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The Black Hole

Supporting excellence in science


In the United States most universities and hospitals are private businesses, and are run as such, maximizing profit margins and generally promoting low-risk ventures with greatest return on investment. Basic research by comparison is high-risk and generally takes 10 to 20 years to show a financial return on investment (if there is a financial return at all). Not surprisingly, basic research projects are thus often left to the federal government to fund – and why not? The Bayh-Dole Act of 1980 permits universities and hospitals to pursue ownership of any invention made using federal funding in preference to the government doing the same.

In Canada, universities and hospitals are both heavily subsidized by the government; nevertheless, there is no legislation in Canada governing the management of intellectual property (IP) rights resulting from publicly subsidized research. Each organization is required to develop its own rules: while some (CNRC, CRIQ) have chosen to retain ownership and grant licenses, others (CIHR, NSERC, FRSQ) do not retain ownership, transferring it instead to the university or research center producing the invention. Although ownership of IP resulting from federally funded research is not as clearly defined in Canada as it is in the U.S., policy decisions are generally structured on the American system.

Under this model, researchers and employees generally assign their rights to their employer who, in turn, assigns those rights to a technology transfer organization. As a result, when it comes to investment decisions on basic research programs, Canadian universities and hospitals are no less run like their American counterparts, and their expected aversion to unnecessary risk encourages subsidization of basic research almost entirely by outside sources.

So why does this matter? While traditional basic research departments such as biochemistry or engineering that subsidize faculty salaries and laboratory support from tuition fees – and rightfully so, as these faculty dedicate a significant quantity of their time (usually 20%) to teaching – PhD faculty in medical departments such as hematology or oncology are expected to support themselves entirely from research grants. This is not entirely unjust, as teaching loads in these departments are virtually non-existent. While MD and MD/PhD faculty make up the difference by assuming clinical roles, generally comprising 25% of their time, this option is not available to PhDs and salary/lab support must ultimately come from somewhere.

One solution is to reclassify principal investigators at academic institutions as “independent contractors,” freeing them to better negotiate their terms of employment and creating more competition in the academic market as a result. The alternative is to transform research departments into centralized self-sustaining profitable ventures by privatizing academic research, emphasizing translational discoveries in government directed areas of need… but how? My following posts will deal with both.

Jonathan Thon
Jonathan Thon is a serial entrepreneur and founding CEO of STRM.BIO. Before STRM.BIO Dr. Thon founded Stellular Bio where he served as CEO and chief scientific officer. Before Stellular Bio, Dr. Thon was an assistant professor at Harvard Medical School.
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