CSR Issue Report: Private Partnerships

1
CSR Issue ReportPrivate Partnerships Public
Universities

• March 14, 2007
• Michael Abbott
• Jeff Denby
• Margot Kane
• Michael Thomas

2
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?

3
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

4
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 companys history or
  behavior.

5
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 drugs 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 researchs 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.

6
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.

7
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.

8
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 Geneticshave 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 centers 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 Berkeleys 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 dont say it first, the media will
  do it for you in a way you wont 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
  Berkeleys Haas School of Business to harness the
  strengths of the universitys 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.p
hp?typebillsid366
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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 dont
• 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
  its 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 Berkeleys 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

26
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 were not the easiest date, but
  were not the easiest date in a good way, in the
  sense that were 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 USD200, 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

29
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 EBIs 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
  its so important to partner with industries at
  the beginning. If we dont do that . . . what
  happens is that you can get some scholars who go
  down there and theyre aiming for the Science
  paper, the Nature paper, and then after that
  its someone elses 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 its
  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.

32
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.

33
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.

34
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

35
Strategic Recommendations Corporate/University
Engagement

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

36
Sources Novartis

• http//www.sacbee.com/static/live/news/projects/bi
  otech/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/2004/0
  7/30_novartis.shtml
•  http//www.berkeley.edu/news/berkeleyan/2003/01/2
  9_novart.html
• research.chance.berkeley.edu/docs/FINALIndustryAff
  iliateOverheadProcedures8-1-06.doc