do the right thing” in the licensing their technology—which should include assuring fair access • But most university technology is very hard to license, because its practicality is unproven • Exclusive licenses are usually necessary to incentivize investment • “Unusual and burdensome provisions” inhibit licensing

  3. And Furthermore: • Most very new vaccine and drug technology will be licensed to small biotech companies (Big Pharma wants more proven technology) • The biotech company will eventually need to form a strategic alliance with Big Pharma to bring the product through clinical trials and to market • Going into the deal, Little Bio is particularly wary of “burdensome clauses” that might hinder future alliances with Big Pharma

  4. And there are no “norms” • Universities have little guidance as to “practical, workable clauses” that will assure fair access without impeding development of new technology • Companies have no experience with “practical workable clauses” that assure access without impeding profitable business

  5. What Can Be Done? • Educate university executives and tech transfer professionals of the need to assure fair access • but the “educators” must show knowledge of the practicalities, not just preach • Collect and publicize clauses and model agreements that have worked for both universities and companies • Educate companies and investors to “the norms” and even the “non-negotiables” in university licenses

  6. Will Norm-Setting Work? Analogous examples of consensus-forming in university/industry relations in: • Open publication of all research results • Full overhead payment for sponsored research • University retention of title to patents • (evolving) Conflict of interest rules

  7. Example of how Norm-Setting has been done in other contexts: university/industry relations • A few elite institutions decide to “hold the line” (they have the power in negotiating with industry) • A national dialogue develops on “what’s right” • Societies of university professionals educate their members • More universities “hold the line” • Industry learns to work with the rules since “they are not negotiable”

  8. Some evolving norms in university licensing for health research • Free access to materials for other non-profit institutions • No “reach through” to other universities’ inventions • [Dirty secret]: Access sometimes inhibited by academic rivalries • University licenses beginning to reserve rights for themselves “and other non-profits” in exclusive licenses

  9. More evolving norms • Research tools: “Should this particular invention be exclusively licensed? What’s the justification?” • Great care in licensing “future inventions”: • Limiting fields of use, where appropriate • Greater emphasis on diligence provisions (Are they developing it or sitting on it?)

  10. Examples of potential new norms • Forego patents in lesser developed countries—when it’s the “best way” • But that’s not always the “best” thing to do • Sometimes it is necessary to offer exclusivity in order to create a big enough market to justify product development • Or even to justify scale up for manufacturing and regulatory approval

  11. Other potential clauses • Restricting pricing of medical products sold to public sectors of developing countries “Products sold to the public sector of developing countries shall be sold at prices no higher than the marginal cost of manufacture and distribution, plus 10%, and royalties shall not be paid on these sales”

  12. More • Limited terms for exclusive rights to discovery technology (not drugs) • Reserving “march in rights” for medical products for sales to public sectors of [lower tier] developing countries • Arbitration provisions for sublicensing when unexpected new applications arise—and exclusive licensee is not developing

  13. A lovely example of what TTO’s can do • IAVI wished to sponsor a program to develop an effective cross-reactive antigen for a multi-clade HIV Vaccine • Four different investigators at four universities had expertise to contribute • All universities had background IP (!!) Full open sharing of materials and scientific cooperation was critical. What to do?

  14. What they did • Agreement to share royalties from all foreground IP (extra share for named inventing institution(s)) • Allowed IAVI to manage licensing of foreground IP • Made background IP available as needed • Implicitly allowed low or no royalties for sales in developing countries

  15. A positive move: Out-Licensing Modified from a proposal by Friedman et al. (Lancet 1/23/03) • Exclusive license to specifically allow outlicensing to generic manufacturers for distribution only in (lower tier) developing countries. Multiple generic licenses can foster price competition and lower prices. • Agree that royalties will be reduced to, e.g. “no more than 20% of the reduced royalties received by licensee”—including zero royalties

  16. Some Cautions • Fair access provisions must be reasonable for both sides and reflect the investment and risk in development • Price controls have thus far proven impractical (viz. the NIH “fair pricing” provision) • Special access for developing countries depends on non-corrupt prevention of back-importing • U.S. Congress must appreciate the fairness of “tiered pricing” for developing countries

  17. We can make a difference • Raise awareness of developing country health care needs and problems in licensing • Discuss and learn from our licensing mistakes • Teach our administrations and licensees about our concerns—with sophisticated understanding • Teach each other about effective clauses and other mechanisms

  18. Let’s start now • We need examples of: • Written policies, if any, that address access to health products in developing countries • Licensing clauses that address these issues • How do we get these aggregated? Who? • AUTM (TMGH?) • Other (the demise of MIHR)

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