CSR Issue Report:

Private Partnerships &

Public Universities

March 14, 2007Michael Abbott

Jeff DenbyMargot Kane

Michael Thomas

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Contents

• Background• Examples of Tension and Historical Responses• Industry Affiliates Program• The Stakeholders• Current UC Berkeley Partnerships• Case Studies:

– Novartis– Dow Chemical– BP

• Examining Student Engagement• Assessing Corporate Strategy• Recommendations• Questions?

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Background

• Research universities have long collaborated with industry to their mutual benefit

• Prior to 1980: research funding came primarily from the Federal Government.

• Bayh Dole Act of 1980-gave universities the right to seek patents for discoveries– Financial Incentive to Seek Patents– Financial Incentive to Seek Private Funding

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Background Continued

• The relationship between Industry and Universities has been productive when:

– scholars are free to pursue and transmit basic knowledge through research and teaching;

– scholars have freedom of thought and expression, and

– the researcher is able to convey the results free of coercion.

• The relationship becomes contentious when:– the financial ties of researchers or their institutions to industry exert

improper pressure on the design/outcome of research; – the specific research will be used by private industry for an unintended

or malicious purpose; and – when university stakeholders object to the funding because of the

company’s history or behavior.

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Examples of the Tension

• The death of a patient in a gene-transfer study at the University of Pennsylvania in Fall 1999, and claims that the financial ties of the researchers to the company that financed their work had biased their judgments.

• Research on a thyroid replacement drug at the University of California at San Francisco was funded by Knoll Pharmaceuticals who had a vested interest in demonstrating the drug’s superiority to generic drugs. In this case, the research proved the generic drug worked just as well as the replacement drug. For seven years, Knoll Pharmaceuticals successfully blocked publication of the research despite the research’s support by the Journal of the American Medical Association.

• Researchers who defy their corporate sponsors may lose their funding. When one Toronto scientist revealed in 1998 a serious side effect of deferiprone, a drug for a blood disorder, her contract was terminated.

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Examples of the Tension Continued

• More dramatically, when a number of researchers concluded that Remune, an anti-AIDS therapy, was of little benefit to patients, the company funding their research, the Immune Response Corporation, sued the scientists in 2001 for $10 million for damaging its business.

• Researchers who defy their corporate sponsors may even lose support by the university. A highly visible whistle-blowing episode occurred in Canada in which a faculty researcher was removed as a principal investigator in a drug study when she broke a gag rule about the toxic risks to some of her patients. The institution denied her legal assistance on grounds that she had not obtained the approval of the administration for her confidential agreement with the drug company, an agreement which an investigator characterized as a “very big mistake.”

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Examples of the Tension Continued

• A study (published in Science and Engineering Ethics, II) stated that of 789 journal articles published that year, in 34 percent of the articles one or more author had a financial interest in the subject matter being studied.

• Where the financial resources of an academic department are dominated by a corporation there is the potential for distorting the priorities of undergraduate and graduate education, and for compromising scientific and research openness.

• An additional concern focuses less on research and teaching in a single department than on the ethics and academic credibility of the entire university.

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Historical Responses to the Tension

• In 1995 Congress passed regulations regarding researchers who receive grants from the National Science Foundation or the Public Health Service. The legislation has research disclosure requirements and financial reporting requirements.

• University Response: Most research universities have adopted policies-some more stringent than others. At Washington University in St. Louis, for example, there is no monetary minimum for reporting financial ties with a corporation that sponsors research, while researchers at Johns Hopkins University must have the approval of the institution before they accept a fiduciary role with a company, if such a position is related to their academic duties.

• Professional Organizations: The American Society for Gene Therapy and the American Society for Human Genetics—have called on their members not to own stock in any company that funds their research.

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Industry Affiliates Program

Goals include:• raising research and administration funding to support the center’s research activities and

teaching • addressing unmet needs in scientific disciplines that may not be supported by public funding

agencies due to programmatic changes or lack of a direct match (i.e., not fitting in any one federal programmatic funding priority)

• fostering the development of entirely new applications areas in the translational research space, for which new graduate programs must be established and/or new faculty hired

• bridging the gap between basic research performed at the University and the more applied, or translational, research necessary to create commercial products and services for public benefit 

• creation and maintenance of vital private-public relationships that result in the future employment of our graduates, retention of our faculty and other University employees being as industry consultants, in donations, research sponsorships and collaborations, and conduct of clinical trials

• opportunities for providing industry members with advance information about Berkeley’s cutting edge research in fields of interest to the members

• learning industry perspectives on possible commercial problems, or directions or applications of basic research

Many industry affiliates programs exist on campus and include some combination of the following elements:

• A. Emphasis on Learning about Berkeley Research• B. Access to Intellectual Property.  • C. Emphasis on Collaborative Research and Mutual Feedback

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Stakeholders & Interests

• Students and Student Government

• Faculty and Academic Departments

• Administration

• Industry

• Berkeley Community

• Statewide UC System

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Case Study 1: Novartis

• 1998-2003 funding agreement between an entire academic department – Plant and Molecular Biology – and Novartis, a major agricultural biotechnology firm (now Syngenta.)

• $25 million ($5M/year) to fund faculty and graduate student research and equipment.

• Viewed as an “experiment” and subject to internal and professional external review (performed by UMichigan for $225,000.)

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Novartis: Stakeholders I

FACULTY• PMB department doubled its

funding• Some faculty did not apply for

funding through this “deal with the devil”

• Every project proposed by faculty was funded as proposed – lots of “blue sky” and overhead funding

• Start-up funding for research that would later be more competitive for federal funding

• Novartis very “hands-off” in managing relationship

STUDENTS• Graduate students benefited

from access to state-of-the-art equipment, corporate & professional connections, and proprietary databases and research results

• No discernable effect on undergraduate students

• Joined public in fear of corrupting academic research & learning

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Novartis: Stakeholders II

NOVARTIS

• Access to creative, independent research results from graduate, post-doc, and faculty

• Ability to negotiate exclusive ownership of patents/inventions developed through research

• Exposure to future employees/hiring advantage in Bay Area• Only exercised four patent options and only retained one. (Genetic

research became more difficult to patent.)• Had right to delay publications of research results – infrequently

exercised

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Novartis: Stakeholders III

ADMINISTRATION• UC-Berkeley exploring first major

private sector funding as solution to fiscal instability

• Negotiations were done secretly• Overhead & Admin revenue

stream• Cutting-edge PMB graduate

department (previously declining enrollment)

PUBLIC• Sentiment of distrust against biotech

& agriculture (i.e. Monsanto)• Distrust of nature of secretive

contract• Fear corporate funding would skew,

bias, or hinder research in PMB either deliberately or indirectly (through providing industry-specific equipment & databases)

• Belief that allowing one company first dibs on university-developed intellectual advances corrupted nature & function of public “land grant” universities

• Lacked understanding of both agreement and Novartis’ activities due to private nature of negotiations

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The results

• UC-Berkeley, College of Natural Resources, and PMB department heavily criticized for non-inclusive approach to deal (i.e., “vegan pie-throwing.”)

• Media played polarizing role• University found itself in debate regarding role of universities,

faculty, and academic departments in education, research, and society – public vs. private, individual vs. communal diversity, etc.

• Public advocacy also devoted energy to attacking Novartis and role/motives in funding PMB.

• State Senate & academic journals debated nature of relationship between Novartis & UCB

• Funding not renewed by Novartis, and little directly gained by company through faculty research.

• PMB faculty often used Novartis “Seed” funding to jump to larger federal grants upon promising results

• Internal and External Reviews concluded the “both the worst fears and the best hopes were not realized.”

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Lessons learned

• Without transparency and public disclosure, the worst will be made of any deal by both public and media (“if you don’t say it first, the media will do it for you – in a way you won’t like.”)

• Corporations, faculty, students, and administrators all have different ideas of what a university should embody and what roles it should play – these differing viewpoints must be brought to consensus in major decisions.

• Early and often communication on the behalf of all parties is essential to accurately portraying goals, motives, likely outcomes, etc.

• The Novartis deal was not what the public/faculty/students feared, but nor was it what the industry hoped for. The PMB appears to be the only satisfied party, having received large amounts of unrestricted funding for 5 years. This is not a sustainable way to partner with corporate!

• Possibility that initial negative public attention convinced Novartis to 1) not exercise patent options and 2) not renew funding.

• Meanwhile, after this experiment, UC-Berkeley has continued to accept major corporate funding under new policies and an “Industry Affiliation Membership Program” that places very specific limits on corporate access to intellectual property & funding and prevents funding of entire programs by one corporate entity.

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External Review Recommendations

• Avoid industry agreements that involve complete academic units or large groups of researchers. (In order to not compromise diversity)

• Reassess in a comprehensive fashion the implications of non-financial and institutional conflicts of interest.

• Encourage broad debate early in the process of developing new research agendas. • Be attentive to the formulation of new goals when motivated by a disruption of

patronage or by self-interest. • Make organizations associated with UC or supported by institutional resources

transparent to the public. • Assess institutional obligations and commitments to reliable production and

communication of regulatory science.• Strive to educate the public on the specific nature of intellectual property, technology

transfer, and the nature of institutional accountability. • Work to identify and prevent the masking of intended applications of knowledge or

potential negative consequences of commercialization with the privileges implied by academic freedom.

• Begin the difficult task of determining the role a public Land Grant university should play in the twenty-first century by re-examining core commitments.

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Conclusion

• “Creativity, autonomy, and diversity” are the three highest priorities/characteristics of universities that underlie their societal value and contribution. Exclusively corporate-funded and/or federally-funded research can compromise all of the above.

• Best Quote: “Believe me, Berkeley professors are too intractable to become corporate lackeys...But what about elsewhere?”

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Case Study 2: BERC & Dow ChemicalOverview

• Berkeley Energy & Resource Collaborative (BERC)– Inter-disciplinary student run group established in 2005– Mission: BERC was established in 2005 at UC Berkeley’s Haas School of Business to harness the strengths of the

university’s students, faculty and programs across the energy and natural resources sectors.– Represents over 190 members from from the Haas School of Business, Lawrence Berkeley National Labs, the Energy &

Resources Group, College of Natural Resources, Boalt Hall School of Law, and the UC Energy Institute.• BERC accepts $50,000 from Dow Chemical to sponsor the UC Berkeley Energy Symposium• Six weeks before event, student organizers are made aware of a non-binding 2004 ASUC resolution (198)

prohibiting students from accepting money from Dow

1. Source: http://berc.berkeley.edu/about.html

2. Source: http://www.asuc.org/documentation/view.php?type=bills&id=366

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Case Study 2: BERC & Dow ChemicalStakeholders & Interests

• BERC– High quality symposium– Respectful of relationship with greater University

• Dow Chemical– Publicity for their sustainability program– Relationship with Haas, UC & Students

• UC Students– Concern for human rights issues– Policy: Constructive Engagement or Outright Rejection?

• Administration– Haas Relationships with Dow– UCB Dept. of Chemical Engineering ($500 million)

• Affiliate Groups– Students for Bhopal

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Case Study 2: BERC & Dow ChemicalCreating a Solution

• Are there more options than “take it or leave it?”• BERC Leadership and Faculty Advisors weighed creative solutions

– Create a panel or separate event to discuss human rights questions around Dow

– Offer to accept half the amount (BERC had another donor lined up for the other half) provided that Dow donate the difference to a human rights organization

• Dow seemed reluctant to modify their level of involvement– They have dealt with this before (University of Texas & University of

Michigan) and know exactly what they are willing to do– Prepared to send representatives to campus– Will not consider alternate funding arrangements for legal reasons as

cases are still pending in many areas• Barriers to negotiation

– Dow: The stakes are low: take the check or don’t– BERC: The symposium is on sustainable energy, not human rights.

This is not the right forum for this debate.

1. Source: Interview with Jit Bhattacharya; BERC Co Chair

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Case Study 2: BERC & Dow ChemicalThe Final Decision

• At the start of the final meeting, Jit felt that had a vote been taken, BERC would have accepted the money

• During the discussion group organizers came to general consensus on the following points:– BERC represents the larger Berkeley community and it’s mission

is to integrate, not alienate, the UC community– The right thing to do was to be engaged with Dow on a

constructive basis, but the timeframe was too short and Dow was clear in their response

– There was not enough transparency around why Dow was chosen in the first place, though time permitting, a case could (and should) be made to the University to take the money

• BERC returned the $50,000 to Dow

1. Source: Interview with Jit Bhattacharya; BERC Co Chair

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Case Study 2: BERC & Dow ChemicalKey Lessons

• Credit to BERC leadership for building consensus and considering all the stakeholders, even those they may not have agreed with

• The “responsible” outcome is often unclear, and a function of perspective and interests

• Size of the relationship matters – how would Dow have responded differently if the stakes were higher?

1. Source: Interview with Jit Bhattacharya; BERC Co Chair

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BP-Berkeley Deal: Energy Biosciences Institute

• Deal basics– $500M 10-year contract with BP – the largest deal in UC Berkeley’s

history

– Partners: Lawrence Berkeley National Lab and University of Illinois at Urbana-Champaign

– Proprietary and Open research components

– Programs• Feedstock development• Biomass depolymerization• Biofuels production• Fossil fuel bioprocessing and carbon sequestration• Socio-economic development

– $115 earmarked for new building paid for by State of California and Donations

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Stakeholders & Interests

• BP– Research into the growing, harvesting, processing, and distribution of biofuels– Improve reputation to make the company seem more environmentally responsible or a

significant effort to invest in the development of real oil alternatives?• University

– Be on the leading edge of research– new resources and ability to sustain research for 10+ years– prestige

• Faculty– Leading edge research– academic freedom issues

• Students– Potential for graduate work– university corporatization

• Public– Development of alternative fuels– Community outreach and environmental effects of a new building

• The Developing World– Economic and social development… or disaster

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Potential Wins

• New scientific discoveries leading to economically viable alternative fuels that have a positive impact on reducing climate change

• Steve Chu (Director of LBNL): UIUC is growing miscanthus for the past 20 years – so the idea is this grass grows much, much faster than the other types of plants we grow for food and it requires much less water, much less fertilizer, these are all good things. This is an unproved crop, even with simple breeding we think we can make this much better. Then you take that grass, and the primary bottleneck right now is how do you convert this cellulosic material into ethanol or into some other biofuel? Right now, it costs, and the estimates vary, somewhere to two, two-and-a-half times more than turning a starch like corn into ethanol.

• Developing a successful partnership framework for academia, research, and industry to work together

• Such a successful venture could serve as a model for future university-industry deals at other institutions.

• Championing scientific research AND addressing the impending social and environmental challenges while partnering with for-profit industry

• Dan Kammen (Director of the Renewable and Appropriate Energy Laboratory): I think one aspect of it is we’re not the easiest date, but we’re not the easiest date in a good way, in the sense that we’re going to poke and prod in not just the basic science but also in the systems and engineering and ethics and impacts and the whole management of biofuels. Because land issues, land tenure, land quality are critically important to sustainability, not just on an ecological basis but also in terms of people around the world, rich and poor.

• Maybe, but how is this monitored?

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Concerns

• Three big concerns: – Process– Sustainability and Justice– Corporatization

• Process– UC Berkeley did not follow the recommendations of

the University of Michigan report that was developed after the Novartis debacle

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Concerns

Sustainability and Justice– Deforestation and displacement of traditional farmlands– Will labor be exploited in the developing world to grow energy

crops?• Brazil – 200,000 migrant workers already being called “ethanol slaves”

• Bush signs “Ethanol Alliance” with Brazil but refuses to cut hefty import tariffs

• Monthly wage of USD$200, 12 hour shifts in heat above 90oF, stay in overcrowded expensive tenements

• 17 workers died of exhaustion in past 2 years

• 55% increase in ethanol crop in next 6 years. Where will this be planted?

- Energy and Transportation issues- Use an enormous amount of energy in the processing of Ethanol. Tropical crops

have high energy efficiency while temperate crops such as corn have low efficiency and may even have a negative energy balance.

- Ethanol cannot be piped, must be shipped and trucked

- Concern over the creation of GMOs

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Concerns

• Corporatization– Will Academic freedom be compromised?– Who will control the content and research direction?– There will be proprietary research conducted by BP that is based on the findings by

university researchers

• From the proposal:– The proprietary component will be carried out by BP personnel in a central Berkeley campus location under

an operating lease. BP personnel will engage in proprietary research in the leased space and will have no obligation to publish research performed in the leased space. UCB, LBNL, and UIUC research personnel should be excluded entirely from the space in the performance of their university activities.

– We envision that BP investigators will be located in an area of the EBI site that will allow a high degree of “flow” between personnel in the open and proprietary components of the EBI, but will also allow restriction of access as needed. However, we also expect that BP investigators will actively collaborate on open research questions with UCB, LBNL, and UIUC employees, students, and post-docs, and will have access to the research facilities, libraries… of the partner institutions. The EBI’s director and deputy director will have confidentiality agreements with BP.

• Will BP exploit this partnership with respected institutions like UC Berkeley to improve its own image in a giant greenwashing initiative?

– From The Foundation for Taxpayers and Consumer rights: The regents [should] carefully scrutinize the proposed arrangement with BP, paying special attention to wording that gives the British-based company… rights to use UC-Berkeley's name in BP's advertising and marketing efforts.

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Concerns

• Who is in control of this research agenda and what is the purpose of a university?

– Many faculty believe that a partnership with industry legitimizes their research because it directs it in such a way that is immediately commercializable.

– Steve Chu: “Yes, you want to train students and create knowledge, but you also want to solve the problem and the problem is how do we get onto a much greener path towards energy. This is why it’s so important to partner with industries at the beginning. If we don’t do that . . . what happens is that you can get some scholars who go down there and they’re aiming for the “Science” paper, the “Nature” paper, and then after that it’s someone else’s problem, and they may not know how to approach things that would scale properly in an industrial environment.”

– BP cannot solve all the problems associated with biofuels and so they want some of the research to be “open research”. BP wants to be highly involved in this open research but then as some developments look promising they would like to take the research proprietary. The nature of such proprietary research would not be revealed and so scientists would not know to what their personal work had contributed.

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Concerns

• In the future, will corporate agendas shape the content of education?

• Chancellor Birgeneau: I think this is probably going to play a lead in our attempts to reformulate how we do undergraduate and even graduate education here at Berkeley. So it’s really a remarkable opportunity which will go well beyond a sustainable environment and may impact how we do education in public universities.

• Chancellor Birgeneau: Energy first, global poverty second

• Berkeley has the biggest collection of social scientists actively interested in the environment of any university in the world. It is interesting to note that none of these “social scientists” that are so abundant here were consulted for the writing of the proposal nor are any named as part of the management/academic team for the new EBI.

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Strategic Recommendations for BP/UCB

• Set up an academic committee that oversees the research and determines whether it is abiding by the tenets of academic freedom and if there are alarm bells that dictate new directions or potential social/environmental issues that need to be explored.

• BP should not be permitted to use UC Berkeley in its advertising nor corporate responsibility promotions – the conflicts of interest are too risky and such benefits should not be the point of the research partnership

• BP and the university partners need to acknowledge that a real outcome of the research may be the conclusion that biofuels will be a financially profitable but neither an environmentally nor socially sustainable alternative to fossil fuels. Real and public discourse on the intentions for the research, regardless of outcome, need to be established upfront.

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Strategic Recommendations: Students

• Corporate reluctance to conduct negotiations more publicly/transparently than industry norm earns the quick distrust of student population, who has little contact with private sector. Industry needs to consider student population as partner as well as faculty and administration.

• University administration must acknowledge role and impact of students and work to fill knowledge gaps, include student government in developments, and involve likely cooperative student groups.

• Anticipate media involvement; use media to transparently communicate to and educate public about intentions of partnership.

• Ensure student (graduate and undergrad) populations benefit from agreement, though improved access to equipment, research opportunity, fellowship, etc.

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Strategic Recommendations: Faculty

– University should promote cross disciplinary representation on the proposal committees and department boards to ensure diversity & independent thought & research

– Involve wider range of faculty in discussions and planning and eventual sharing of grant access to ensure better buy-in and wider range of applications for research (i.e. BP deal did not include social-environmental researchers)

– Promote and protect faculty independence and autonomy and remove incentives that might overtly bias research direction, revelations, or results

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Strategic Recommendations: Corporate/University Engagement

• Balance benefits, motives, and credibility: – Universities have a higher level of trust and credibility than corporations;

University’s interest is to have resources because of funding constraints.– Negotiations need to be conducted in more open manner that satisfies

source of value & credibility of both University and Industry.• Public-Private partnerships can be beneficial for academia and

industry, but there are issues that need to be addressed.• Deal needs to be structured in such a way that the university retains

its independence and credibility and the corporation provides resources to get what they need.

• Stakeholders need to be engaged to a level that is reasonable for all sides and to an appropriate level. All stakeholders need to be considered but will not necessarily be satisfied

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Sources: Novartis

• http://www.sacbee.com/static/live/news/projects/biotech/archive/112003.html

• External Review of the Collaborative Research Agreement between Novartis Agricultural Discovery Institute, Inc. and The Regents of the University of California.

• http://www.berkeley.edu/news/media/releases/2004/07/30_novartis.shtml

•  http://www.berkeley.edu/news/berkeleyan/2003/01/29_novart.html

• research.chance.berkeley.edu/docs/FINALIndustryAffiliateOverheadProcedures8-1-06.doc