Dr. FREDRICKSON. In response to the question in your letter, the Harvard University investigators who reported on inducing a bacterium to produce insulin were funded by the NIH, and the university has filed a patent application under its IPA. Several other patent applications have also been filed in the recombinant DNA area. I am enclosing a list for the record, Mr. Chairman. Chairman NELSON. For the record they will be received. [The list follows:] RECOMBINANT DNA INVENTIONS (PATENT APPLIED FOR) MADE WITH THE HELP OF HEW GRANT FUNDS 1. Dr. Curtiss, University of Alabama: Modified Microoganisms and Method of Preparing and Using Same. 2. Dr. Wu et al., Cornell University: Oligonucleotides Useful as Adapters and Adapted Molecules for Cloning DNA and Method of Employing Same. 3. Drs. Rutter/Goodman, University of California at San Francisco (UCSF): Recombinant Bacterial Plasmids Containing the Coding Sequences of the Insulin Gene. 4. Dr. Goodman et al., UCSF: Purification of Nucleotide Sequences Suitable for Expression of Bacteria. 5. Drs. Cohen/Boyer, UCSF and Stanford: A Process for Construction of Biologically Functional Molecular Chimeras. 6. Dr. Gilbert, Harvard University: Induce Bacteria to Produce Rat Insulin. Dr. FREDRICKSON. Also, in your letter of invitation you asked me to comment on the fact that in March 1977 NIH introduced the phrase "patentable material" into its standard justification for closing peer review meetings pursuant to exemption 4 of the Federal Advisory Committee Act [FACA]. The Federal Advisory Committee Act used to include the same exemptions contained in the Freedom of Information Act [FOIA]. Passage of the Government in the Sunshine Act, effective in March 1977, eliminated the Federal Advisory Committee's use of FOIA exemptions and substituted the Sunshine Act's exemptions as reasons for closing advisory committee meetings. This change did not alter NIH's basic approach in using exemption 4. While the Sunshine Act became the source of exemptions in place of the Freedom of Information Act, exemption 4 is essentially the same in both statutes. However, we took the opportunity occasioned by the passage of the Sunshine Act to change the standard language used by NIH in citing exemption 4. In so doing, we shifted to the current format to clarify the grounds on which meetings could be closed. In making this language change, no substantive shift from the prior practice was intended. In fact, NIH's operating instructions to its committee management officers, as revised in light of the Sunshine Act, continue to provide that exemption 4 is not to be used in situations when it is evident in advance that information covered by the exemption will not come up for discussion. Mr. Chairman, that concludes my statement. I would be pleased to respond to any questions or comments you may have. Chairman NELSON. Thank you. You commented that the interagency committee representatives from various agencies favored covering DNA research by IPA, ex cept for the representative from Justice. You said all agencies on the committee except Justice agreed, while Justice argued that because of the great public interest in this field, ownership of any invention stemming from Government-sponsored recombinant DNA research should be held by the U.S. Government. So Justice agreed with the other types of research being covered by the IPAs, but not for recombinant DNA research, is that correct? Dr. FREDRICKSON. I think that is so, although the Interagency Committee did not take up the general issue of IPAs. The committee focused its attention only on those inventions related to the recombinant DNA research, developed with the help of HEW funds. Chairman NELSON. But Justice at least believed that because of the great public interest in this field, ownership of any Governmentsponsored DNA research should be held by the U.S. Government? Dr. FREDRICKSON. Yes, I believe Justice put forth that opinion. Chairman NELSON. The university witnesses in previous hearings, as well as their technology transfer organizations-the nonprofit technology transfer organizations, as well as the for-profit ones-all argued that technology transfer was very expensive, that only a small percentage of the inventions was profitable in any event, and that this was the best way to transfer technology to the public so the public could get whatever benefit there might be from its use. Does the potential profitability of DNA research inventions give you any pause respecting this being covered by IPAS? There are possibly very, very large windfalls to universities. I think we used the figure, if the staff is correct, of a $100 million market for insulin. If some synthetic insulin resulted that was better, cheaper, easier to produce, what have you, and that took over the market, would it bother you that some single university in the country or some private manufacturer and some single university were the beneficiary of very large income from that research? I have no doubt that the potential is there. That is what Justice was concerned about, because of the great public interest. Supposing out of the IPA a series of inventions is discovered, which does not have all of the trouble getting to market that the universities and transfer organizations have talked about: The long time to be developed, the question of whether or not they will sell, whether or not they are profitable, and all that. Here is an item for an existing market of $100 million. In other fields of medicine, there is a tremendous ready market, too, and all of the problems of technology transfer discussed in the testimony we have had would not certainly be as applicable to these inventions, for which there would be a very high demand immediately. Dr. FREDRICKSON. Mr. Chairman, you have asked me a number of questions, if I may, I will answer them in series. Those inventions that arise from biomedical research have no meaning in the public's eve, unless there is some practical application that becomes available to individuals. On the other side of the coin, it is not my feeling that excessive profit from those inventions, whether developed by public or private funds, upon which rests the health and safety of the people, is necessarily desirable. But there are economic facts of life; inventions do not reach the marketplace without the investment of resources. With respect to whether recombinant DNA inventions will become inordinately profitable-beyond the scale of other inventions relating to biological systems-I think is impossible to say. It is my own personal belief that there will be many practical benefits from recombinant DNA research. However, at the present time, there are very few concrete examples of successful translation of genes in bacteria that will allow anyone to assume that that is certain to be a fact. I think it is also true, Mr. Chairman, that when successful translation of one genetic message is achieved through the use of a bacterium that there will be many ways to achieve that same translation, and thus one must reserve judgment as to whether a single invention, capable of producing a substance of great value to mankind, will actually be unique. Thus the likelihood of extremely profitable inventions in this area is problematical. It was after going through all of the facts that I came to the conclusion that I described to you, that I cannot at the moment find the basis for assuming that recombinant DNA inventions will be uniquely or extraordinarily different from other biological inventions that are already judged patentable according to the patent law. Chairman NELSON. Did the interagency committee, the agencies that made up the interagency committee, file written statements of their position on this question? Dr. FREDRICKSON. Yes, some of them did, Mr. Chairman. They would be in the records of the transactions of the committee, and could be made available to you if you so desire. Chairman NELSON. Did Justice, do you recall, present a written statement? Dr. FREDRICKSON. I do not recall specifically, Mr. Chairman. Chairman NELSON. Whichever agencies had written statements, we would appreciate it if you would submit them to the committee for the record. Dr. FREDRICKSON. We would be very happy to do that, Mr. Chair man. [The filed written statements follow:] The following agencies submitted written comments on the DNA Patent Decision Document: Commerce Department, Environmental Protection Agency, Department of Agriculture, National Science Foundation, and Department of Justice. JUL 6 1977 ARTMENT K UNITED STATES DEPARTMENT OF COMMERCE Joseph G. Perpich, M.D., J.D. Department of Health, Education, and Welfare This is in response to your letter of May 27, 1977 requesting the views of the Department of Commerce on how it might handle its patent agreements with universities and nonprofit organizations with respect to recombinant DNA inventions. Under our present practice, since there is no patent policy guidance imposed upon the programs of the Department by statute, the Department follows the policy set forth in the Presidential Memorandum and Statement of Government Patent Policy issued in 1971. Generally, with regard to government-sponsored research performed by universities and nonprofit organizations, I believe the federal agencies should follow the recommendations in the Report of the University Patent Policy Ad Hoc Subcommittee of the Executive Subcommittee of the Committee on Government Patent Policy, Federal Counsel for Science and Technology. This report recommended that the executive agencies adopt policies and regulations recognizing that the public interest will normally best be served by allowing the institutions with an approved technology transfer program to retain title to inventions made in the course of or under any government research grant or contract. The report further recommended that these policies and regulations should require the use of Institutional Patent Agreements (IPA's) with universities and nonprofit organizations that are found to have an established technology transfer program that is administered consistently with the stated objectives of the President's Memorandum and Statement of Government Patent Policy. The report noted, however, that the agency should reserve the right to exempt specific grants and contracts at the time they are awarded from the operation of the Agreement, since there may be instances where exclusions from the normal policy are warranted as being in the public interest. |