Academic research institutions and drug companies alike have been criticized for the high prices of their patent-protected drugs–particularly when these high prices are maintained in poor countries, where patients can least afford them.  Yale was the site of a conference last week where it and five other universities signed on to a statement of principles governing technology licensing in developing countries.  While this document is primarily a statement of shared philosophy, does it provide a good model for improving access to medicine in the poor nations–and perhaps even here at home?

Many would agree that universities should automatically subscribe to the principle of removing barriers to medication in developing countries; few but the most cynical would expect academic institutions to desire profits over the advancement of global health.  Unfortunately, it is unclear whether universities have the legal or practical potential to ensure that fruits of their researchers are equitably available–mostly because universities are not in the business of actually making the drugs.

The new licensing principles are crafted to address that disconnect between academic (and mostly publicly funded) research and the patient end-user.  In the context of academic biomedical patents, licenses are the contracts that the university (which reserves the right to patent anything invented within its facilities) signs with companies that agree to develop and market the innovation.  These licenses can contain anything mutually agreeable to both parties, but the main thing at stake is money: the university wants to get as large a percentage as possible in royalties, while still providing sufficient incentive to the company taking the risk of developing the drug.  The right of universities to profit, financially, from publicly funded research was codified by Congress almost thirty years ago, and major research universities have offices dedicated to working out license agreements.  What several universities, including Yale, have now agreed to in principle, is to exercise their rights as patent holders, to ensure licenses are written in such a way that, at the very least, they won’t be barriers to distributing discounted drugs in poor countries.

From an extremely idealistic vantage, it is appealing to compare these activist, principled licenses to the copyright licenses that have enabled the open-source software revolution, where creators invoke their intellectual property rights to ensure their creations are openly available.  Such a philosophy lies behind Creative Commons licenses, covering the words you’re reading right now, as well as the GPL, which has enabled a software revolution.

Of course, the comparison is completely metaphorical.  The major problem is that a license can be as activist and idealistic as anyone wants it to be, reserving rights to free distribution across Africa, Asia, Detroit and the Mississippi Delta, but it will have no impact unless the terms are acceptable to a drug company.

Furthermore, like many high-tech products, drugs are often born of quite complicated intellectual-property parenthood.  A company might license a research patent from a university, but then make several more patentable innovations, perhaps related to the process of actually manufacturing the drug, before the medication enters the marketplace.   Those who negotiate licenses on behalf of universities will have to be exquisitely shrewd to anticipate such complexities, and ensure that they can retract licenses if drug companies don’t follow through with equitable drug distribution.

The proposal enshrining the new guiding principles recognizes the pitfalls in ensuring access to medicines.  Time will tell whether universities can, within the current patent regime, exert a measurable influence over drug distribution, or whether their new principles are merely P.R. posturing.

Finally, by stating the principle of equitable access should be embodied in license agreements, how long can universities ignore patients here at home, in the U.S., that can’t afford medicine?  Drug companies are afraid that cheap drugs distributed even across the ocean in Africa will make it back to rich countries, diluting their market share and profits.  However, poverty is as globalized as ever, global warming threatens to bring tropical diseases to the temperate homeland, and meaningful health-care reform remains elusive.  Is it possible for Yale and other institutions to remain true to their goal of “implementing technology transfer strategies that promote the availability of health-related technologies”, without doing the same at home as in poor countries?

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More reading:

• Universities Allied for Essential Medicines: detailed proposals for Equitable Access Licenses.
• Yale press release.

A New York Times article from last week caught the eye of commentators on the business and law of intellectual property. The article describes an up-and-coming business model, already filling-up on on venture capital, that aims to streamline the process of licensing patents by setting up commercially organized patent marketplaces.

These patent auctioneers aim to insert themselves as efficient (and lucrative) middlemen between inventors and manufacturers, allowing prices to be negotiated for patents within an environment of open and well-informed trading.

Patent auctions have their detractors. Michael Masnick at Techdirt invokes Thomas Jefferson in proclaiming the theoretical weaknesses and practical costs of such markets:

Markets are for property exchange and the more efficient allocation of property. Ideas are not property, and making a market for them and holding them back doesn’t accelerate the pace of innovation, it retards it. Greatly.

It’s still unclear whether patent marketplaces can solve, even by auction-style bidding, the complicated task of putting a monetary value on patents. Putting a value on an idea is difficult enough, but patents, unlike, say, copyrighted music, are especially risky because they vulnerable to being challenged in the courtroom on the basis of their novelty and non-obviousness.

If commercial patent marketplaces gained traction, it seems likely that they would have a huge appeal to universities, which invest large amounts of money in their “technology transfer” or “cooperative research” arms. These offices are responsible for identifying research at the university that may be both patentable and lucrative, so that the university can make investments in writing up and applying for patents with the hope of returns from future royalties. (Universities can seek patents for research performed with federal tax-dollars, an arrangement made possible under the momentous Bayh-Dole Act of 1980). Successful patent marketplaces could decrease the costs and risks to the university of licensing their innovations, perhaps allowing them to privatize some of the work of technology transfer.

Anything that actually speeds the route from innovation to technology sounds like a good thing. However, the risk of patent auctions, particularly when applied to basic, academic biomedical research, is that they could further erode the stated purpose of that research by adding another layer between inventor and manufacturer. Research is performed and licensed not to make universities rich, but to save and improve lives.

We already let universities, public and private, take control of inventions that were made possible with public money. We may not, however, be doing enough to ensure that the social utility of these inventions is maximized during the licensing process.