Today, universities aren’t shy about making money off their research. It’s become a point of pride that ivory tower ingenuity can lead to important — and valuable — real-world technologies, drugs or spin-off companies.
In March, for example, the University of California at Los Angeles sent out a news release announcing that it had sold its royalty interest in Xtandi, an expensive prostate cancer medication, to a company for $1.14 billion. More than 6,300 U.S. patents related to university research were issued in 2014, according to the Association of University Technology Managers, resulting in 965 new products and $28 billion in net product sales.
That wasn’t always the case; at one time, the line between academia and industry was more sharply drawn. The shift is evident in the history of insulin. In the 1920s, the researchers who discovered insulin saw providing their patent to a university as a way to defend their discovery from being commercially exploited by a single company, according to historian Michael Bliss’s book, “The Discovery of Insulin.” Insulin represented a pivotal moment in modern medicine, but according to Bliss, it was also a formative test case for a new kind of relationship between universities and drug companies.
The University of Toronto held the patent for insulin in 1923 and licensed it to companies worldwide, preventing a single company from developing a profitable monopoly — a key aim of those who discovered the hormone, which is essential for people with Type 1 diabetes to live. But at least one member of the team made an impassioned case that it wasn’t just companies’ profits that had to be watched — the royalties the university was earning, he argued, were far too steep.
"It has come to be universally recognized over all the civilized world that the University has performed a great service for humanity," the Scottish biochemist John J. Macleod, who shared the Nobel Prize for insulin, said in 1924. In a statement to Toronto's Insulin Committee, he praised the scheme the university had developed prevented the "commercial exploitation" of the essential drug. But with a 5 percent royalty on insulin, the university had already amassed $10,000.
"The collection of royalties has always seemed to me to be the only part of the work of the Insulin Committee that might be open to unfavorable criticism," Macleod said, urging that the royalty amount be decreased -- in the hope that those savings could trickle down to patients.
He asked Toronto's Insulin Committee, which administered the patent, to reduce the royalty immediately.
"The present royalty would in most cases be considered sufficient even for an inventor wishing to exploit a discovery for his own personal profit," Macleod wrote. "It is, for example, as large as that usually allowed to authors of scientific textbooks."
What Macleod's argument highlights is a stark cultural change in how medical discoveries are seen and how uneasy researchers and universities felt about making profits on medicines.
"The coming of insulin really quite starkly posed the patenting issue, which was just starting to be at that time to be seriously discussed in scientific and medical circles," Bliss said in an interview. "What you see going on in Toronto, in 1922, is a conflict between an older view of patenting as being something that no good scientist would want to get involved in because the job of the scientist is to make a discovery and give it to humanity," and a newer view that "there's nothing wrong with getting financial returns from a discovery."
Macleod did not win out in his quest to have the royalty payments reduced, Bliss said. And the view he held -- the idea that profiting off discoveries was somehow wrong -- seems old-fashioned today, in an era in which universities are increasingly held accountable for whether federal investment in research is yielding benefits.
Making sure innovations don't get stuck in universities has become a major goal, what is often called bridging the "valley of death." That has had tremendous benefits in the form of new products and companies, but this historical footnote is an interesting reminder that the incentives for innovation haven't always been the same as they are today.
"If you think back to the old days, it just seemed like the people who did research back then were cut from a different cloth," said Jing Luo, an instructor of medicine at Harvard Medical School, said pointing to Jonas Salk who developed a polio vaccine and the team that discovered insulin. "I think the contrast is very stark. ... These are people who made really innovative products and then just kind of gave it away for the betterment of humanity, more or less."
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