Sunday, December 6, 2015

Bridging the Chasm Between Invention and Commercialization Part 1: Incentives

People in medical translational research circles talk about the Valley of Death – the chasm between university-generated innovations and real-world product and services.  This phenomenon is not unique to health care innovations.  Multiple forces carve out the chasm between the lab and the market:
-- Misaligned incentives 
-- Skills gaps 
-- Cumbersome tech transfer processes 
-- Insufficient access to key ecosystem elements such as industry expertise and  risk capital 

The good news is that, piece-by-piece, the bridge across the chasm is slowly being built.  This post focuses on aligning incentives. 

Until 1980, it simply wasn’t worth it for universities to encourage commercialization of federally funded research, because the federal government owned the intellectual property rights.  But then came the Bayh-Dole act, which allowed institutions that have received federal research grants to pursue IP ownership of the resulting inventions.  This was win-win deal:  a win for society because there was now an incentive for federal grantees to pursue commercialization, and a win for universities (who receive the bulk of federal research grants) to generate new revenue streams.

Financial incentives for research faculty vary by institution.  The University of Minnesota policy is to split licensing revenues into thirds (after patenting expenses):  1/3 goes to the inventor, 1/3 goes to the college and department 1/3 is retained at the University level.  Relative to corporate employers, this is a pretty sweet deal for faculty inventors.

Still, inventions may take decades to generate revenue and are highly uncertain, so incentives also need to be built into the fabric of academic careers.  Just last month, the Association for Public and Landgrant Universities recommended that faculty tenure and promotion decisions take into account technology transfer activity as well as traditional scholarly measures such as research publications.  The University of Minnesota also allows tenured faculty to take “entrepreneurial leave” to pursue new venture opportunities based on their research.  The University of Minnesota also formally honors UMN innovators, including Entrepreneurial Researcher of the Year. 

Better aligned incentives are a necessary, but insufficient condition for increased research commercialization.  They are an important start.