The Social Contract of Science

9/14/10

To know what to change to make universities more innovative in the way they manage science, we have to go back to the way our biomedical-industrial complex is constructed.

We have come a long way from the days when science was done by a gentleman scientist in a room in his mansion, supported by his own funds or those of a generous friend. Nowadays governments put a significant part of their GDP into supporting R&D. Much of this investment, about $50 billion per year in the United States alone, goes to our research universities. Governments justify this use of taxpayers’ money by pointing out, correctly, that unfettered research activities are the most effective way of fostering the innovation needed to address current and future challenges to society. Scientists also are motivated by the sheer beauty, elegance, and excitement of fundamental discovery, but this is an acquired taste, not usually shared by the general public!

To convert university research into something valuable for society requires interaction with the private sector. If investors and manufacturers see a potential market for an innovation, then the discovery moves efficiently out of the lab and into the market place. Not only does society get something it needs, as measured by its willingness to pay for it, but the manufacturing and marketing process creates jobs and economic growth.

The social contract of science, therefore, is that university scientists are given the freedom to pursue their research interests, supported by taxpayers’ funds, because the taxpayers have been convinced that potentially commercializable discoveries will be made, which will result in new products and economic growth. The contract specifies roles for the three stakeholders: governments, universities and the private sector.

In the life sciences, the system is not working well for all three stakeholders. Government is questioning whether it is getting sufficient value when its investment in university research generates one start-up company per $100 million dollars of research funding and one patent license for every $12 million. University scientists are being told that they must stop establishing fundamental biological principles but direct their research towards specific needs of society. Venture funding, especially seed funding for life science innovation, has almost dried up. Finally, the powerhouses of the biomedical industry, the large pharmaceutical companies, have few new products coming to market and are looking at a drop in income of over $100 billion in the next few years.

The crisis in the biomedical innovation world is what is frequently called a “wicked problem,” one that is challenging to solve because it involves interactions between disconnected entities. To solve this crisis requires that the stakeholders interact with each other more productively. We believe that research universities should take the lead.

[Editor's Note: This post is also appearing today on the QB3 website. It is part of Reg Kelly's plan to write an occasional series of mini-essays on connected themes, rather than commenting on the news of the day.]

Regis Kelly is the director of the The California Institute for Quantitative Biosciences (QB3) at the University of California. Follow @

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  • http://www.claremontcreek.com Brad Webb

    Regis, I believe you are being much too pessimistic about the value received by the three stakeholders involved in aspects of academic research.

    For starters, I must respectfully disagree with the contention that venture financing has almost dried up – I don’t see that at all. For instance, several large new capital venture funds specializing in life sciences have recently been formed. These include Third Rock Ventures, which raised $426 million for its second fund focusing on biotech, medical device and diagnostics companies; OrbiMed Advisors, which closed its fourth venture fund at $550 million in February; and SV Life Sciences, which recently secured $523 million for its fifth fund.

    In addition, dozens of established life science focused-venture funds are consistent investors, and that includes Claremont Creek Ventures. At CCV, we focus on computational advances that have applications to health care and the life sciences – what we like to call the application of Moore’s Law to medicine. We are constantly on the lookout for great ideas bubbling up in academic institutions such as the QB3. We regularly invest in early stage startups, and have funded projects right out of university labs.

    Supporting these arguments are some compelling facts: venture capital investments totaling more than $3.4 billion were placed into 241 companies in the biotechnology, medical device and health information technology sectors in the first half of 2010, according to the PricewaterhouseCooper MoneyTree report. And, the majority of these funds were invested in the second quarter, after the health care reorganization law was passed. These private sector funds support the flow of ideas from university research into startups, which work to turn the innovative ideas into commercially viable healthcare products and services.

    This flow of investment dollars is leverage on the federal funds provided to support academic research, which is substantial also. For the record, the budget of the National Institutes of Health for fiscal year 2011 is $32 billion, most of which goes to grants for academic research. California also supports direct research through its funding of the University of California system and other direct projects. And there is ample money to pay recipients for the fruits of their success. The Department of Health and Human Services has a staggering budget of almost $900 billion, the majority of which pays for reimbursements of Medicare-funded and Medicaid-funded health care costs, including products and services manufactured by American pharmaceutical, biotechnology and medical device companies.

    In the aggregate, the patents created by university research represent incalculable value. Basic researchers never know when they are going to develop a world class idea, but this uncertainty and risk is what makes them tick. As you said, “Scientists … are motivated by the sheer beauty, elegance, and excitement of fundamental discovery.” Venture capital investors take similar risks in that we never are sure of the outcome of our investments, but one thing is certain – without government funding for academic research, the medical and health care sector of society would be nowhere near the level of sophistication and success as it currently is.

    It therefore follows that the government does get good bang for its buck. The medical products industries ultimately purchase a multitude of extremely valuable patents held by the universities, resulting in generous royalty payments, and of course government receives a huge return in the form of corporate and sales taxes from the sales of medical products. Finally, it is without argument that our society has benefitted enormously from the medical devices, pharmaceuticals, and advanced treatments for diseases that result from the collaboration of the three stakeholders.

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