become more difficult to deal with in the case of fetal tissue or tissue derived from cadavers. There are others much more

qualified than I to examine these issues.

The committee may be interested in my impression of whether the practices of universities and government laboratories are consistent with the public's best interest. The availability of gene libraries, human cell lines, and specific human tissue have played a major role in the rate of progress of biotechnology in the United States. Although policies and practices are quite varied across the country, they have proved to be generally compatible with the rapid dissemination of information and an accelerating pace of commercialization.

It is unlikely that any system can be established which ensures a totally equitable redistribution of profits to each single contributor in precise proportion to the value of his

contribution. The public may be better served if such a goal were achievable but care should be taken not to institute such changes as might disrupt the present functioning of this complex system to the considerable detriment of human welfare.

To date, more than two billion dollars has been invested with significant ongoing losses in order to sustain this progress. Such investments are required to translate scientific knowledge and the knowledge gained from natural biological materials into commercially useful products. Clearly, the expectation of significant profits is necessary to generate this high risk investment and the commitment of considerable personal efforts.

Mr. VOLKMER. Thank you very much, Dr. Rathmann.
Does the gentleman from California have any questions?

Mr. PACKARD. Thank you, Mr. Chairman.

The process, Mr. Reimers, of patenting materials, human materils for use and perhaps marketing of biomedical results, is that inreasing now more and more than we've seen in the past two or hree decades?

Mr. REIMERS. Yes, I believe the genetic engineering technologies nd the hybridomas technologies have increased that interaction in he filing of patents in the field.

Mr. PACKARD. Historically, medicine has not done a great deal in marketing the research that they've done. That is becoming more and more prominent, obviously, and in so doing, is taking upon themselves more and more of the risks of the private enterprise. Heretofore, they have, oh, had a kind of a protective cloak in their research in terms of litigation, in terms of liability, simply because the motivations have been, I suspect, very acceptable in the minds of most Americans.

Now, as you get more and more into the private competitive marketplace, you will see much more, I presume, of the vying for some of the benefits. Does that give you concern? And if so, what will that do in terms of changing the implementation of the new mood of moving toward a marketable product or capitalizing on some of the benefits of some of the research from the private sector?

Mr. REIMERS. I think, to a degree, it's affected worldwide trends in competition, where more and more a nation depends upon its intellectual capacity to compete in international trade; where innovation has become very important. In my paper I did deal with the trends of university and industry interaction and the accelerated rate of university-industry interaction since the Second World War. I personally think that it's to the benefit of society at large that there is a close interaction of our educational institutions with industry to see that the fruits of the universities' research are delivered to the public, and it is industry that is chartered by society to do that.

Mr. PACKARD. May I ask either one of you, do you think that these changes will alter the motivation and perhaps the quality of research that's being done? And if so, what will it be, to the good or to the bad?

Dr. RATHMANN. We have certainly not seen any evidence in the close associations we have with the leading-many leading scientists, some very closely associated with the company-we see no evidence of adversely affecting their research, their degrees of freedom and publication, their academic quality.

And as a matter of fact, I agree with Niels that the strength of the collaboration between industry and academia has been beneficial on both sides. They see the benefits of what they're doing reaching out into the potential health care of the country and the world, and I don't see that as something that is adversely affecting the course of their research.

Some of them have actually expressed that concern. They've said, "Well, we don't want to get too tied in with commercial thinking. We've been very successful being isolated." But after a while,

they've said it hasn't affected their mentality to the point of corrupting, so to speak, their objectives and failing to see the longrange benefits of their research.

Mr. PACKARD. Mr. Reimers?

Mr. REIMERS. Yes, I would like to add to that. The major objective of our licensing program at Stanford, and I am sure at other universities, is to take a positive step in bringing the results of research to the public.

The secondary objective is to make money doing that to plow back into education and research. But in many situations, if the making money side of that should jeopardize any academic objectives such as freedom of publication and so on, we will forgo the income. And we have done that before.

I would also like to say, as far as the role of the scientist, many are concerned about the potential dangers from interaction with industry. It is nothing new, in a sense, in many departments such as chemistry and physics and engineering that have worked with industry for a long time. It's a bit newer in the biological sciences, and to a degree they perhaps perceive that's new to the university at large. I don't think it is. It's the same problem.

But I don't know of any scientists at our university or any other that would go for the dollar instead of being the first one to publish. I think a Nobel Prize or being the first to publish in the literature is something that will stay with you forever. You can't take the money with you.

I would like to add one more thing, which is that while the inventors at the university are entitled to receive a net one-third of the actual of the revenue received, for the most part-and I am not sure of the exact numbers, but I can give that to you later—the money is donated back.

For example, in our recombinant DNA invention by Cohen at Stanford and Boyer of the University of California, both have renounced any personal claim to royalties.

Mr. PACKARD. Is the increased activity in your research areas toward industry or a contractual arrangement between the university and industry, is that motivated, do you think, largely by the lack of funds from Federal support? Or is it a natural

Mr. REIMERS. That might be a factor. I don't think so. It's really greatly satisfying to see the results of your research actually be used, and particularly if it's going to save some people. They really care about it. And I think that's a greater motivating force.

And industry now, as I mentioned the overall worldwide trend where you've got to advance in high technology and innovation to be competitive, industry is finding that universities are sources of technology that they can put in future products. It's become a much more important linkage in the U.S.'s ability to compete.

Mr. PACKARD. Do you think that it will have some effect on the public's attitude toward the research that's done in the universities now in biomedical areas which has always been a rather pristine, clean, and very well-received kind of a research program by commercializing it? Will that tend to remove some of the public opinion and therefore have some effect upon the public reception and public support of the high quality of medical research that's being done?

Mr. REIMERS. Sure, it probably could, and that would be a tragedy, I think, for the Nation, for the academic institutions and for the competitiveness of our industry.

Mr. PACKARD. Could it have an effect upon further support from Federal sources, the policymakers determining that the more the research arm of our institutions become commercialized or capable of retrieving sums of money, the less need there would be for public support and Government support? Do you think it could have an adverse effect upon the funding sources for research— which I think are extremely important?

Mr. REIMERS. I think that you are probably in a better position to answer that question than we are. I would say that at the moment the highest level of royalties enjoyed by any university I believe were about $5 million in the last fiscal year.

So it's not a great sum of money, but it's really important on the margin because it is independent research money where, instead of going through the process of preparing and submitting proposals, which take quite a bit of time before they're awarded, you can immediately move on some promising source of some promising research problem for which you don't hav funding available otherwise. So this, in a sense, free-of-strings research money that is enabled by such programs as our technology licensing program, I think are very important.

Mr. PACKARD. I have expressed on several occasions my concern that we are not doing well in this country in terms of applied research, that we do well in basic research and developing marketable information but we do not do a good job of turning it into a marketable product. Foreign competition has outstripped us in those areas, and I still feel very strongly that way.

How could-if that philosophy were to be pursued in biomedical research areas-in your judgment, how could that best be done and at the same time avoid many of the problems that could stand in the way of that in terms of litigation, in terms of rights, in terms of funding?

Dr. RATHMANN. I think we would have to take you on with your hypothesis. I think we are leading in biotechnology, and that's more recognized by overseas people even than some of the more modest people in this country. We are leading today, and we did it by applied research. It wasn't done in the universities, but it was done in close conjunction with universities, and I think the biggest things to look at in terms of how to make sure we continue to do that is look at the barriers that may be building up, creating potential problems for a system that I think has worked over the past 5 years, and worked very well.

Mr. REIMERS. May I add to that? It's not clear to me that you really want your universities to do this applied research, not simply because of the threat of litigation-and of course, the closer you get to the product, the greater threat there is of litigation. It's not clear to me they're best at it, you know, nor should that be what society wants them to do.

I think the best way to do it is in close interaction with industry, and it should be industry that does that applied research. There may be others in academia who disagree with me on that, but that's my feeling, and I think most would agree with that.

Mr. PACKARD. Thank you, Mr. Chairman. I may come back : other questions.

Mr. VOLKMER. All right.

Now I have several questions, and I won't go into all of them. W will probably submit some of them to you by writing.

Now, about how widespread is the use of the human biologica materials in the development of biomedical products?

Dr. RATHMANN. We have no patents on what I would ca "human biological materials," nor do we intend to sell any what would call "human biological materials." So I appreciate we'r dealing with a semantic issue here, but I think it's a very impor

tant one.

We are not taking materials and marketing them from huma bodies or any ongoing requirement for human materials to be sold Basically, what biotechnology does is it extracts information, ge netic information, and from that in many cases, such as in our company, we actually synthesize a totally new material from a to tally new gene, and we produce products in bacteria or other cells that are very similar to human biological materials. They mimic the human biological material, but in no way are they being produced by any human at that stage.

Now, the concept that we have used human biological materials to get the information we need is a simple fact that every human body has genes in every single cell, and any one of those cells contains all the genetic information of the body, and that genetic information is what we need. Sometimes we can take that genetic information from a single normal cell, just a cell from any source, a cell from the bloodstream or whatever, and sometimes we extract that information from a specimen such as a urine specimen where there is some protein in there and we get some data on the protein. But none of our products really involve the sale with the connotation, ethical connotation perhaps, of selling somebody's materials. None of ours do that, and that's true in most cases in most biotechnology companies. I think it's worth making a careful distinction. Mr. VOLKMER. Mr. Reimers, do you agree basically with that as to what is the end product, the development of the end product is through synthesis?

Mr. REIMERS. Yes, I totally agree with that. As my paper indicates, it's basically information that is received from the patient, and then the AMGEN's of this world develop products that express the protein that results from the coded genetic information. Each cell is a library from which this information can be obtained.

Mr. VOLKMER. So what you've done, Dr. Rathmann, is not a replication directly of the human biological material that is used to determine the information-

Dr. RATHMANN. No.

Mr. VOLKMER [continuing]. You synthesize it or use synthetic methods?

Dr. RATHMANN. Yes. It isn't always that, but whatever process is going on is far removed from the starting material that was obtained. In most cases, it's simply information that you obtained, yes.

Mr. VOLKMER. Now, this basically has, I suppose from my examination and reading of it, has been brought upon by the genetic en