Nouveau Nonprofits: The Broad Institute’s Big Money, Business & Public Benefit Mix

By Madcoverboy – Wikipedia-English, CC BY-SA 3.0, Link

April 25, 2017; STAT News

Basic medical research is very expensive. While the U.S. government continues to play a large role, as it has in the past, private philanthropy led by megadonors increasingly keeps cutting-edge work in motion. When research results prove to have practical application they can have great commercial value. Current practice, permitted under US law, is for the institution supporting basic research to control the patentable outcomes of their investments. The sums at stake can be very large and how they are controlled raises a new challenge to the meaning of nonprofit that should be of interest to the field.

In a recent article published by STAT News, author and scientist Jim Kozubek looked at one organization, the Broad Institute, as a case study of a new set of challenges to the meaning of the word “nonprofit.” Launched in 2004 as a 501(c)(3) nonprofit organization, the Broad Institute set out to “propel progress in biomedicine through research aimed at the understanding and treatment of disease, and the dissemination of scientific knowledge for the public good.” Fueled by contributions of $1.4 billion from Eli Broad and Ted Stanley, the Institute is “committed to making the extensive data, methods, and technologies it generates rapidly accessible to the scientific community to drive progress around the world.” The research it funds is advancing medical knowledge in important ways.

After examining the Institute in operation, Kozubek raised several critical questions: Is this very large organization still a nonprofit operating in the public interest or a business entity operating for the benefit of its sponsors and leaders? How does the fact that its research is partly funded by government grants affect that question? As a nonprofit, how should the Broad Institute act out its commitment to allowing “rapid access” to its work and how should the profits from its work be shared? Should the public have a say in the decisions?

After a years-long legal battle with the University of California, the Institute won the patent rights to a particularly promising gene-editing technology called CRISPR-Cas9. Because the research was funded with both government and funds from a 501(c)(3) nonprofit, the idea was proposed that this technology ought to be available to all comers. Kozubek found that Broad did not agree; it granted an exclusive license to use it for human medical research work to a business with close financial ties to Institute “insiders.”

The Broad Institute will benefit from its share in eventual profits, which will benefit the public welfare by supporting additional research. The firm granted exclusivity is closely tied to Institute insiders, which raises the specter of conflicts of interest.

Soon after patents were issued to the Broad for CRISPR-Cas9, its director, Eric Lander, turned to Third Rock Ventures, a company to which he has close personal ties, for an early shot at investing in Editas. That startup was founded by Feng Zhang, a core researcher at the Broad. Editas obtained an exclusive license to CRISPR-Cas9 from patent holders including the Broad for cash and stock equity, and began funneling $34.1 million (by the end of 2016) to reimburse the Broad’s legal fees in its court battle for the rights to CRISPR-Cas9. As millions were flowing from the now publicly traded Editas to the Broad, Editas cofounder David Liu was installed as a core member at the Broad, further strengthening ties between the Broad and its commercial partner. Zhang and colleagues then patented an application of a related genome-editing technique called CRISPR-Cpf1 and, through the Broad and other institutions, granted Editas an exclusive license to use this technology for medical applications.”

From Kozubek’s perspective, this whole thing raises serious questions about whether the Institute is operating in the spirit of a nonprofit organization chartered to act in the public interest.

Science, long conceived as a public trust, is now characterized by an ownership culture. That is raising questions about how much taxpayers should pay for grants that feed into this culture and its incipient biotech wars. There is something intuitively wrong about a tax-exempt nonprofit organization such as the Broad being so financially aggressive. Taxpayers should not be paying for biomedical research and development that preferentially benefits the scientific elites who hold and legally defend their property ownership.

The Broad Institute disagrees. They assert in a response to the STAT article that theirs “are actually among the most open and innovative policies employed by any academic institution to serve the public good.”

The licenses for human medicine carry explicit public-interest restrictions. In addition to barring use for germ-line genome editing, an “inclusive innovation model” in the license provides a strong and novel protection that the primary licensee (Editas Medicine) cannot block others from using the technology for targets that the company is not actively pursuing.

NPQ has followed the development of the Chan Zuckerberg Initiative and its $3 billion commitment to create BioHub. The concerns that effort raised about how the public’s interests would be protected resonate with the concerns that this look into the work of the Broad Institute raises. The power to determine how research results are shared is kept within the boardroom of each nonprofit. As with most nonprofits, who gets a seat at the table is determined by those already there. Who represents the public’s interest in the determinations about how the public should benefit from their work?

That very wealthy people wish to use some of their assets to benefit humanity is commendable. But does their wealth give them a unique ability to manage in the public interest? It seems with the large health-and-wealth returns that are in play, it is time for legislators to review the current rules which grant private funders control of publicly supported outcomes.—Martin Levine