By Robert M. Rosenzweig
IT SHOULD NOT BE SURPRISING that there was some disquiet at the announcement that
the Novartis Corporation, a Swiss pharmaceutical company, had joined with the Department
of Plant and Microbial Biology of UC Berkeley's College of Natural Resources in a
five-year, $25 million deal that will fund research in the department and, in exchange,
give Novartis licensing rights on a large fraction of the inventions coming out of
The most public, though not the most articulate, expression of the disquiet was
the attempt by members of two groups calling themselves the Hexterminators and the
Biotic Baking Brigade to throw pies in the faces of the school dean and the President
of Novartis of North America at the press conference announcing the deal. Other,
neater, expressions of protest followed from some graduate students, among others.
In the interests of full disclosure, I must admit that I, too, was troubled by
the press reports of the deal, although in general I have been rather sanguine about
the growing links between industry and university research. These connections raise
some potentially serious problems, to be sure, but so, too, do relations with any
I have argued that if university scientists and administrators are faithful to
a few old and tested academic principles, the problems are solvable and the benefits
to all parties, including the public, can be substantial.
But this deal seemed to be something more, and it was these extra elements that
gave me pause. The most important of them was that this arrangement embraced an entire
academic department, virtually all of its faculty and a large share of its research
program. This was not a single faculty member, or even a single large laboratory.
In this case, the work of a major academic unit was being sold to a single corporation
-- and a foreign one at that.
My unease was not alleviated by Chancellor Robert Berdahl's statement that, "This
is the first, though experimental, step in what we hope will be a long and fruitful
relationship." What if the experiment were to succeed? What would be the next
part of the university to be sold to a corporation? Perhaps this would be one case
in which supporters of the university ought to hope for failure while there is still
something left unsold.
In a sense, how one evaluates this agreement depends on one's position at the
start. For those who believe that any connection with business is corrupting to universities
because their purposes and values are irreconcilably different, then the answer is
easy, and it has nothing to do with the specific terms of this or any other agreement.
I do not believe that. On the contrary, I believe that important intellectual, economic
and social values can be served by carefully structured connections between these
two very different kinds of institutions.
I also believe that there are some problems inherent in the relationship that
may not be solvable, certainly not easily so, and that it is important to have a
very clear-eyed view of what these problems are, and to weigh them in any final assessment.
Thus, both the specific terms of an agreement as well as generic issues of the relationship
need to be examined in order to make a fair evaluation of the Berkeley-Novartis contract.
I learned long ago that the press are selective in what they write about science
and universities, generally looking for the most headline-worthy parts of a story,
often at the expense of balance and depth. It seemed a bad idea to reach conclusions
about the meaning of the Berkeley-Novartis arrangement without first looking at exactly
what they agreed to. It turns out, on careful examination, that there is both good
news and (maybe) bad news.
The good news is that the university and Novartis have gone to unusual lengths
to build into the agreement protections for the rights of the scientists involved.
Restrictions on publication, a common cause of conflict in such agreements, are well
within generally accepted guidelines. Short delays will be permitted for purposes
of patent protection, but the decision to publish is strictly left to the faculty
Another common source of conflict is the treatment of proprietary information
or materials provided by the business to the university. Here, the agreement is uncommonly
thoughtful and candid. It explicitly recognizes that the university "is an open,
academic environment and as a public, non-profit educational institution has no mechanism
to guarantee the confidentiality of information, and as a public non-profit educational
institution is subject to statutes requiring disclosure of information and records
which a private corporation could keep confidential." Separate, special agreements
may be made with respect to specific cases, but the general rule for the company
is "share at your own risk," a rule that gives fair warning to the giver
and protects the essential character of the receiver.
Finally, the patent policies contained in the agreement are consistent with government
requirements and university policies. The university will hold all patents and negotiate
licenses where feasible. This agreement breaks no new ground in its standard patent
In one important respect, though, the agreement is unusual, if not actually novel.
What Novartis gets for its $25 million is first crack at licenses for a proportion
of the total number of inventions produced in the department that equals the company's
share of the department's total research budget, whether or not those inventions
were the product of company-sponsored research. It is thought that the proportion
will turn out to be 30 to 40 percent.
From the company's point of view, this is the reason for the agreement, and it
would seem that they got a terrific deal. They have bought the right to skim the
cream from a highly productive research program. And even if the grants made with
company money turn out to be less productive than planned, there is still all of
that work being done under NIH, USDA and other auspices -- 60 percent to 70 percent
of the total.
It's not quite the same as paying for the button and buying the coat, but it is
surely an unusually effective way for the company to hedge its bets.
The issue here is not one of principle, but of money. From the university's point
of view, the problem with the arrangement is that it requires the university to give
up the right to negotiate licenses, and presumably maximize income, from its most
promising inventions. The fee for that is $25 million over five years. I assume that
smart people at the university ran the numbers and concluded that the price was right.
Time will tell.
The economics aside, this is a carefully drawn agreement that keeps academic values
at its center -- much more than can be said for some other university-industry connections
around the country. And the UC people responsible for negotiating the agreement should
be commended for their work. That is the good news, but as I suggested earlier, it
is not all of the news. There are matters that, while not readily amenable to solution
by contract language, are nevertheless of real importance.
Here are some examples:
› The agreement pays a good deal of attention to the structure that will govern
the relationship, and the university insists that the structure guarantees that Novartis
will not be able to influence departmental policies or direct the research agenda.
No doubt both of those statements are true as stated, but it is ingenuous to think
that the corporation will have no influence over the research agenda. That agenda
will in fact be determined by a grants committee of five persons, two of whom will
It is hard to believe that the company would have been interested in putting out
$25 million with no role whatsoever in deciding how it would be spent. That role
does not, arithmetically, constitute control, but it surely adds up to considerable
› The university's information says that virtually all of the members of the department
have agreed to participate in the program. It is not entirely clear what that means,
except that failure to participate means that no funding under the contract could
go the individual. However, any inventions coming out of that person's own, separately
sponsored research would be subject to the agreement unless the work were sponsored
by another corporation.
Depending on how the overall program develops, though, one can imagine circumstances
that would lead an individual to prefer to have nothing to do with it. Fair enough;
but suppose that individual were a young and ambitious assistant professor with limited
access to other research funding. Does such a person really have a free choice? If
her work were of particular interest to Novartis scientists, could her senior colleagues
refrain from pointing out how helpful to the department and the renewal of the agreement
her participation would be? And would such a young person be in a position to resist?
I have no doubt that this suggestion will be met with quite sincere indignation
by senior members of the department. I would simply point out that such a possibility
is built into the nature of the agreement. Denial of that fact makes it more likely
that the danger will not be recognized should it arise.
› The investigator-initiated, peer-reviewed application process that dominates
research support in the life sciences has its own set of problems, but no other allocation
system has yet been devised that so productively rewards individual creativity and
provides such powerful safeguards against the perpetuation of mediocrity.
The essence of the system is that judgments of quality are not made by the applicant's
close colleagues. Indeed, immediate colleagues are typically barred from deliberations.
For all of its flaws, it is the best system available, and to act in ways that undermine
it is to risk a diminishing of scientific quality.
The framers of this agreement would not, I suspect, dispute these observations.
In fact, they have established what looks like a system of peer review as the basis
for allocating the research funds. But it is not, and it cannot be, genuine peer
review. Rather it is virtual peer review. The necessary distance between applicant
and judges is simply not possible in an arrangement like this one, and the form cannot
be made to substitute for the substance.
The weakening of peer review is, however, an important byproduct of a more fundamental
underlying problem. The really important fact about this agreement is that a great
deal of research money is being made available to a closed group of scientists. Outsiders
are not welcome, either as applicants or judges.
One would need to be blind to the value of the funding processes that have made
the patronage of American life sciences so brilliantly productive, to be unconcerned
that this heralded exemplar of a new way of doing business may be exactly that, and
that the new way could seriously undermine the old.
It is important to say clearly that there is nothing of bad faith or nefarious
dealings in this agreement. Nor are there any "ethical" issues that I can
discern here. Both sides have been open about their motives -- Novartis wants access
to a productive group of scientists whose work is relevant to their business interests,
and the university is happy to give them that in exchange for an assured source of
funds to support their work.
There is nothing illegal, immoral or unethical in that. Why, then, am I left with
a slightly sour taste about the direction we are heading under the impetus of agreements
such as this? Let the answer to that come from a representative of Stanford -- Berkeley's
neighbor, collaborator and competitor. His reaction to the agreement was this: "There's
been a culture for many years at Stanford that you do research for the sake of doing
research, for pure intellectual thought. This is outdated. Research has to be useful,
even if many years down the line, to be worthwhile."
What is so troubling, and captures the main source of my own unease, is not that
this view disastrously confuses the a priori basis on which research should be supported
with an ex post facto evaluation of its worth; nor is it that this view of the academic
world turns the historic basis for the university on its head and blithely disposes
of entire fields of research that do not show the kind of usefulness that hard-headed
people are willing to pay for.
It is none of those. What concerns me, and gives me such a queasy feeling, is
the thought that doing research for its own sake might really be "outdated."
*If that is what, in the end, we want, then so be it. But it is surely mistaken to
accept the notion that once we have identified a set of complementary needs and taken
some care to assure that a contract is carefully drafted, we have thereby dealt with
all of the important issues.
The University of California has been scrupulous in its concerns for the issues
that lie within the four corners of its agreement. But it has not shown comparable
concern, at least publicly, about the direction in which its good fortune takes important
issues of research policy, and the effect that this example may have on others. If
their example turns out to be cover for others less scrupulous, or less well-positioned,
in their pursuit of money, then the real cost of this agreement may be more than
we can afford to pay.
Robert M. Rosenzweig is President Emeritus of The Association of American Universities.