$25 million way to go

January 7, 2000

Kristi Coale examines the landmark deal between Swiss biotech giant Novartis and the University of California, Berkeley that frees researchers from the need to pursue funding and gives the company first rights to negotiate for licences on faculty inventions.

Peggy Lemaux vividly remembers the scene that, in her mind, justified the effort her department at the University of California, Berkeley was putting into courting a corporate research sponsor. She was visiting a crop genetics laboratory at Pioneer Hi-Bred with some colleagues when she saw a Pioneer researcher take a genetic sequence that a postdoctoral student had been working on, plug it into a database, find a match and drop the matched sequences into yet another database. Moments later, the researcher's computer spat out the data the student needed to complete his studies.

"It was like dropping a coin into a vending machine; it was that simple," Lemaux recalls. "Seeing that, I understood the value of corporate partnerships - that students would have the tools to do their work."

What had become clear to Lemaux, a cooperative-extension specialist with Berkeley's department of plant and microbial biology, was that in the field of agricultural biotechnology, corporate sponsorship could involve more than funding. Watching a postdoc student receive in ten seconds what might have taken five years to put together in a university laboratory, Lemaux knew that any research agreement her department put together would have to include a more valuable asset - access to genetic maps, information about genes and gene sequences, and various genetic tissues used to analyse genes and generate new traits.

When Lemaux and her colleagues brokered an agreement with Swiss biotechnology and agrochemical giant Novartis, access to information was a key part of the deal:

* Novartis, by way of the Novartis Foundation, agreed to fund research at the department of plant and microbial biology with $25 million over five years

* Department faculty taking part in the agreement and signing a confidentiality agreement will have access to the proprietary genomic databases of the newly minted Novartis Agricultural Discovery Institute via computer terminals located in the department labs on the Berkeley campus

* Novartis funds are for unrestricted research. A review committee with three representatives from Berkeley and two from Novartis will allocate funding

* Novartis gets first rights to negotiate a licence on a percentage of the inventions and a window of 90 days in which it is the lone negotiator. Publication of findings, in these cases, is delayed for the 90-day period.

On November 23, 1998, Lemaux and 19 of her colleagues made the agreement official at a press conference that featured an attack by the Biotic Baking Brigade, a Bay Area group that expresses political disagreements by throwing pies.

While the deal's architects were able to avoid getting pie in their faces, they could not escape the controversial nature of the deal they had signed. What makes Berkeley's agreement with Novartis unusual - and subject to criticism - is that it involves virtually an entire university department. (Only two members of the department of plant and microbial biology did not sign on, and neither engages in laboratory research.) The set-up was the design of Gordon Rausser, dean of Berkeley's College of Natural Resources, who believes that one-on-one research deals have left researchers having to answer first to the interests of corporate sponsors and not to the university.

It is the proprietary landscape of agricultural biotechnology that makes a deal like the Berkeley-Novartis agreement necessary. Until late 1998, when the United States government introduced a crop genome initiative, the process of sequencing and making sense of crop plant genomes was largely the province of private industry. Agrochemical companies invested heavily in research and purchased companies engaged in genetic research - and in the process achieved a remarkable degree of control over the intellectual property of crop plants.

Looking for a corporate partner, Rausser and his faculty took an unorthodox route. Typically, university faculty generate research proposals in response to requests issued by government agencies or private companies, tailoring them to the specifications in the request for proposals. What Berkeley did was to turn this situation on its head: Rausser and his faculty fashioned their dream research agreement, a wish list of conditions and specifications, and asked for proposals from potential sponsors.

The wish list represented what Rausser wanted the final agreement to look like: faculty would spend their time on research instead of moneygrubbing; faculty autonomy would be preserved; the corporate partner would have the same research goals as the faculty; finally, faculty would gain access to modern tools of biotechnology to allow the campus to be a player in important developments.

By signing on with Novartis, the Berkeley suitors believe they are getting private assistance to help their public institution keep pace in a competitive field. Wilhelm Gruissem offers the example of the National Science Foundation pledge to complete the sequencing of the entire rice genome by 2010. By partnering with Novartis, he and his Berkeley colleagues will be able to achieve this feat by this year.

But the key provisions Rausser and others crafted into the deal - the involvement of virtually an entire department and the role Berkeley researchers will play in using and enhancing Novartis's databases - raise troubling questions about whether the Novartis agreement is an instance of a university fulfilling its mission or selling out to the highest bidder.

The changing landscape What was clear to Rausser and his colleagues long before they began their quest for a research partner was that the funding of agricultural research had changed and that the fundamental structure of public-private partnerships worked against the public interest.

Land-grant colleges such as Berkeley could once count on several federal and state resources for research dollars. Chief among these monies were allocations made under the Hatch Experimentation Station Act of 1887, which sought to stimulate research adaptable to the immediate needs of farmers.

Fred Buttel, a professor of rural sociology at the University of Wisconsin-Madison who studied agricultural research issues at land-grant colleges for an upcoming book, says these funding sources began declining in the early 1980s, in part due to the general decline of federal funds for higher education. Wisconsin let 200 faculty go as part of downsizing measures in the 1980s; 70 of them came from agriculture studies. But though federal funding decreased, the federal government got involved in generating other sources of cash for agricultural research. In fact, the government has played a major role in stimulating private-sector research.

The Plant Patent Act of 1930 gave protection for plants reproduced through methods other than seeds. The Plant Variety Protection Act of 1970 extended intellectual property protection to many sexually reproduced plants. A decade later, agricultural inventions - as well as those in medical biology - were given even higher status as intellectual property when the Supreme Court, in Diamond v. Chakrabarty, ruled that General Electric could patent a genetically modified bacterium. This decision paved the way for scientists of all stripes engaged in biotechnology research to patent genes and gene sequences.

The problem with patents Patents, while encouraging private investment in research, also create scientific monopolies. Companies and institutions receiving patents on inventions get a 20-year head start on any would-be competitor. To use a patented technology, a researcher must request a licence, which the patent owner can refuse to grant for any reason. By allowing patents on genes, gene segments and other genetic tools, the government has created a kudzu of overlapping intellectual property rights.

Some research will not be completed because a scientist gets tired of negotiating licensing agreements. The Berkeley-Novartis deal is supposed to cure this situation. But will it? "What if UC-Berkeley's College of Natural Resources suddenly needs a tool or technology that's owned by one of Novartis's competitors?" asks critic Doreen Stabinsky, a former molecular biologist and a member of the board of watchdog group the Council for Responsible Genetics. Gary Pace, general counsel of the Novartis Agricultural Discovery Institute, says Berkeley faculty may use anybody's research, even a Novartis competitor's. But if the research and resources are tied to private funding, then restrictions apply.

Novartis may become the clearing-house for research tools at Berkeley, but it may also become a road block. Novartis could deny a researcher permission to go forward with an invention because a tool used to develop it could be too valuable to let out.

Rausser and Novartis have what they think is an answer to the dilemma. The company has first rights to negotiate a licence on a portion of the inventions developed under the agreement and gets a window of 90 days in which it is the lone negotiator. But if Berkeley does not like Novartis's offer, Rausser says, the university can turn it down and negotiate with another company. Would Berkeley do this and potentially alienate a larger benefactor? Not likely, says Stabinsky. "The incentive is already there to do the deal with Novartis."

The key area of research in biotechnology is genomics, the process of genetically mapping an organism - yeast, plant or man - and explaining how specific genes translate into disease or behaviour or physical traits. In agricultural biotechnology, genomics is essential in developing new crop traits. It is also expensive. In the past two years, Monsanto has spent more than $247 million on investments in and research collaborations with genomics companies such as Incyte. In the summer of 1998, Novartis pledged $600 million to develop its San Diego, California-based Agricultural Discovery Institute, which uses genomics to develop new crop traits, crop protection technologies and animal health applications.

A little discomfort For some academics, what is most disquieting about the Berkeley-Novartis agreement is that, by virtue of its size and scope, it gives the appearance that Berkeley is collaborating with private industry. Universities and faculty have long traded on their reputation as the institutions in society that care about advancing a field - the pursuit of knowledge for its own sake. To this end, schools tout the number of Nobel laureates on campus as well as faculty who have served on government and international bodies. Society looks to universities for impartial, disinterested science. By partnering Novartis, Berkeley has been compromised in this role, according to Ignacio Chapela, an assistant professor of microbial ecology at Berkeley.

Chapela is experiencing his own ethical dilemma in the wake of the Novartis agreement. By virtue of his past work as a researcher for Sandoz, a Swiss biotechnology and agrochemical company that merged with compatriot Ciba-Geigy to form Novartis in 1996, Chapela has a special understanding of how such companies work. Because he is now outside the corporate world, he is called on to mediate between corporations and developing nations to help them work together. Recently, he attended a United Nations-sponsored meeting at which representatives from industrial and developing nations, biotechnology companies and academia discussed issues of genetic resources worldwide. Chapela says he was brought in as an objective observer on these issues, but because of the Novartis agreement he felt compromised. "The moment my institution enters into this agreement, I don't have the same face," he says.

Universities, as the impartial policy bodies in society, have a major part to play in examining regulatory, safety and trade issues in biotechnology. Berkeley professor Brian Staskawicz was going to fill just that sort of role for a National Academy of Sciences committee that was impanelled this year to look into the regulation of genetically engineered crops that produce their own pesticides. The study - the first such examination by the NAS in a decade - comes as the Environmental Protection Agency is in the throes of changing the way it looks at this type of crop.

Staskawicz's work on plant pathogens and his efforts to genetically engineer plants for disease resistance to reduce the use of pesticides, made him an attractive candidate for the NAS panel. At the same time, his research interests coincide with those of the Novartis Agricultural Discovery Institute, and the highly respected researcher is a participant in the Berkeley-Novartis deal. As a signatory to the Novartis agreement, Staskawicz's participation in the work on the NAS panel, which will end up making recommendations about EPA regulations that will affect Novartis products, presented a potential conflict of interest. NAS staff on the committee told the US-based University Business magazine that Staskawicz voluntarily resigned from the panel, citing conflict-of-interest issues. Staskawicz did not return repeated calls by University Business to comment on his resignation.

To be sure, the work of the NAS panel will continue. But if research agreements like the Novartis-Berkeley collaboration are duplicated, then more and more university researchers will find themselves in potentially compromising situations. This could leave fewer and fewer university scientists available for producing impartial science on regulatory issues, and this is what troubles Chapela. "There are major regulatory and safety issues (in science). Who provides leadership on this? Scientists in academia," he explains. "By entering into this agreement with Novartis ... we are compromising policy."

Parallel worlds Instead of having a department where everyone watches one another's ethics and is jealous of one another's research deals, Berkeley's department of plant and microbial biology, by virtue of the Novartis agreement, has wiped away these hazards of academia and given researchers multiple reasons to get along. If people are worried about the deal, it is because nobody is in a position to say how it will turn out, because no one can see five years into the future. Throughout the university, the Novartis deal is being called an experiment - and this makes some people squeamish.

If there is any conclusion to be drawn about the Berkeley-Novartis deal, it is that one great big research deal is different from lots of little ones. With multiple small deals, academic departments have researchers out making contacts and competing for different grants and arrangements from a diverse group of organisations. This gives a department competing funding interests, which may keep it honest. In forging such a large deal with a single corporation, it is possible that Berkeley has discouraged other sources of funding - a grantor could turn down a Berkeley proposal because it feels the university is too beholden to the interests of Novartis. While universities and faculty may argue that moneygrubbing is a bad use of researchers' time, it certainly has good uses. With researchers constantly beating the bushes for funding, a university ensures renewable sources of funding for projects with staggered termination dates.

Should a funder have a conflict with the university and decide to cut off support, the school faces a loss of a small percentage of its budget. But the sheer size of the Berkeley-Novartis deal, the single termination date and the fact research money is coming from fewer sources means the price of alienating the funder is very high.

The Berkeley-Novartis agreement says that Berkeley inventions that are based on Novartis's genomics databases are the property of Berkeley. What is left unwritten is the fact that Berkeley belongs to the public, that it has a responsibility to serve the public - and that partnering with Novartis may consume resources that should be devoted to that public mission. With so much money being poured into the development of databases for the private sector, it is getting harder for the public sector to keep pace.

This is an edited extract of an article that first appeared in University Business.

Kristi Coale (kcoale@worldnet.att.net) is an associate with the San Francisco-based Center for Investigative Reporting. Her work for this story was supported through the center's fund for investigative reporting on the environment. She thanks Judy Alexander, Dan Noyes, Dick Satran and David Weir for their help and support.


The Berkeley-Novartis agreement grants theuniversity access to Novartis's proprietary information, it acknowledges a university'sduty to publish research and it gives Berkeley ownership of its faculty's inventions. Much of it sounds positively generous. But the full document runs close to 60 pages and on some of them Novartis is playing hardball.

* No funds or research materials from a private, for-profit source other than Novartis can be used to support projects funded under the agreement, says section 6.5. Thus it would seem that if a Berkeley researcher needs DNA from a plant virus or some other tool to conduct research funded under the agreement, and that tool belongs to, say, Monsanto, then the researcher cannot use it. (A tool from the US department of agriculture would be OK.) Similarly, materials transferred by Novartis to Berkeley cannot be used in research subject to any outside consulting or licensing obligations without permission from Novartis.

* An appendix says Berkeley researchers can use Novartis biological materials for research only. Nothing in the agreement, it says, grants Berkeley any rights to make commercial use of products derived from or with Novartis biological materials. What doesthis mean? Apparently, though Berkeley does have the right to patent an invention createdwith Novartis materials,it still must negotiate a licence to use the material commercially. And Novartis does not haveto agree.

* The document seems generally to favour publication of research results. But the section that details access to Novartis's database gets down to brass tacks: all genomics bioinformation obtained under the agreement is proprietary and confidential, it declares, and cannot be disclosed without permission from Novartis for the period of the agreement plus five years. That is, a researcher working with the database could publish his own findings, but if he had to reveal a genetic sequence that belonged to Novartis, he would need Novartis's permission. "Consent shall not be unreasonably withheld," says another part of the agreement, but it remains to be seen what Novartis regards as unreasonable. What about information that Berkeley researchers may add to Novartis databases? Nothing in the agreement addresses the question of ownership. And given that Novartis wants Berkeley's work to enhance the company's databases - which are a key part of its $600 million genomics research effort - that is a key omission.


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