1. Yale: the d4T story 1966: compound synthesized under a National Cancer Institute grant at the Michigan Cancer Center 1984: Yale scientists prove that d4T is potent against HIV in cell cultures 1986: Yale files for a patent 1988: Yale issues BMS exclusive worldwide license 1994: FDA approval 1994 - 97: BMS takes out process patents

2. BMS made $443 million on sales of d4T in 2002; $515 million in 2001, $578 in 2000. We don’t know what exactly BMS profits are from d4T, but according to the BMS 2002 Annual Report: “In 2002, our company earned $2,034 million from continuing operations on global sales of $18.1 billion, putting us among the most profitable companies in the Fortune 500.” The Money Trail

3. The Impact of d4T for Yale In 1999, Yale earned $46.12 million in royalties. About $40 million of this was from d4T. (But almost none of this comes from developing countries)

4. MSF’s request; Yale’s response Feb 14, 2001: MSF request to Yale: –Asking Yale if they “would consider the importation of generic versions of stavudine for use in providing treatment free of charge to people with HIV/AIDS unable to afford treatment an infringement of your intellectual property rights,” and if so, if Yale would “issue a voluntary license to allow the importation and use of generic stavudine in South Africa.” March 1: Yale replies: –Yale denies the request, indicating that they have granted an exclusive license to Bristol-Myers Squibb (BMS), and cannot legally respond to MSF’s request without BMS’s permission.

5. MSF’s Reply March 9: MSF responds: –MSF suggests to Yale that their own policy states that a key objective is “ the benefit of society in general, ” and that they should follow their policy –MSF points out that d4T is not reaching those who need it in South Africa, and suggests that Yale has the ultimate power over their patent, and could breach their contract with BMS if need be. March 11: NYT story “ Yale Pressed to Help Cut Drug Costs in Africa ” March 16: GESO hands over petition and issues press release

6. March 14 th : Concessions! “ EMERGENCY PATENT RELIEF ” “ The Company will ensure that its patents do not prevent inexpensive HIV/AIDS therapy in Africa. The patent for Zerit, rights to which are owned by Yale University and Bristol-Myers Squibb, will be made available at no cost to treat AIDS in South Africa under an agreement the Company has recently concluded with Yale. ” In June, 2001, “ agreement not to sue ” signed with Aspen Pharmacare. PRICING BMS will sell its two ARVs at one dollar per day (15 cents per day for d4T and 85 cents per day for ddI) throughout Africa This is later extended to private sector.

7. What’s happening at other universities? U Minn: Abacavir Emory: 3TC Duke: Fuzeon Columbia: Cotransformation patent U of Washington: Hep B Vaccine Michigan State: Cysplatin and Carboplatin

8. What can a university do when it is deciding where and if to patent an invention? What can universities do when negotiating licenses with industry? What can be done if a university invention has already been patented and licensed to industry? Proactive vs. Reactive: How can universities ensure that their IP helps those who need it most?

9. Yale AIDS Network Founded, April 2001 Workshop at Yale, September 2002 Universities Allied for Essential Medicines (Student workshop, Spring 2003) Working Toward an Answer: Development Timeline Back up: How does university tech transfer work? Then: How should it work? How can it be changed?

10. Who funds university research?  Revenue from licensing patents makes up only 2-4% of university research budgets on average. Yale School of Medicine FY 2002 Research Funding Sources:

11. Currently, what do universities do with the products of research? PATENT  LICENSE  $$$ If they think an invention can be commercialized, they patent it (usually just domestically). Universities then license the patent to industry, which will further develop and market the invention. Universities may grant either exclusive or non-exclusive licenses to industry. - An exclusive license gives a single company the sole right to develop and sell the invention. - A non-exclusive license allows many companies to use and sell the invention. In either case, universities receive royalties and/or other payments in exchange for the license.

12. How big a role do universities play? Academic R&D is a small proportion of total U.S. R&. But, academic basic science research comprises 40%-50% of total U.S. basic research Nearly 60% of academic R&D is funded by the federal gov’t Source: NSF Science and Engineering Indicators, 2002.

13. Historical Perspective For most of the 20 th century, universities rarely patented their research output—resisted directed involvement and discouraged it as taboo (particularly medical patenting) Source: Mowery and Sampat (2001)

14. Most universities had no patent policy before WWII –Harvard and Yale examples –Need to request waiver Post WWII Trends –Substantial increase in federal funds for universities Source: Palmer (1948), NSF Science and Engineering Indicators, 2002. The non-patenting norm prevailed before 1950—in medical patenting till 1970s

15. Academic R&D in biomed sciences, and in turn patents, surged in the 1970s… Universities began direct management of patent portfolios Process of getting patents and rights to license remained cumbersome Decline in federal funding led to more aggressive patenting efforts 1974 - Harvard ends stance against patenting medical innovations Source: NSF Science and Engineering Indicators, 2002. Percent of total academic patents in three largest academic utility classes

16. Bayh-Dole (1980): Patent & Trademark Law Amendments Act Goal: Increase technology transfer and utilization of federally-funded research What did it do? –Universities given right to retain the property rights to inventions made under federal funding –Exclusive licensing permitted –No distinction between downstream inventions and fundamental research discoveries Rationale –Commercialization: Basic nature of university research requires further development by industry –Industry won’t take on risk without exclusive licensing rights –Universities won’t transfer as much without financial incentives

17. Bayh-Dole Has Some Special Provisions for Preserving the Public Domain Funding agencies permitted to restrict patenting ex-ante only in “exceptional circumstances” that contradict goals of Bayh-Dole (such determinations can be challenged – and provision is cumbersome) Agencies can exercise “march-in rights” to compel licensing of a university patent if necessary to alleviate public health or safety needs –NIH has never exercised these rights – significant administrative obstacles –Current cases: Norvir and Xalatan NIH has sought to promote goals through hortatory statement. –For ex: For human genomic DNA sequencing information, NIH issued statement against patenting – effectively contributing to a “no-patenting” norm w/out forbidding it Reasonable pricing clause for commercialized federal research existed initially, but was repealed by the Clinton Administration

18. University Patenting – Phenomenon of the 1980s and 1990s Perspective: University patenting has grown faster than other patenting in the U.S. Source: Jaffe (2000)

19. Licensing Activity Has Surged… Number of Licenses Issued Annually Source: Bremer, 2001 speech - data from AUTM Licensing Survey

20. …as Have Royalties from Licensing Royalties to Universities/Hospitals in Millions of Dollars Source: Bremer, 2001 speech (http://www.autm.net) - data from AUTM Licensing Surveyhttp://www.autm.netSource: Bremer, 2001 speech - data from AUTM Licensing Survey

21. Why does any of this matter? Answering the initial question: How big a role do universities play? In the US, most basic biomedical research is performed at universities and funded by the federal government, usually the NIH. Until 1980, most inventions derived from university biomedical research were not patented. In 1980, C1ongress passed the Bayh-Dole act, which instructed universities (and others) to patent inventions made during government funded research. The import of (early stage) university research and federal funds – example: AIDS drugs and top 5 selling drugs

22. What are the goals of university technology transfer? The $$ Tension – in theory and in practice Yale claims that “The primary goal of commercializing Yale inventions is to disseminate and develop knowledge for the public good.” Yale calls generating revenue a subsidiary goal. Despite this, Yale and other universities run their tech transfer offices like commercial profit seeking ventures. But the “ethos” is recognized inside and outside universities and can be used to push for change.

23. Realities of University Tech Transfer Typically, university research is “upstream.” –Adds complexity to policy development –According to AUTM data, 2/3 of university licenses are given to small companies Licensing income is limited, but it is discretionary –On average, revenues from licensing patents make up 2%-4% of university research budgets –Bayh-Dole requires income sharing (inventor’s personal share often makes up 30%) –But, recall the house that d4t built… Resources for tech transfer are finite –Many university owned patents don’t get licensed; most licensed patents don’t result in big money for universities. AUTM Annual Survey: $1M (2000). –Practice of limited patenting in developing countries, given the high cost of securing such patents –Example implication: Avoid overly complex schemes that require resources for monitoring

24. Workshop at Yale – September 2002 Promising Trends Generating Discussion: Working Groups and Publications Licensing of compounds to treat Chagas disease in developing countries to OneWorld Health, a non-profit pharmaceutical company. Discussions produced a broad normative framework or basic principles regarding the role of universities Universities should systematically take “access” into consideration when patenting/licensing, given the institutional ethos which prompts their concern for the common public good In addition, workshop participants generated a litany of possible strategies that universities might use to facilitate or to ensure the accessibility of their innovations

25. Strategy Development – 2003 to present Multi-part approach Development of network / materials; support for activists “Best practices”  Developing Country License Pro-access policy statement? Additional ways to increase transparency / monitoring? Process Development of principles Meetings with tech transfer officers, university presidents, etc. Consultations with experts

26. Strategy Development – 2003 to present Goal: Getting universities to adopt policies and to utilize practices that will facilitate and accelerate access to essential medicines Focus: Developing Country License Seeking to maintain “open” markets through cross licensing -“reach through clauses” preventing enhancement patents from blocking market access Positive access requirements (reasonable pricing), particularly where markets are not “open” for some reasons Complexities of operationalization