Reducing Drag: New Approaches to IP Negotiation and Technology Licensing
December 3, 2013
Intellectual property (IP) negotiation can be arduous. Recognizing the drag and inefficiencies of these transactions is crucial to developing new approaches for IP that reduce unneeded delay in translating discoveries into drugs, vaccines, devices, diagnostics, or new services.
At the 2013 Partnering for Cures meeting, the panel “Reducing Drag: New Approaches to IP Negotiation and Technology Licensing” was moderated by FasterCures Senior Fellow Robert Cook-Deegan. He posed three questions to the panelists concerning IP negotiation: what would you like to fix, what do you not want to break, and what else should the audience hear. With a panel of voices from industry, patient groups, academia, consulting, and government, the answers were varied and highlighted many issues in IP negotiation faced by all.
Justin McCarthy, senior vice president and general counsel of Pfizer, began the conversation by describing the changing landscape of medical research and how this has an impact on IP negotiation. At Pfizer, there has been the realization that, “the days where a drug is wholly discovered, developed, manufactured, and commercialized within the four walls in one company is largely a thing of the past.” They have now moved toward models that involve more open approaches with a variety of institutions and look to collaborate in ways beyond the past fee-for-service model. These collaborative models have scientists working side by side to ensure that contributions are fair for everyone.
Josh Sommer, executive director of the Chordoma Foundation, has a unique point of view as an advocate for a disease with the potential for orphan drug status. For some companies, chordoma may be a path to market for drugs in their portfolio, but it must be an attractive path in order to get companies to invest. Many potential investors look for pre-clinical data to validate that their investment will be worthwhile. However, the system experiences a breakdown in getting these pre-clinical models to the companies. Academic institutions who own these models expect licensing fees, “reach through” rights, or other compensation, often causing negotiations to break down over time. Because of the difficulty of acquiring models and the collection costs, researchers will test on the limited models they already have access to, but often these sets are not representative of the entire disease. Testing in this way, as Sommer pointed out, is counterproductive from a scientific point of view and morally questionable from a patient perspective. “There’s nothing inventive about these models,” Sommer said. “They’re taken from human tumors donated by patients who are treated at these medical centers. They are not modified in any way; they’re simply sustained and they don’t embody intellectual property.” In addition, if patients do not demand royalties for the success of drugs from their clinical trial participation, why do academic centers expect royalties? Sommer’s solution for these issues is to treat all patient-derived models as a public resource, free to be used under the same terms by both commercial and academic institutions.
Voicing the concerns of academic institutions was Lita Nelsen, director of the Technology Licensing Office at the Massachusetts Institute of Technology (MIT). She was quick to point out that MIT already supports Sommer’s solution as all their mouse models are available non-exclusively for nonprofits and single payers alike. The difficulty in academia is in the translation of findings to inventions. “It is our experience that very, very seldom will an invention that comes out of our very fundamental research go directly to a large pharmaceutical company,” forcing researches to go the start-up company route in the biotech area. The other issue academics face is dealing with venture investors who will not invest in unrealistic agreements and often may want to take back the IP license after millions of dollars have been invested. There must be agreements in place that give investors reasonable assurance that their rights will not be taken from them in order for these collaborative efforts to be successful.
Many collaborative research efforts have been implemented with great success, as a collaboration among PATH, the U.S. Food and Drug Administration, and the National Institutes of Health (NIH) recently displayed. Steven Ferguson, deputy director of licensing and entrepreneurship in the Office of Technology Transfer at NIH, described how this collaboration was able to create a meningitis vaccine, which sold more than 100 million does in Africa and had a direct impact on the disease prevalence in areas where it was used. This work inspired the NIH to create a term sheet template for working with foundations and nonprofits who are working to commercialize technology, in an effort to ease many of the woes that would be faced. Ferguson emphasized the importance of flexibility that research institutions must have in order to work with nonprofits to take a product through to development.
Reiterating many of the themes mentioned by other panelists, David Clifford, founder of Avicenna, said that the future is in collaboration, not the current models. “Biology is very complex—it’s unlikely that we’re going to get to the next generation of IP discovery along the same mode that has taken us this far. It’s more likely that it’s going to be coalitions, consortia of people that are coming together to form new organizations or leveraging existing systems that really breed new generations of therapeutics.” Reevaluating the current models and asking for goals to allow for true partnering for cures is a space with many unanswered questions that need to be addressed.
The intricacies of IP negotiation and technology transfer will never entirely disappear, but these panelists agreed that collaboration, flexibility, and thoughtful negotiation are crucial to continue translating fundamental discoveries into therapeutics. Cook-Deegan closed the conversation by asking how to build a system of IP negotiation that can learn from itself. Solutions include transparency in licensing activity and openness in what is happening with IP. However, these solutions are not yet widely accepted. For groups new to this space, Cook-Deegan recommended FasterCures’ The Research Acceleration and Innovation Network’s Intellectual Property Intersection, which has many resources on IP negotiation best practices.










