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305
The Power of Money: Commercialisation of Research Conducted in Public Institutions
Jocelyn Downie*
Introduction
Against a backdrop of increased costs and decreased support for universities (particularly for basic research) from government and other traditional noncommercial sources,1 as well as a transition to "knowledge-based" economies, we are witnessing remarkable commercialisation of research in public institutions around the world.
In this paper, I offer some critical reflection on this phenomenon. That is, I first describe the phenomenon (drawing on data from New Zealand and Australia) and then enumerate the potential effects of it. I conclude that there is much that we simply do not know about the impact of commercialisation. Much greater caution is therefore warranted on the part of the public institutions currently embracing this phenomenon with enthusiasm.
Dissecting the Phenomenon
For the purposes of this paper, I will stipulate a set of definitions. First, "commercialisation of research" means "the converting of research results into products, services, and processes that can be the object of commercial transactions". "Public institutions" means "tertiary institutions, Crown Research Institutes, government-funded Centres of Excellence, and public hospitals". In discussing the commercialisation of research in public institutions, I will focus on two often-related features of the phenomenon: first, the harnessing of intellectual property by public institutions (through, for example, the patenting or licensing of research results); and, second, the partnering of public institutions with the private sector.
Harnessing Intellectual Property
Public institutions in New Zealand and Australia are certainly harnessing their intellectual property (IP). In Australia, for example, public research institutions
Jocelyn Downie holds a Canada Research Chair in Health Law and Policy and is the Director of the Health Law Institute at Dalhousie University. Commonwealth Government grants decreased from 57% of total university revenue in 1996 to 41% in 2003. Australian Vice-Chancellors Committee "University Funding and Expenditure" (2005) Table A2. Accessed at www.avcc.edu.au/australias.unis/statistics/uni_funding_expenditure. New Zealand government grants (excluding research) decreased from 73 % of university operating revenue in 1991 to 42.2% in 2002. Other revenue (research and other) rose from 12.9% of operating revenue in 1991 to 28% in 2002. W. Guy Scott & Helen M. Scott, "University Income and Student Numbers between 1980 and 2002" (2004) 7. Accessed at www.aus.ac.nz/funding.htm.
306 Otago Law Review (2006) Vol 11 No 2
reported the following IP harnessing activities for 2002 (the first number represents all institutions and the second number represents only universities):
In New Zealand, according to the most recent available statistics (1993-1997), a Crown Research Institute (Industrial Research Limited) was the top generator of patent applications and a university (Auckland) was second. A second CRI was in the top five generators of patent applications.3
Through the harnessing of intellectual property, the public institutions are generating considerable income. For example, according to Statistics New Zealand:
New Zealand's nine Crown Research Institutes (CRIs) earned $256.8 million in sales during the year ended 30 June 2004... This is an increase of $22.1 million on the previous June year.... Total revenue increased by 2.3 per cent to $532.2 million.... [T]axpayer equity in the CRIs rose by $20.2 million to reach $317.8 million.4
This harnessing of intellectual property in New Zealand and Australia is being driven, in large part, by significant financial incentives. First, and most obviously, the public institutions are permitted to keep profits from the commercialisation of their research. Second, significant funding is available specifically for commercialisable research, as the governments of Australia and New Zealand are creating funds to support commercialisable research in public institutions. For example, the Pre-Seed Accelerator Fund (PSAF) in New Zealand is designed to "accelerate the commercialisation of new knowledge that arises from publicly funded research carried out by public sector research providers".5 The Pre-
Australian Government, Department of Education, Science and Training,"National
Survey of Research Commercialisation: Years 2001 and 2002" (2004) xiii. Accessed
atwww.dest.gov.au/highered/commercialisation/documents.
"In terms of the number of patent applications in the period 1993-1997, Industrial
Research Limited (CRI) was the highest producer, followed by Auckland
Uniservices Limited (affiliated to Auckland University). Two CRIs were among
the top five patenting organisations. This shows that public-funded scientific
research has led to considerable patenting activity." Pam Walker & Junjia Liu,
"Baseline Indicators for Measuring Progress towards the goals of RS&T: 2010"
(1998) 42.
"Crown Research Institute Statistics (Year ended 30 June 2004) - Media Release"
(2 December 2004). Accessed at www2.stats.govt.nz.
Accessed at www.frst.govt.nz/research/preseed.cfm.
The Power of Money 307
Seed Fund in Australia (effectively a government-funded venture capital fund) administers $104.1 million "to support projects or companies formed by universities or government research agencies."6 Later in this paper, I will discuss additional reasons for the commercialisation of research in public institutions.
Partnering with the Private Sector
Public research institutions in New Zealand and Australia are also partnering with the private sector. For example, investment by business in Australian universities was $174 million in 2002.7 In Australian universities, private funding (industry and other private sources) accounted for 33% of all university research income in 2003.8 In New Zealand, there are now ten Research Consortia (government co-funded partnerships between industry and public research institutions).9
As with the harnessing of intellectual property, this partnering is being driven, in large part, by financial incentives. Governments see partnering as beneficial and actively encourage it: "The government sees linking research and industry as one of the key areas of continuing New Zealand's transformation.... The Government remains committed to supporting the research, science and technology sector by encouraging the linkages between research and industry."10 In New Zealand, government incentives for partnering include the following:
In addition, benchmarks of success for public institutions (and the concomitant rewards) include commercialisable and commercialised research. For example, the New Zealand Performance-Based Research Fund explicitly links its funding
7 Id. at xi.
Department of Education, Science, and Training (DEST) HERDC data cited in "Australian Vice-Chancellors' Committee: Key Statistics - Research" (2005). Accessed at www.avcc.edu.au/documents/stats/research.pdf.
11 Accessed at
www.frst.govt.nz/research/consortia.cfm.
12 Accessed
at www.frst.govt.nz/business/fund_TIF.cfm.
13 Accessed at
www.tec.govt.nz/funding/scholarships/index.htm.
14 Accessed
at www.nzvif.com.
is Accessed at www.minedu.govt.nz.
16 Accessed at
www.frst.govt.nz/publications/guides-forms/index.cfm.
308 Otago Law Review (2006) Vol 11 No 2
for tertiary institutions to their external research funding (15% of the total PBRF).17
Similarly, in Australia, the government is creating incentives for partnering: "A key feature of Backing Australia's Ability - Building our Future through Science and Innovation is increased emphasis on collaboration between businesses, universities and publicly-funded research organisations."18 This collaboration is being encouraged through a variety of initiatives, including:
As in New Zealand, the performance-based funding in Australia is linked to partnerships as the formula rewards those universities that attract more research funds from external sources (which includes industry).21
Consequential changes
Largely to facilitate, maximise, and respond to this harnessing and partnering, there have been a number of changes in the research landscape. These include: restructuring; collaborating across sectors; intermingling of people across sectors; and shifting roles, missions, and mandates for researchers, research institutions, research regulators, research funders, and universities.
New structures
In universities, new offices have been created. Many New Zealand and Australian universities now have a "Research and Enterprise Office" or similarly named office aimed, at least in part, at commercialising the research results of the institution and partnering with the private sector. The staff of these offices include commercialisation managers as well as lawyers specialising in contracts and intellectual property.22 Titles and portfolios at the highest levels of university management have also evolved to include Pro or Deputy Vice Chancellor
19 Id. at
47.
20 Id. at 72.
The Power of Money 309
(Research and Innovation), Pro Vice Chancellor (Research and Development), Deputy Vice Chancellor (Research and Commercialisation), and Deputy Vice Chancellor (Research, Enterprise and International).23
New companies attached to universities have also been created.24 For example, the Auckland University's UniServices Ltd manages all commercial research at the university and "[o]wns and commercialises the University's IP estate, forms new businesses based on University research and now generates over half the University's total research revenues."25 The University of Queensland's UniQuest "specialises in adding value to the outcomes of research at an early stage and was established to foster links between emerging technologies developed by university researchers and the financial and entrepreneurial resources of industry and business."26 Melbourne University's Bio21 "is the governing body of a cluster of collaborative research institutions which, via the Bio21 Project, are committed to the advancement of basic biomedical science, translational clinical research and biotechnology; training in research of the highest order; science communication and education; and commercialisation of biotechnology discoveries... [one of the objectives is] to create a financially viable biotechnology precinct and to facilitate the development and commercialisation of biotechnology research."27
New degree and diploma programs have also been developed. For example, consider the UNSW Diploma in Innovation Management:
the primary objective is to integrate business and entrepreneurial training into the core tertiary education of our future scientists. Post-graduate programs in Innovation and Research Management are currently under development. The Australian education system for scientists has until recently been solely focused on scientific fundamentals. Students have not been educated in the commercial and business aspects of the science-based industries. Students have been able to complete double degrees in business related areas and science but the majority of graduates have tended to embark on business rather than science-based careers. Australia's next generation of research scientists must understand the path required for commercial exploitation and have the marketing and entrepreneurial skills
agencies) did not report employing any commercialisation staff. For the 45 organisations reporting for each of the three survey years, the number of commercialisation staff grew significantly (by 40 per cent) between 2000 and 2002." Australian Government Department of Education, Science and Training, supra n. 2 at 5.
27 Accessedatwww.bio21.com.au.
310 Otago Law Review (2006) Vol 11 No 2
required to make the journey. Australia needs a critical mass of science graduates with business and entrepreneurial skills if it is ever to develop a local high technology industry with global markets.28
Government structures are also changing. As discussed earlier, there are new funding programs such as New Zealand's New Economy Research Fund which (at $63.9 million per year) "is looking to make some high risk and (potentially) high return investments... [It invests] in exciting, leading-edge, basic research -research done by world-class research teams that also have some awareness of the commercial environment."29 There are also new companies created by government to increase commercialisation. For example, the Australian Institute for Commercialisation is a not-for-profit company set up by the Queensland Government "to improve commercial returns from the Australian public sector's $5.2 billion investment in research."30 The States, Northern Territory and Commonwealth governments have since joined in this initiative. AusIndustry is a government agency mandated to assist with the commercialisation of research.31
New collaborative entities
Groups of individuals and institutions are coming together to collaborate in relation to the commercialisation of research. For example, Knowledge Commercialisation Australasia (KCA) - whose membership includes representatives from universities, government research organisations and departments, and industry - aims "to assist in the development and maintenance of skills associated with knowledge transfer from public sector organisations" where knowledge transfer is defined as "the process for transferring knowledge and technology to the commercial sector. This may be achieved through commercialisation, such as spin-offs and licensing innovations, or consulting and education activities."32
AusBiotech, which self-identifies as the Australian biotechnology industry organisation, includes not only companies but also research institutes and universities.33 The Australian Business/Industry/Higher Education Collaboration Council was set up to "advise the Government on ways to increase collaboration between the higher education sector and other public and private business, industry, community and educational organisations." Its responsibilities include "promoting regional engagement between universities and business and industry" and "developing initiatives to further facilitate the commercialisation of intellectual property."34 University research managers (with
28 Accessed at
www.babs.unsw.edu.acu/news/dip_inov_2005.html.
29 Accessed
at www.frst.govt.nz/research/nerf.cfm.
30 Australian
Institute of Commercialisation 'Annual 2002-2003' (2003)
2.
31 Accessed at
www.ausindustry.gov.au.
32 Accessed at
www.kca.asn.au.
33 Accessed at www.ausbiotech.org.
The Power of Money 311
various specialisations) formed the Australasian Research Management Society (ARMS) in part to "improve the interface between research, its administration and successful commercialisation."35 In New Zealand, the Science Enterprises Group (SEG) is an organisation consisting of senior representatives from the Crown Research Institutes, the universities, and the industry associations.36 NZBio self-identifies as the New Zealand biotechnology industry organisation, but again its members include research institutes and universities.37
Intermingling of people across sectors
Industry staff are now appearing in the public sector. For example, "industry scholars" are appearing on peer review committees and industry employees are using space in university/hospital labs and hold appointments on university/ hospital staff. Conversely, public institution researchers are now appearing in the private sector. For example, they can be found serving as board members, consultants, authors, and speakers. Similarly, senior level public and private sector managers are coming together. For example, the Australian Business/ Industry/Higher Education Collaboration Council referred to above is made up of University Vice-Chancellors and CEOs from major corporations.38 In addition, corporate Chief Executive Officers are serving on Boards of Trustees/ Directors for public sector research entities. For example, the Board of Directors of the Foundation for Research, Science and Technology (a major research funding body for the New Zealand government) includes: the former CEO of Fonterra; the Managing Director of Eurekster Inc. and RealContacts Ltd.; and the Director of Genesis Research and Development Corp. Ltd. and Chair of NZBio. Thus three of nine members are industry managers.39
This intermingling is not only in roles but also in space through "co-location" of industry and academic researchers. Consider, for example, the University of Otago's Centre for Innovation - "its primary function is to stimulate and develop commercial applications from the co-location of industry researchers and academic researchers."40 Industry and the academy are both literally and figuratively coming together through the commercialisation of research in public institutions.
Shifting roles, missions, and mandates
Now a researcher in a public institution may be not only a researcher but also a graduate student supervisor, teacher, clinician, consultant, peer reviewer, author, speaker, license holder, patent holder, and equity holder. Similarly, a public institution may now be not only a research institution but also an educational institution, clinical care provider, license holder, patent holder, and equity holder. The role of public universities has shifted from the provision of
35 Accessed at www.researchadmin.org.
36 Accessed
at
www/acri.cri.nz/media/4fe13c0b2202413ee5dde08eb13485b2d.html.
37 Accessed
at www.nzbio.org.nz.
38 Nelson, supra n.
34.
39 Accessed at www.frst.govt.nz.
40 Accessed
at www.cfiotago.com.
312 Otago Law Review (2006) Vol 11 No 2
education and the conduct and dissemination of research to the provision of education, the conduct and dissemination of research, and entrepreneurial engagement in the market economy.
The Potential Benefits of Commercialisation
Quite clearly, there is significant commercialisation of research in public institutions in New Zealand and Australia (as elsewhere in the world). The question that must now be addressed is whether this phenomenon should be embraced and promoted or rather approached with caution or even resisted. In order to begin to answer this question, a thorough canvas of the potential benefits and harms of commercialisation is needed.41 Potential benefits of commercialisation of research in public institutions can be seen for individual researchers, students, public research institutions, for industry, and society. I consider each in turn and, of necessity, in brief.
For researchers
Improve employment prospects for researchers - If commercialisation brings more money into public institutions, there might be more jobs for researchers and these (and existing jobs) might have higher salaries. Closer links between industry and universities might result in greater job prospects for students upon graduation if they are seen as better prepared for careers in industry and if they take advantage of increased networking opportunities with industry. If commercialisation results in the benefits to society (e.g., translation of research results into useful products, services, or processes), researchers' job satisfaction may increase as they feel that they have made a positive contribution to society. There may also be higher job satisfaction for researchers if their work is valued more by universities and society.
Increase financial rewards for researchers - Individual researchers might find additional personal income through industry funding for conducting research, writing papers, giving presentations, consulting, and serving on advisory boards. They might also find additional personal income through holding the intellectual property in their own research results (e.g., from the profits realised through patenting).42
It must be acknowledged here that some readers may disagree with my characterization of some effects as potential harms rather than potential benefits. For example, some may find the shaping of research to be a positive rather than a negative result of commercializing research. However, there is not sufficient space herein to undertake a justification of my normative classification and, more importantly, these disagreements will likely be few and will not compromise my conclusion. Readers who disagree with the characterization of a particular effect should simply read that effect under the alternate heading. "All universities interviewed had in place policies for the sharing of revenue from licensing of intellectual property.. Similarly, researchers had access to equity in spin-off companies." Australian Government Department of Education, Science and Training, 'Evaluation of Incentives for Commercialisation of Research in Australian Universities: A Survey of Selected Australian Universities' (2005) 43.
The Power of Money 313
For students
Increase funds available for educational purposes - Through the commercialisation of research, public institutions may have access to more unrestricted funds which could be used for educational purposes from industry partners. These funds could come either out of the profits from harnessing the intellectual property of their own research or from industry partners (directly as unrestricted gifts or indirectly through overhead on research contracts).
Increase availability of financial support for students - Increased funds might become available to support graduate students through unrestricted funds from the commercialisation of research being redirected to scholarships, new scholarships being funded for commercialisable research,43 and through direct employment on research projects.
Enrich educational environment - The educational environment might be enriched if it is true that active researchers are better teachers and if the phenomenon of commercialisation results in more active researchers on university campuses.
Increase acquisition of useful skills and attitudes - Students may learn more business and entrepreneurial skills and develop attitudes which may be very useful in knowledge-based economies.44
For public research institutions
Increase viability of public institutions - Commercialisation of research may result in an increase in universities' ability to retain researchers who would otherwise work for much greater financial rewards in the private sector (e.g., in pharmacology or electrical engineering) but who would stay in universities if they were able to participate in the benefits of the commercialisation of their research. Specific universities may see an improvement in their reputation and rankings if commercialised research is recognised in the benchmarks for rankings.45 The reputation of public institutions with the public may increase if they are seen as less "ivory tower". This might translate into public support for funding of these public institutions, either for a particular university or for universities as a class. More generally, there may be an increase in public support for researchers, research institutions, and research if research comes to be seen as more relevant and useful. Public support for it might increase and there might consequently be more funding and more participation in research.
For industry
Through increased support by government for commercialisable research in public institutions, industry may realize increased growth in revenues, net income, and number of employees. This could in turn benefit the companies' employees and shareholders.
44 UNSW, supra n. 28.
314 Otago Law Review (2006) Vol 11 No 2
For society46
Improve health and safety - Through commercialisation, we may see better health and improved quality of life from advances in research.47 Health and safety products, services, and processes might be developed that, without commercialisation, would never have been developed or would have been developed more slowly.
Increase rate of advancement of knowledge and knowledge translation - Allowing the protection of intellectual property in research results through the use of the patent regime may result in more sharing of information.48 This could, in turn, lead to faster advancement of knowledge as others are then able to build upon the shared research results. Furthermore, through the intermingling and collaborating across sectors, complementary skills may be brought together (e.g., basic research brought together with business development skills) and this may lead to faster knowledge translation.
Increase amount of research - There may be more funding available for research in public institutions through the sponsorship of research from partners (e.g., industry and government), through the government performance-based funding initiatives, and through the profits realised from public institutions harnessing intellectual property.49 This could result in more research being done.
Reduce costs of research - Technological advances may lead to new research tools (with improved quality and/or effectiveness) that may make research cheaper to do.
Increase efficiency of use of research funds - Research funds may be used more efficiently as research becomes more a part of the market and as market discipline may produce efficiency. Furthermore, the emphasis on commercialisable results may result in researchers maintaining a narrow, more efficient, focus rather than pursuing tangents that they find interesting.
Increase useful application of research funds - If the market reflects usefulness in the public's mind and if the research agenda in public institutions is driven by commercial incentives, then commercialisable research may be seen as more publicly responsive and thus a more useful application of research funds.
Increase amount and rate of access to useful products, processes, and services - We may see more and faster access to useful products, processes, and services
49 See discussion above, "Dissecting the Phenomenon".
The Power of Money 315
through advances in research.50
Create wealth - We may see wealth creation, not just for the individuals, public institutions, and companies directly involved in the commercialisation of research but also for the consumer as a result of lower prices resulting from greater competition resulting from locating more research in the marketplace. We may also see economic growth as a result of the commercialisation of research leading to lower taxes leading to greater individual wealth overall. In addition, as a result of research-led improvements in technology, we may see an increase in productivity in turn boosting the standard of living and per capita income.
Create more and better jobs - We may see an increase in the number of jobs as well as the quality of the jobs created (where jobs in "knowledge industries" are considered preferable).
Improve competitiveness for country - Commercialisation could lead to an improvement in a country's competitive position, for example, in the World Economic Forum Global Competitiveness Report and the OECD rankings.51
Decrease costs for publicly-funded health care systems - Research results may lead to cost savings for the publicly-funded health care systems of New Zealand and Australia (e.g., safer products may result in fewer expensive hospital stays).
Redistribute benefits and burdens - Commercialisation of research might shift the burden of the cost of research from the public sector to the private sector (as the private sector is more involved in sponsorship) and shift the benefit of research from the private sector to the public sector (as public institutions share more in the profits from the harnessing of the intellectual property in research results).
The Potential Harms of Commercialisation
While there are numerous potential benefits of the commercialisation of research in public institutions, there are also numerous potential harms. Potential harms can be seen for research, education, health and safety, and society. I consider each in turn.
Research
Increase cost of research - As a result of commercialisation of research in public institutions, research may become more expensive as research tools are patented and those who would like to use them in their own research are required to pay
316 Otago Law Review (2006) Vol 11 No 2
for access to them.52 Research may also be duplicated as researchers may choose to do the research themselves rather than pay to use the tools patented by others.
Waste research resources - Research resources may be wasted as researchers duplicate the work of others either because they do not know that it has been done (e.g., it has not been published) or they cannot gain access to the results (the costs may be prohibitive or the research may simply not be shared) and so they have to (or inadvertently) repeat the research.53
Delay advancement of knowledge - The sharing of information may be delayed as universities introduce a screening process during which information cannot be released while the university conducts an assessment of the potential commercial value of the research.54 The sharing of information may be further delayed while patents are being processed.55
Block advancement of knowledge - The advancement of knowledge may not be merely delayed but may be entirely blocked. A company might buy a research result (e.g., a research tool) and then shelve it because it is better and/or cheaper than its own product.56 If key elements of research are kept secret, the reproduction of results may be rendered impossible and thus the advance of knowledge dependent on the reproduction of results (particularly the case in the physical sciences) may be blocked.57
Shape what gets researched - The phenomenon of the commercialisation of research in public institutions may result in less non-commercialisable research being done.58 Research with commercial potential may be prioritised over
53 Bok, ibid at 112.
56 Slaughter & Rhoades, supra n. 54 at 331.
58 In Australia, the distribution re: types of research has changed significantly:
Pure basic research 38% in 1988 to 28% in 2002.
Strategic basic research 24% in 1988 to 23% in 2002.
Applied research 31% in 1998 to 41% in 2002.
Experimental development 7% in 1998 to 8% in 2002.
Note the reduction by 10% of pure basic research and the increase by 10% of applied research. AVCC, supra n.1 at 59 Table E.7. In New Zealand, the definitions of types of research changed such that it is not possible to meaningfully compare the results of the R&D surveys. Accessed at www.stats.govt.nz.
The Power of Money 317
research with no commercial potential. So, for example, research into the treatment of diseases disproportionately affecting the poor, research into the treatment of diseases affecting only a small number of people, and research into prevention rather than pharmaceutical treatments may all be less likely to be undertaken.59
Shape how research gets done - When the emphasis is on the commercialisation of research, we may see cheaper but more dangerous methods being used. For example, a placebo-controlled trial is usually cheaper and faster than a trial using an active control arm. And yet, a placebo-controlled trial can be more dangerous than an active control trial as some of the participants are, by definition, on a placebo rather than a known safe and effective or possibly safe and effective treatment.60
In addition, research may be designed to achieve favourable results and avoid negative results. For example, with respect to favourable results, the following methods might be employed:
With respect to avoiding negative results, for example, if a liver biopsy is not done in a trial of a drug for the treatment of thalassemia (a disease causing damaging iron loading in the liver), liver fibrosis may not be discovered and an unsafe drug may appear safe.62
Shape how research gets interpreted - There may be a positive results bias in the interpretation of research results in research funded by industry. For example:
one survey investigating the wide divergence of views on the health effects of passive smoke found that 74 percent of the studies finding no adverse effects were written by authors with ties to the tobacco industry. Of the authors with tobacco
59 Examples of industry shaping can be found in Krimsky, supra n. 57 at 223.
318 Otago Law Review (2006) Vol 11 No 2
ties, 94 percent found that passive smoke was not harmful to health, while only 13 percent of those without tobacco ties reached the same conclusion.63
Similar results are being reported from meta-analyses of clinical trials.64
Shape how research gets reported - Industry sponsorship of research may affect the way that research gets reported. First, the report on the research can be shaped through "ghost authorship" in which an individual employed by the corporate sponsor writes up the results of research and then the company (or a second company hired by the first) casts about for an academic to sign on as the "author" or "coauthor" on the paper.65 It can also be shaped through "ghost journalism" in which the corporate sponsor of the research (or a second company hired by the first) produces a video that looks like a news report. It is sent to a television or radio station complete with, for example, a report by an individual who appears to be a journalist and interviews with "experts," individuals suffering from whatever disease the new treatment is for, and a script for the local anchor to read as voiceover for the story. And yet, the entire package has been created by or paid for by the company.66
Second, negative results may be suppressed. This can happen when a sponsor prevents a researcher from publishing the results of research (for example, through issuing legal threats).67 It can happen when a researcher self-censors because of the risk of harm to his own profits where, for example, he is an owner in a company holding the patent to the intervention he is testing.68 It can happen when a researcher self-censors because the sponsor does not want the results reported at all or wants negative results mis-reported and the researcher complies in order not to compromise future research funding or other financial rewards.
Reduce public trust in researchers, research institutions, and research - As the results of the research into the shaping of research and research results become public, it is possible that public trust in researchers and research institutions and, indeed,
67 Thompson,
Baird & Downie, supra n. 62.
68 See, for
example, Tseng case described in Bok, supra n. 52 at 67.
The Power of Money 319
the research enterprise as a whole may be eroded. This could have significant negative effects on research as the public may withdraw its support for government funding of research and research institutions, its willingness to participate in research, and its willingness to use research results.
Education
Reduce free flow of ideas - With commercialisation of research comes a significant reduction in the sharing of information and yet education is enhanced by the free flow of ideas. Students learn, in large part, by discussing their ideas with others and participating in the discussion of other people's ideas. All other things being equal, policies and practices that promote secrecy (such as are found in the commercial arena) inhibit education.
Delay student publications and thesis approvals - When research is sponsored by industry or is being commercialised by the university, delays in disclosure of the research results can be introduced that seriously harm students' educational progress. Clauses in research sponsorship contracts and time delays related to patenting by the university may delay or defeat student publication and thesis approvals.69
Reduce trust between student and supervisor and between students - Trust between students and supervisors as well as between students can be reduced as they may worry that the other will steal potentially valuable ideas or will intentionally or accidentally disclose potentially valuable ideas to others before the intellectual property in the research is harnessed.
Erode moral education/role modeling - Researchers in universities can function as role models for their students. Students learn by watching their supervisors and what kinds of research are valued. They also learn the kinds of behaviour that are accepted. Where researchers privilege research with commercial potential and/or engage in unethical behaviour in order to realise or maximise the commercial potential of their research, their students may be shaped in the direction of commercial and/or unethical research.
Increase competition/undermine morale within university - If faculties with more commercialisable or commercialised research are seen to get more resources from the university (or from external sources) or if faculty members with more commercialisable or commercialised research get higher salaries or other benefits, competition between faculties and faculty members may be increased and morale may be undermined.
Decrease public support for universities - If negative consequences of the commercialisation of research continue to come to the public attention (e.g., through recent stories in the press about Vioxx, Celebrex, and Bextra),70 there
320 Otago Law Review (2006) Vol 11 No 2
may be less support from the public for the amount of government funding of universities and so funds available for education may drop.71
Shape student research areas/topics - Student research areas and topics may be shaped as more funding is available or funding is more readily available for research with commercial potential.72 In addition, student choices of areas and topics may be shaped by changes in the costs of research tools.
Shape curricula - With the commercialisation of research, we may see new degrees/diplomas (e.g., the new Diploma in Innovation Management in the Faculty of Science at the University of New South Wales).73 We may also see new commercially-oriented courses in established degree programs and new emphasis on commercialisation issues in established courses.
Shape profile and activities of educators - We may also see a shift in profile and activities of educators as the preferences, strengths, and time spent on teaching rather than research may be reduced.74
Shape spending - It is possible that universities will spend less money on teaching and more money on research.75 It is certainly the case that they are spending more money on professional managerial staff.76
Shape space - Teaching space may be reduced in amount and quality if more money and effort are directed toward developing research space. For example, a Canadian survey recently found that "for new academic space on campus, research labs trump teaching space at 15 of the 20 universities surveyed—with ratios as high as eight square metres of new research space to one square metre of new teaching space."77 This may be because more money is available for research space. However, it may also be because the funds available for research space require matching funds and so funds and fundraising resources that might otherwise be directed to teaching space are instead directed toward matching for research space. The same Canadian study found that space may also be
71 Slaughter & Rhoades, supra n. 54 at
334.
72 FRST, supra n.
43.
73 UNSW, supra n. 28.
Sarah Schmidt, "Universities choose labs over classrooms: Survey of 20 universities: Federal funding partly to blame for imbalance" National Post (13 January 2005).
The Power of Money 321
disproportionately allocated as between disciplines. For example, "of the 164 new academic buildings or additions built or planned at 20 universities, just nine involve faculties of arts and social science, and four involve the fine arts or contemporary arts. These projects carry a price tag of $341.2 million. Three new libraries and five multi-use academic building projects, at a cost of $312.8 million, will also benefit students in the arts and humanities. But this represents a fraction of the total $4.73-billion cost of the new academic buildings captured in the survey."78
Health and Safety
Increase risks to research participants - Because conflicts of interest arise more frequently in the context of more commercially-driven research, the risks to research participants may increase as the commercialisation of research increases. For example, when researchers have personal financial interests in the enrollment and retention of participants in trials, participants may not be given full information, they may be improperly enrolled, and they may be improperly kept in trials. The Jesse Gelsinger case from the United States amply illustrates this point: a participant in a gene transfer study (in which the researcher and the research institution had financial interests) was not given full information about risks.79
Increased risks may also come from "marketing studies." The purpose of these so-called "studies" is really to introduce patients and their physicians to a particular drug in the hope that the patient will choose that drug over the long term after the "study" has ended. These patients may be put at risk unnecessarily because they undergo potentially harmful safety monitoring to give the appearance of a research study, but the results of the monitoring may not actually be used for the advancement of knowledge.
Increase risks to downstream users of research results - With the increase in commercialisation of research, researchers in public institutions are becoming increasingly involved with industry. Some of these researchers are, in turn, involved with or advise on the regulation of products (e.g., through the FDA).80
78 Ibid.
322 Otago Law Review (2006) Vol 11 No 2
These conflicts of interest may result in more dangerous products placed and kept on the market through, for example, improper approvals and the failure to restrict use, require warnings, or withdraw products. Recent experiences with Vioxx, Celebrex, and Bextra illustrate such risks.81
Slow access to treatments/products - Rather than speeding up access to treatments and products, it is possible that access will be delayed as treatments and products are kept confidential and out of the market while applications are made for patents.82
Decrease access to treatments/products - Some treatments and products may become less accessible as the costs are increased due to the harnessing of intellectual property. Furthermore, some treatments and products may become completely inaccessible as, for example, a company might buy the rights to a research result (e.g., a new drug) and then shelve it because it is better and/or cheaper than its own product.83
Narrow range of research done - As noted in the discussion on potential effects in the context of research, the range of research being done may be narrowed and less research may be done for health promotion and prevention and for interventions/products for diseases/needs that affect few people or the poor. The potential health consequences of this are obvious.
Society
Increase costs for publicly funded health care system - As more research results are commercialised, drugs and tests may cost more. This would be a particularly significant harm in a publicly-funded health care system which includes drug coverage such as is found in New Zealand and Australia.
Unjustly enrich researchers and industry - It might also be argued that the commercialisation of research represents an unjust enrichment of researchers and industry. Some researchers forming companies to harness the intellectual property of their research are like venture capitalists except they run no financial risk and reap the benefits - the capital is coming from the public. Similarly, sometimes industry partners with researchers in public institutions on publicly funded research, either take all of the profits from the products, processes, or services developed or share the profits with the researchers. In such cases, the public funds the research, has no share in the future profits, and must pay for the results.
Erode socially valuable institutions - With the commercialisation of research in public institutions, we may see the erosion of some socially valuable institutions. The threat to an independent press is illustrated through the phenomenon of "ghost journalism." The threat to a protective regulatory arm is illustrated through the prevalence of conflicts of interest in the US FDA. The threat to universities as trusted disinterested critics and trusted disinterested sources of
81 Lemmens, ibid. for descriptions and analysis of recent controversies.
83 Slaughter & Rhoades, supra n. 54 at 331.
The Power of Money 323
knowledge and advice is illustrated through the prevalence of connections between researchers and industry and the prevalence of researchers and research institutions as commercial enterprises.84
Weighing the Potential Harms and Benefits
Having canvassed the potential harms and benefits of the commercialisation of research in public institutions, we must now attempt to weigh them against each other. However, doing so is, to quote Derek Bok in Universities in the Marketplace: The Commercialisation of Higher Education, "much like asking whether an indeterminate number of olives, figs, and grapes should count more than an unknown quantity of apples, pear, and plums. The uncertainties involved cast a fog over the problem and invite personal bias into the calculations of those who make the decisions."85
Which of the potential benefits have been or are likely to be realised and which of the potential harms have been or are likely to be realised? Will products, processes, and services come to the public faster? Will jobs and wealth be created? Will the advancement of knowledge be slowed? Will research participants be harmed? Will universities cease to be trusted disinterested sources of knowledge and advice? Unfortunately, we simply cannot answer these questions. There is far too little evidence in relation to many of the potential effects outlined above.86
Even more unsettling than the fact that we do not know, is the fact that we cannot know. Much of the information we need in order to analyse the effects is not being gathered. For example, when benchmarking the effects of commercialisation of research in public institutions, many of the potential effects outlined above are not being monitored. While it is common to have benchmarks relating to all kinds of economic benefits and while benchmarks are sometimes used in relation to the reputation of a country's science (e.g., number of papers published and cited) or health (e.g., improvements in mortality and morbidity), it is rare to have benchmarks relating to the shaping of what gets researched, how research gets done, how it gets interpreted and reported and the shaping of curricula, profiles of educators, spending and space in universities. The potential effects on valuable social institutions are not mentioned let alone benchmarked.87
Indeed, still more unsettling are some recent developments in the reporting of information actually making it more difficult to assess the phenomenon. For example, the definitions of the different kinds of research (e.g., basic, applied, strategic, and experimental) have been changed over time by Statistics New Zealand. This renders it difficult to assess changes in the amount of each kind of research being undertaken as a percentage of the whole and as a percentage
For a helpful discussion of models of the role of a university, see Michael Robertson, "Research and Academic Freedom" in John Dawson and Nicola Peart eds., The Law of Research: A Guide (Dunedin: University of Otago Press, 2003) 27-45. Bok, supra n. 52 at 118.
Bok, supra n. 52 at 60, 61, 77 and Slaughter & Rhoades, supra n. 54 at 330-331. For example, see Australian Institute of Commercialisation, supra n. 30; Walker & Liu, supra n. 3; Access Economics, "Exceptional Returns: The Value of Investing in Health R&D in Australia" (2003).
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of university research. The categories of external sources of funding for university research have been collapsed so it is no longer possible to determine the percentage of university research that is funded by industry.88
Generalising somewhat from available documents on indicators, it appears that the realisation of potential benefits is being monitored but the realisation of potential risks is not. And yet, starting with objectives and then moving to outcomes, targets, and benchmarks tests only for positives. Such an approach is like running a clinical trial and testing for efficacy but not safety. This would not be allowed for a new drug. Should we accept it for a new social policy? I would argue that we need to monitor for safety and, also like clinical trials, we need something analogous to independent data monitoring committees with appropriate expertise (including, for example, social costs related to the potential effects outlined above).
It must also be noted that much of the information, even if gathered, might not be shared. As research is commercialised, more and more information about it may become cloaked in claims of "commercial in confidence" and less information may be made available to the public. For example, Statistics New Zealand changed its reporting of external funding for universities because "[d]ue to confidentiality reasons we were prohibited to release comparable data for the University sector in 2004 R&D HoTP for source of funds."89 Additionally, the Official Information Act establishes commercial sensitivity as a ground for not disclosing information held by public institutions (albeit with a public interest exception).90
And yet we need a great deal of information if we are to make informed decisions about whether this grand social experiment of commercialisation of research in public institutions is a good idea and is being conducted well. If we never gather and gain access to the information about the realisation of the potential benefits and harms, we may never get from indeterminate to determinate and from uncertain to certain.
There is a still further problem with respect to weighing the potential harms and benefits of the commercialisation of research in public institutions - that is, the lack of public debate about the relative value of the various potential harms and benefits and the lack of independent expert advice in relation to public policy and practice regarding commercialisation.
In relation to independent expertise, it is revealing to look at the composition of the groups most actively involved in the commercialisation of research. It would not be surprising (or inappropriate) for industry organisations to consist solely of those engaged in the industry. However, it is surprising (and arguably inappropriate) for government bodies and bodies tasked with policy-making or advising to be so limited in their membership. And yet, consider Australia. The Prime Minister's Science, Engineering and Innovation Council is "the Australian Government's principal source of independent advice on issues related to science,
88 See www.stats.govt.nz (e.g., definitions changed, reporting categories collapsed).
90 Official Information Act 1982 (N.Z.), 1982/156, s. 9.
The Power of Money 325
engineering and innovation."91 It does not appear to include anyone with expertise in ethics, the sociology of higher education, and other areas of expertise relevant to the potential risks of commercialisation of research in public institutions identified earlier. The Australian Biotechnology Advisory Council is similarly deficient. Indeed, the same might be said of all of the independent institutions identified by the Australian government as "Key Institutions" for informing its policies and positions in relation to innovation.92
In relation to public debate, if we are to ensure that the social experiment of commercialisation of research in public institutions is consistent with public values, we need to have public discussion and debate about the values that we want to pervade the public institutional sector. And yet we are not having adequate public debate. Unfortunately, the nature and extent and impact of the commercialisation of research in public institutions is not widely known or understood by the public. Furthermore, some of the government's engagement with the public is problematic as it seems directed toward advocacy rather than education (and truly seeking the public's opinions on appropriate directions for policy and practice). For example, in the New Zealand MoRST Baseline Indicators for Measuring Progress Toward the goals of RS&T: 2010, Goal 1: Values and Attitudes Towards Science and Technology is "Fostering societal values and attitudes that recognise science and technology as critical to future prosperity."93
So what are we to do? I would argue that we must start by gathering all of the relevant information and sharing that information. We must then involve all those whose interests are at stake in discussions of relative values, policies and actions. We must also involve those with expertise relevant to all of the potential effects outlined earlier. We must then ground policies and actions in the arena of commercialisation in these discussions. We must then hold the policies and actions to benchmarks directly related to all of the objectives.
Conclusion
Brendan Nelson, the Australian Minister for Education, Science, and Training said recently, "We should never be frightened of turning knowledge back into money."94 Perhaps. But, quite clearly, we should be much more careful.
Australian Government Department of Education, Science and Training, supra n.
6 at 106.
Id. at 105-108.
Walker & Liu, supra n. 3 at 8.
Brendan Nelson, Australian Minister for Education, Science, and Training,
transcript of Speech to National Press Club, March 24, 2004. Accessed at http://
www.dest.gov.au/Ministers/Media/Nelson/2004/03/ntscript240304.asp
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