Examination of Witnesses (Questions 500-520)|
TUESDAY 4 MARCH 2003
500. But do you not think it is right that some
of these decisions should be taken locally?
(Professor Borriello) Yes, absolutely, I do not disagree,
but what I am saying is that the decisions are taken not necessarily
after being exposed to the best available evidence or the best
available impartial evidence. Decisions are mainly taken on who
they spoke to last or the very last meeting they went to, which
is not the full picture.
501. What you are saying is that a series of
locally made separate decisions will not have the same focus or
(Professor Borriello) That is absolutely right, and
the opportunities for linkage to IT and therefore developing what
are huge holes in diagnostics in the UK are difficult even for
an IT system that works. If you had a proper link on to an information
hospital system you would need to interface it with all of your
automated diagnostics but if you have a system where every other
laboratory has a different IT system and everybody has got a different
platform then you are not starting from a very good base.
502. On a slightly different note, though still
connected with this, what is the danger of litigation in this
field? You mentioned litigation with respect to vaccine and vaccine
development but not in diagnostic testing. Is it low, is it medium
or is it high if you get a diagnostic test that gives you a wrong
result and that leads on to litigation? Is that a worry in the
development of diagnostics?
(Professor Borriello) I am not aware at the moment
of any litigation based on the failure of the diagnostic. It does
not mean to say it cannot happen. Most diagnostics in the market
do not claim to be 100 per cent and they would normally find they
have the protection of the NHS almost inevitably because, as the
user of the diagnostic, it would probably not adhere 100 per cent
to the written guidance. They would also protect themselves by
saying, for example, that the laboratory using it is accredited
and their accreditation includes an independent accrediting body,
so that is an appropriate diagnostic to use. They have an element
of protection in the chain but I suspect that if there was a failure
and the failure was due somewhere in the process to the manufacturer
or the quality of the reagent, then there would be a risk of litigation.
A classic example may be the failure to diagnose MRSA, not that
the clinician did not bother to look but that the test said it
was not there.
503. Do you think that university researchers
are sufficiently engaged in developing the new technologies of
the kind that you have been discussing? If not, could you suggest
ways in which involving universities more in these activities
could improve their entrepreneurial outlook? Would you think that
that kind of emphasis would detract from the researchers' concentration
on their scientific work?
(Dr Logan) Firstly, science enterprise centres have
had a very positive effect in most universities and have acted
as a catalyst for the change in the enterprise culture. We are
now in their third year but this changing of culture takes time.
We are beginning to see the rewards. We have further to go. That
is very positive. I think that could be extended to the NHS hubs
as well. Certainly in London there is a lot of interest in this.
The catalyst is very important, disseminating the information,
having very clear IP policies in place so that people know, if
they are going to go down the route of commercialising something,
what is in it for them and their department, particularly what
is in it for their department in terms of additional resources
if something is commercialised or licensed. The SECs have been
very useful. They are only funded as separate entities for another
year or so. They then have to be funded through the universities
but whether they will have completed their job by that time is
open to debate. I have already mentioned the issue of more resources
to do some of the basic testing. It is very often the case that
the research group leader would prefer to carry on with the pure
science so the role of the research assistant is absolutely vital.
We do encourage research assistants to be the ones who are involved,
in spinning out companies. There needs to be some funding for
the proof the principle stage, before we get something that the
VECs can look at. That is essential: funding to carry on those
basic tests. There is then an issue about the technology transfer
departments. If an academic goes to the technology transfer department,
we still have the situation in universities where these departments
are quite poorly trained. The DTI has set up a steering group
to look at this issue. I am on that steering group. It is absolutely
essential that we increase the expertise in the group dealing
with the academic business interface. I have mentioned the RAE
and the merit award. That really needs to be changed. I also think
we must have more of a joined up provision. In certain areas of
the country the RDAs are working very closely with universities.
We are beginning to see great success. That is not happening in
all areas. We have a long way to go in London, for example, which
is where a lot of the medical spend is. This is very important.
We must have the incubator space so that we can get potential
spinouts to the level where these ideas will be interesting to
VCS. Those are the main things: this lack of funding and the lack
of clear guidelines and training.
504. Should not these activities produce an
(Dr Logan) It is a long term income stream. I have
been talking to other SEC directors about this and we think that
the university has to invest quite a lot in the whole licensing
set-up before we get returns. If you take somewhere like Isis
Innovation, they get £1 million a year from Oxford University,
but that was a leap of faith. Oxford University had excellent
research but they were prepared to make that investment and they
are beginning to get that back now. Again, we are back to this
505. Rather than saying we are not being given
enough money from other sources, ought not the interested parties
themselves, the institutions, say, "Yes, we believe in some
of this work that is going on in our laboratories and we are going
to apply some of our resources" to making the transitions
that you describe?
(Dr Logan) That is a very good point. But while our
resources are still linked to the RAE, universities are going
to go on being focused on the publications.
506. Is not the RAE linked with good research?
(Dr Logan) It is but the RAE is not necessarily linked
to the number of patents, is it?
507. You are implying these things are mutually
exclusive and they are clearly not.
(Dr Logan) They are not mutually exclusive. I am not
implying that they are. We are beginning to see a change and universities
are beginning to invest, but it is still very patchy and not every
university will have the leap of faith like Oxford has.
(Dr Reeders) Not every university has technology worth
developing. The return on these kinds of investments made at the
very early stages does take time to come in. The Medical Research
Council, which has been at this longest, had last year more than
£10 million of income from exploitation activities, largely
as a result of development of antibodies. Now they have a self-funding
process where they have enough money to continue to proactively
develop. To prime that pump elsewhere, there probably does need
to be some funding. The quality of translation activities in universities
is extremely uneven. A lot of good technology in certain universities
is not being developed because they do not have anyone to tell
the scientists how to do it. That is less true of Oxford and some
other major universities, but I think there are good universities
with good applied research which do not have people of sufficient
quality to direct development.
(Dr Logan) That is putting it extremely well.
(Professor Borriello) There are a number of small
things but they may make big differences. Overall, the awareness
in academia of the intellectual property right potential of some
of their basic research is not as high as it could be. We are
still predominantly dependent upon what I would call active reporting.
We would expect the researcher to recognise the potential value
from their own basic research and notify someone. We have been
less good at what I would call active, top-down mining of potential.
You need somebody who can do an intellectual property right potential
swoop on a particular department or university. That will only
be of value if the outcome of that is some quick hits. In most
academia, whatever people might think, their main interest and
reward is not having a big bank balance; it is having some extra
pairs of hands to help them do their research. The reward system
has to be looked at and putting people there is useful. The other
thing comes back to the research councils. It is true that the
MRC get ten million, mostly off one product which I think is humanised
antibodies from the eighties. Most research councils say all the
IPR rests with the university, but it is possible that if the
fund awarding body said, "We are also interested in ten per
cent of this IPR", this gives them an incentive to chase
up the IPR potential of the grant that has been awarded. That
might help stimulate greater recognition of the IPR potential
because somebody else would be asking that question. I do not
think much academia would be averse to that except if it went
back into grant awarding from those bodies.
508. In another context, Dr Logan said she thought
that the Yorkshire region was working very well as far as cooperation
is concerned. I think this is because the Yorkshire region has
developed a strategy called Yorkshire Forward incorporating the
universities, the employers, voluntary organisations, hospitals,
everybody in Yorkshire and the government as well. The government
has a role to play in this. It is far better for the government
to play a role in the strategy in that way rather than just to
react to emergencies of pressures from MPs who may have marginal
constituencies. If the regional development agencies all developed
a strategy like that, that would solve some of the problems we
have just been discussing that the universities might have.
(Dr Logan) Definitely. There is a government steer
on this for the RDAs and universities to work much more closely.
We are now beginning to see that in the south west of England
as well. We are less good at it in London. That is exactly what
we need. We have to all be working together in collaboration and
it has to be joined up because one of the problems we have now
is we are in danger of wasting resources and even in some cases
competing. We will have people who are working on the SEC side
who will be in competition with people who are working on the
BEP and we are all doing the same thing. It is having a joined
up strategy that everybody participates in. We are not in competition
at all. We can all work together and that is what I am trying
to do in the areas in London in which I work.
509. You mentioned a joined up strategy in this
area and we have heard in the past in the United States when we
were there that one of the failings to make progress in this general
area is the absence of managerial skills and business skills to
bring science and business together. There are one or two places
in this country, incubator cases, that do both science and management
and there probably is a need for more of these, but how does one
get over that? Are there special skills that one needs to hone
and develop even within universities to get development on the
(Dr Logan) There is a tremendous skill shortage. You
are right. One way we are trying to deal with this is to have
a mentoring programme, so that people who have done it work with
people who are trying to go through the process. That is the only
way we can fill that skill gap, by using mentors who have gone
through the process themselves or who have been through a similar
process. That is a real problem for us, finding enough skilled
people to be on these teams.
(Dr Reeders) There are three answers there: tax relief,
tax relief and tax relief. If you can offer a manager of a new
start up company so many options completely free of tax, you will
suck into small companies, a lot of people looking for a chance
to make a lot of money and willing to work very hard to do that.
That is key. One of the things that has helped a lot in the US
is the 20 per cent tax rate on long term capital gains.
People look at that and say, "I am going to keep more of
what I make." This tax treatment does not cost anything in
the short term. It costs something in the long term but only in
the event of success.
510. I wanted to clarify whether you meant personal
tax or company tax, because corporation tax in small companies
is 10 or 12 per cent.
(Dr Reeders) Most of these technology companies are
not profitable and therefore corporation tax does not worry them.
It is really personal tax. I was addressing the specific point
of management skills. Why would someone who is a leading drug
developer at Glaxo SmithKline go over and start a two man company
where he has to plug in the phones and all of this stuff, which
is very hard work, when the company cannot pay him as much as
Glaxo SmithKline can? What is the incentive? What is the draw?
One great advantage is to say, "If you make a big success
of this and you have an equity interest which substantially appreciates,
you will get a much more favourable tax position than earned income
in a big company". That will draw people into small entities.
511. One of the difficulties of that is how
you tell the difference between the tax rate of somebody such
as you describe and the chap next door who may be working in an
engineering company or who is a teacher or a social worker. The
tax credit system does try to tackle that but how would you differentiate
between these people?
(Dr Reeders) You would use classical, maybe more strict
definitions of small entities. The management gap is not in the
company with 100 to 200 people. It is right at the beginning,
in companies with two, five or ten people, with annual turnovers
of a few million pounds, maximum. Those would be two criteria.
By and large, equity appreciation in small businesses is economically
very advantageous generally but if you wanted to focus it more
on technology I would take companies that were very small, had
small turnovers and were relying on third party capital.
512. Dr Logan was referring to the RDAs and
their involvement with developing science, engineering and technology
as innovations, which is another inquiry that the House of Lords
Science and Technology Committee is doing. They will be looking
to see what evidence there is for that, but my question relates
to something Professor Borriello has said about research councils
themselves taking responsibility for IPR and investing in that
IPR to take it to the market place. Do we have an example of anywhere
else in the world where that is successful?
(Professor Borriello) I am not sure of any examples
anywhere else. The point I was making was not that they take the
role but that they have a shared role in that, because that increases
the potential number of people and bodies who have an interest
in realising the intellectual property.
513. The fact that we do not have an example
is because research councils' business should be about funding
good research and it is right that universities own and exploit
that IPR rather than research councils saying, "If this comes
to the market place, we will have a share in it."
(Professor Borriello) That is a philosophical argument
as opposed to a proposal as to how we may improve things. I can
see no reason in law why a funding council should not have some
interest in the IPR. Neither am I going to fight a pitched battle
about it. It is just a proposal that might be a way of trying
to unlock an increased awareness and drive to release the intellectual
property that exists. Much of that research is funded by the research
councils through to academia. If the funding bodies had some interest
in the potential IPR, a small stake, there may be more incentive
for them to help drive it and also to put at the disposal of the
recipient of those grants some of their business officers that
already underpin some of those research councils such as the MRC
and the EPSRC.
514. Most of the research is pretty complex
funding; it is not just one stream funding. It comes from the
private sector, charities and industry and it is very difficult
to identify the component of IPR which can then go to research
(Professor Borriello) It can be difficult. There are
many examples of multiple stakeholder IPRs.
(Dr Reeders) The venture firm I manage is a wholly
owned subsidiary of the Medical Research Council, so we watch
the tensions from a little distance. Lord Patel has identified
one key issue. I think there is a genuine tension between the
need to do the very best research and the need to make sure that
if you do something that is applicable it is correctly exploited.
That tension is always there. It is at Harvard University just
as much, where Harvard now has a very elaborate policy to stop
people spending all their time in companies down the street. I
do not think we will ever get over that. Having a highly professional
translation organisation does stop the researchers spending too
much time worrying about it. For example, one of the big problems
is where patents are poorly drawn up. The Medical Research Council,
for example, is highly sophisticated about its patent strategy
and they get high quality patent lawyers to draw patents up that
have a high chance of success. Many institutions do not have that
knowhow. Often, you will find a professor struggling to help the
translation group figure out how to file a patent. Higher quality
translation specifically in relation to patents would be a very
valuable thing and would save the researchers time.
(Dr Logan) This brings us to an issue which is critical.
Most universities have their own technology transfer office. We
duplicate. Surely we have to now move to collaboration so that
a number of universities share a very highly skilled technology
transfer office. I am sure that has to be the move forward instead
of having these technology transfer offices in each university
where you might have somebody who is a physics technology specialist
transfer having to deal with a number of other areas which are
not theirs. That would be one of my main recommendations: could
we somehow join up that provision?
515. Professor Borriello, in your written evidence
you describe the failure to analyse data using sophisticated techniques
for trend analysis commonly in other areas such as meteorological
analysis, financial analysis, etc. Could you expand on this and
give some examples to provide some of the clues we need for the
(Professor Borriello) Yes. Some of those things sounded
very good when I wrote them but were maybe not so clever when
I read your question. There is a serious point being made in there.
I have a personal view, which may be shared by others around the
country, that for a long time surveillance in the UK has been
based on what I would call the hoover principle. You try and collect
everything but you expect it to be driven to you. Then you are
faced with trying to find those few nuggets or that lost earring
in a hoover bag full of dust. The surveillance and the associated
epidemiology should concentrate on being much more question orientated
within an area where you can intervene and have an effect and
measure the effect. It is a question of balances. In order to
do that, you therefore need sophisticated analysis and there have
been many years of development in the UK where there has simply
been collation of data and presentation in tables and graphs.
Very simple things, for example, from the financial markets would
be time series plots where you would have lots of short gap analysis
points collected over a long period of time. If you have single
points every six months over ten years, you might see a nice curve.
If you are looking at financial markets where it is collated by
the hour or, say, infectious diseases which could be done by the
week, you would then see a whole series of different points moving
around, probably quite radically. It is the mean of those points
that give a single curve. That sort of analysis would allow you
to look for correlates. Is there a dip every third Wednesday and
how can you explain that? You can then have time series analysis
whereby, instead of accepting that the last point on your graph
is an independent point, you accept that the last point may have
an influence on the next one. The antibiotic resistance for E-coli
to antibiotic Z this monthwhatever that point ismust
have some sort of effect on what the next point is going to be.
The analysis simply tends to join the dots. The reason that is
important is because it must feed through into the measurement
of interventions and predictive models. You cannot assess what
the effect of the intervention has been unless you can accurately
assess what the prediction would be in the absence of that intervention.
Otherwise, all your measuring is real time and what judgments
can you make on that? A classic example would be from many, many
years ago where it was said that vaccines caused a major decrease
in infectious disease in the UK. If you take the plot back long
enough, it was improved sanitation that had the effect. It depends
where you start on the plot to draw your conclusion. Finally,
a philosophical point is that in the hard sciences the prediction
will not influence the result. The speed of light you predict
in medium Z is going to be a particular value. You may predict
all sorts of values but when you measure it it will always be
whatever it is. In the softer sciences such as the financial markets,
and also in infectious diseases because of human behaviour, the
prediction will affect the outcome. If you predict the HIV is
going to go right off the scale and the only people left alive
will be in the Houses of Parliament, you can guarantee that there
is going to be an intervention somewhere that will have an effect
on that curve. How do you judge how good the intervention was
unless you have an accurate prediction? There are many people
far more skilled than I in that sort of analysis: Professor Andy
Hall at the School of Hygiene; there is Roy Anderson at Imperial;
Peter Davey at Dundee for antibiotic resistance. There is Monet
in the Denmark Serum Institute who also has looked at predictor
models. There are many people you may already have spoken to who
may have said similar things but, if not, are probably worth speaking
516. Is what you are talking about being done
elsewhere in any other country, say, in Europe or north America?
(Professor Borriello) I think it is a general fault
of not bringing together sufficiently the mathematical skills
that some of the best epidemiologists have into what are frequently
at national level predominantly surveillance bodies, where most
recruitment is from the public health arena, quite rightly. My
surveillance colleagues would be insulted if I said their epidemiologists
were not the best in the world and that is not what I mean. It
is accepting that there are other skills to draw on and that they
should draw on other disciplines that use these mathematical skillsfor
example, in the meteorological arena, where it is exceptionally
complex; and yet they are still able to make predictions out of
that chaos that it will rain on Wednesday. That takes a lot of
computing and a lot of mathematical intellect.
517. Can we presume that the data required for
this analysis is available or should it be collected and made
(Professor Borriello) That is one of the reasons why
I suggested that maybe we need to shift the emphasis a little
away from trying to capture everything, almost irrespective of
its quality, to more targeted particular surveillance and epidemiological
analysis, where we believe we can have an effect and therefore
can accurately measure what the effect of our intervention was
or was not. That may mean targeting a number of sentinel hospitals,
perhaps for hospital acquired infections, and generally assessing
the interventions effect of various behavioural changes or new
policies, but having sufficient time periods either end and sufficient
knowledge of mathematical analysis to draw a valid conclusion.
518. We realise that communicable disease is
a global phenomenon and, as far as this Committee is concerned,
that was emphasised to those of us who went to see the people
at the WHO at Geneva four weeks ago. How can the UK liaise more
closely with other countries and international organisations when
deciding about priorities for researching, developing and using
(Dr Logan) There are a number of EU initiatives now
but it seems to me there needs to be more international coordination
of research. There is a lot of research going on but we need to
bring that research together in some way so that we are using
the resources in a more focused way.
(Professor Borriello) At the European
level there is the new drive towards a so-called European research
area as well as now increasing talk of a European research council,
still with the proviso that you would not disband the national
ones. They would face the same problem, probably multiplied, that
we face at national level of trying to involve small to medium
enterprises. It is the continual failure to get individual companies
involved. I do not think it solves that problem. Working together,
I would see the opportunities through, for example, DFID and some
of the major charities and the WHO. The trick would be to identify
a diagnostic goal where there would be benefit to all contributors.
One of these could be improved rapid diagnostics, say, for viral
haemorrhagic fevers. The WHO would be keen because they could
use it in the field. We might be keen because we could use it
on military personnel or at immigration as a diagnostic exclusion.
TB would be another example, where one could develop simple, easy
to use, near target tests that could be used in a number of different
settings. That is where you could get coordinated sign-up potentially.
Outside of that, I do not see any easy solutions. Lots of things
can be proposed but I do not see many coming to fruition.
(Dr Reeders) I think the answer is vaccines.
We have a huge moral dilemma. We have conquered all the major
diseases for the rich countries and the poor countries are being
decimated by TB and HIV and malaria. This is a huge problem for
all rich nations: how do you live with the fact that there is
this massive differential in ability to deliver care to these
patients? The problem is now so huge, especially in the case of
HIV in Africa, that trying to deliver western style care to very
poor countries probably is too expensive and too difficult. There
are infrastructure problems. Vaccines which have been developed
here could be delivered in Africa and in the Indian sub-continent
and elsewhere. One of the biggest efforts right now is from Mr
Bill Gates, the founder of Microsoft, who has put in the first
instance $750 million into the international AIDS vaccine initiative,
the malaria vaccine initiative and TB, which are the three big
killers. Programmes like that, perhaps with coordination from
a number of governments, could be extremely effective. It is not
impossible to make a vaccine for AIDS or malaria or TB. Money
into that could be extremely well spent because vaccines are relatively
cheap to deliver. We have to consider very carefully whether,
as a nation, we put money into these programmes or we sit back
and watch what is happening in the Third World. That is a key
decision for governments to make. This is not a trivial problem.
It is a massive problem, particularly for HIV, which is completely
out of control at the moment.
519. I wanted to hear what you felt about whether
existing organisations would be sufficient providing they had
more resources or do we need to have different mechanisms as well?
(Dr Reeders) The problem is that the efforts of these
organisations are too diffuse. I think you can have a bigger impact
by targeting what really matters. On a global basis, right now,
what clearly really matters is the epidemics of HIV, TB and the
problem with malaria. A better way to go would be to have a direct
programme, albeit allied with other direct programmes, in those
key areas. By all means tie your effort to the international AIDS
vaccine initiative or the malaria vaccine initiative or whatever,
but it is important to target the money. There is a risk otherwise
that it will be spread over too many areas. The milestones and
goals will be too diffuse. If you are going to spend any money
on these things, you have to have very concrete, specific milestones.
That is the danger: that that does not happen. If you focused
in on vaccines for the three big killers and you put significant
funding into that, you could have an impact within five to ten
520. There is the global fund, particularly
aimed at these three conditions, of $10 million per annum. That
money might be targeted exactly as you have suggested.
(Dr Reeders) You will know better than I how to get
these things delivered but it seems to me that if you wait for
all sorts of other countries to get together and do it they will
never do it. The way forward is to do it yourself. By all means,
if someone else is independently willing to do it themselves,
align yourself with them. Right now, courtesy largely of Mr Bill
Gates, for whatever reason, he has put $750 million into this
and it is not a bad starting fund. We should not have any pride
of ownership if we merge our funds with his.
(Professor Borriello) There is no doubt they are three
of the world's biggest killers. I am not convinced that lack of
progress has been due to lack of investment. There has been huge
investment into HIV; massive investment into malaria and TB vaccines,
including in the UK and the western world. The lack of development
has been the intractability of the problem and the component factor
of ensuring what is developed in western countries will work in
Third World countries, particularly for TB when there is such
a background of prior exposure to other tubercle organisms. Somebody
put forward at the OECD meeting last year in Lisbon, which was
particularly addressing how does one invest in public health in
terms of ensuring economic development of countries, that the
biggest inhibition of development in many of these countries is
their public health problems. The point was put forward, which
might have a lot of validity, is that instead of putting more
money into vaccine research one should guarantee that whoever
produces vaccines can sell them to Third World countries at a
proper price. In other words, the western governments should underwrite
part purchase of a vaccine, instead of continually asking manufacturers
to put all the development money in and then kick them away. That
is addressing the market the other way around. It is a slightly
alternative point of view, to guarantee the investment at the
commercial end and the market for that investment, which is that,
if the vaccine was meant to cost $20 a shot in order to recover
your investment and make some profit, that is what it would be
charged at. If the country cannot afford it, the WHO and others,
who are pouring billions into development, should pour some of
that instead into purchases.
(Dr Reeders) The international AIDS vaccine initiative,
to my knowledge, is working very hard, lobbying the World Bank,
saying, "Do not let us produce a vaccine when we have no
way to pay for it. You have to come forward with a significant
amount of money." The cost of that will be very substantial,
but it will suck commercial enterprises into trying to work on
Chairman: That brings us to the end of our questions.
Thank you very much indeed for coming along. If there are points
which we have missed or you feel that you have not got over effectively,
perhaps you would like to let us have something in writing. You
will get a transcript of the morning so that you have an opportunity
to correct it factually. In the meantime, thank you very much
for coming along. It has been a good session and I hope you have