Interview with Jennifer Washburn

March 2005

Interview of Jennifer Washburn, author of the book, University Inc: The Corporate Corruption of Higher Education and New America Foundation fellow, by Nick Schwellenbach. Schwellenbach is a former member of the university watchdog group, University of Texas Watch (, and currently an investigator at the Project On Government Oversight (

Can you tell us a little about your background?

I've been a freelance journalist since 1995. Some years ago I received a grant from the Open Society Institute to research the growing privatization of various different areas of public life. So I wound up looking at various government services that were being contracted out to private companies. And then I stumbled upon an article about what was happening in the universities with the Bayh-Dole Act and intellectual property. Having gone to a smaller liberal arts college, I was astonished at the degree which universities themselves were engaging in commercial activities that I had no idea that they were involved in. That grew into a cover story for the Atlantic Monthly in March 2000 called "The Kept University."

The title of your book University, Inc. suggests that increasingly universities are acting like corporations themselves rather than simply having their research directed from the outside by corporations. Do you think this distinction is important in understanding the difference between universities in the past and those today? I ask this because critics tend to focus only on universities' relationships with outside corporations, rather than on what is happening inside the university.

Yes, I try to make this point very clearly in the book. It's not simply that outside companies are violating academic freedom or changing the direction of academic research, it's that the universities themselves are acting increasingly like for-profit enterprises. The real historical shift can be traced pretty clearly to the Bayh-Dole Act, passed by the US Congress in 1980, which gave universities automatic intellectual property rights to taxpayer-financed research.

The goal of the legislation was quite noble: to transfer technology to industry more quickly. By giving universities the right to own any inventions stemming from taxpayer-financed research, Congress hoped to encourage universities to license them to industry in exchange for royalties and other fees. So the Act created a monetary incentive for universities to commercialize their research. It was thought this would help boost US innovation at a time when we were facing growing competition from Germany and Japan.

The problem was that it introduced a profit motive into the heart of the university that was very distinct from anything what we had seen previously. Universities have long had relationships with private industry - professors consulted for industry, graduates took jobs in industry - but never before was the university itself trying to profit off of campus-based research. And so that's the real change that happened in 1980.

You mention economic competitiveness, but can you more fully flesh out the rationale behind the Bayh-Dole Act?

In the late '70s the US economy was stagnating, so the question was: "How is it that a country spending so much money on research is falling behind in innovation with other countries beating us out?" Congress wanted to know, "What's happening with all this taxpayer-funded research and why isn't it stimulating economic growth?"

Unfortunately at the time, Congress was putting out very faulty statistics which I discuss in the book. There was a statistic - you hear it repeated even today (the Economist magazine recently cited it) - that there were 28,000 publicly-funded inventions essentially sitting in the government's basement and only 5% percent of them ever got commercialized. It turns out these statistics were totally erroneous. There was a selection bias. Today you often hear people say that, prior to Bayh-Dole, academic inventions just simply sat on the shelf. This is not true.

Academic knowledge was transferred to industry through a variety of means - through consulting, through informal relationships with private companies. Patenting and licensing was not a very common way to transfer knowledge to industry. Most of the knowledge was transferred through the public domain through open publication.

So what happened [around the time of Bayh-Dole] was that Congress started to increasingly expect universities to prove that they were transferring their knowledge to industry, and one of the easiest ways to [prove this] was through patents.

Has technology transfer actually increased? It seems that perhaps in measurable ways - number of patents licensed - it has, but what about these informal means of transfer? Has anyone tried to quantify these informal mechanisms of transfer?

Right, it is very different to measure whether technology-transfer has increased. We just don't have the data we need to measure that effectively. In a survey published in 2002 by Wesley Cohen and Richard Nelson, industry technology professionals were asked what are the most important mechanisms by which you get information from academia? To an overwhelming extent, industry said that open channels like publication and consulting were the most important channels. Patenting and licensing ranked way at the bottom across nearly all industries, except pharmaceuticals.

So putting so much emphasis on patenting and licensing, as the Bayh-Dole Act did, may actually be detrimental because universities may be imposing proprietary restrictions on research that would be more broadly used if it was transferred through the public domain.

Has patenting and licensing research even paid off for universities?

No. The truth is the vast majority of universities are not in fact profiting off of their licensing and commercial activity. The Association of University Technology Managers constantly trucks out these impressive numbers showing that universities have generated $1.3 billion off of commercialized research. But the overwhelming majority of the profits go to less than two dozen schools. And the rest of the schools are barely breaking even or losing money on these commercial activities.

Even when schools do make money, does the student population or the faculty in general receive any of this money?

This is one of the things that is such a shame. The few schools that do make sizable profits, do invest some of this money back into new research. But, increasingly, governors and state legislators are putting enormous pressure on all universities to become "engines of economic growth" in their local regions. They are pushing universities to spin-off the next Silicon Valley in their own backyards. They're telling universities, "We're giving you all this money and we want you to generate high-tech jobs, we want you to spin-off companies." Meanwhile, the states are gutting the general funds for higher education that actually go toward teaching and educating undergraduates.

So students are not really seeing any benefits. In fact the share of state funding for public universities has declined by one-third since 1980. States continue to target money toward high-tech commercial activities on campus. But, meanwhile, because of cuts in the state's general funding, students are being forced to pay higher tuition fees.

Rising tuition costs deter students from being able to access higher education, which is a great shame since most of the good paying jobs we have left in this country require a college degree.

So you're saying that not only is state support for higher education stagnating or decreasing as a percentage of university funding (in absolute terms the amount of state spending may still increase), but that more and more of that state support is then being earmarked for specific commercial projects rather than used as general educational funds?

That's right. The stem cell initiative in California is a good example. Taxpayers are paying $3 billion for stem cell research in California. Now I'm a supporter of stem cell research. The problem is that even as the state is pouring $3 billion into this one specific area of technological research, state funding for higher education in general is being cut forcing tuition costs to rise as a result. So it's that kind of skewing of priorities I find troubling. The core undergraduate center of the university is being under-funded and ever more money is poured into commercial activities.

Well, in general, why should students, faculty and the general public be worried about corporatization of the university?

There are many reasons. We have to remember that universities perform so many vital functions. First and foremost, they educate the next generation of citizens and world leaders. Because of the new corporate orientation, universities are misdirecting many of their resources and they're increasingly eliminating full-time professorships and farming out the teaching to graduate students and adjunct professors who are paid meager salaries, with few, if any, benefits and no job security. Close to 50% of faculty who teach in higher education now teach on a part-time basis.

Students are being neglected. I think this is the first thing that should make everyone quite concerned.

The second issue is that we rely on universities to provide us with disinterested research that the public can trust. Nowhere is this clearer than in the medical arena. Historically universities played a very important role in testing the new drugs that came out to see if they were safe for us. Universities would accept money from private industry to do those studies, but they conducted the studies at arms length from the drug industry. Now universities are riddled with financial conflicts of interest. Universities themselves now hold equity in the companies that are sponsoring the research, they hold intellectual property interests in the drugs and products being tested, professors consult for the companies that are funding their research, the professors sit on the companies' speakers bureaus and are flown around to fancy resorts on the companies' tab. The public now has no place to turn to for independent expertise to evaluate these drugs.

The FDA is having trouble staffing their advisory panels with people who don't have financial interests [in the drugs evaluated] because so many academics have these sideline consulting arrangements.

Could you give us some examples where conflicts of interest have led to problems? Are there any "horror stories" out there?

The journal Nature Neuroscience invited Charles Nemeroff, chair of the psychiatry department at Emory University, to review about two dozen psychiatric treatments. The journal expected that this eminent academic psychiatrist would be giving his expert advice based on good science. Well, later it came to light that three of the treatments that he endorsed in his article were ones that he had a direct financial interest in, including a lithium patch that he owned the patent to. None of this was disclosed in the article.

One of the most devastating stories is what happened with the anti-depressants. In Chapter Five ["Are Conflicts of Interest Hazardous to Our Health?"] of my book I go into this further. Essentially all of the original research that came out about the SSRI drugs - Selective Serotonin Reuptake Inhibitors, which include Paxil and Zoloft and Prozac - said that these drugs were safe and effective for children. But when the FDA went back and looked at the raw data from those same clinical trials - when it actually evaluated the complete raw data from the trials - the agency found that the SSRI's actually increased the rate of suicidal behavior and thinking in children two-fold as compared to kids who were just taking a placebo, a sugar pill.

So the question arises: "Well how did that negative data get suppressed?" We don't for sure, but we do know that the academics who authored those early published studies had extensive financial ties to companies manufacturing the drugs. We also know that in many instances the universities signed contracts that allowed the industry sponsor to control the raw data generated by those studies. The professors did not actually control the data from their own research!

So are you also saying that secrecy inside the university has increased? If so, what are its effects?

Yes, many analytic studies have come out showing that industry-funded research is associated with greater delays in publication and secrecy. When researchers are funded by industry they are more likely to withhold information from their academic peers.

It's important to remember that traditionally universities were a very open realm for practicing science. Now there is a lot of concern about industry money making the environment more secretive, more proprietary, less open. I interviewed a top cancer researcher who's been asked to sign agreements to gain access to data that require him to keep the results of his research secret for up to ten years.

Economists, legal scholars and historians of technological innovation are concerned that if universities mimic industry and make publicly-funded research proprietary, it could stifle innovation over the long term. It could clog the pipeline for future discovery.

When researchers continually find they can't gain access to basic research tools, or it is very costly and cumbersome to do so, it makes the scientific process more inefficient and it has the potential to slow innovation over the long-term.

Historically external regulation by the government has been opposed by universities quite vigorously. The argument is that government regulation violates university autonomy. Can you tell us why oversight is needed now and can you answer the universities' argument about autonomy?

I do understand why universities are wary of having government come in and impose conflict-of-interest regulations on them. Obviously, there is good reason for universities to be cautious about government interference in their affairs. But I do find it very ironic that, even as conflicts of interests mount and industry interference in their research grows - these institutions can, with a straight face, say that they are preserving their autonomy by rejecting federal conflict of interest regulations. Universities are far more wary of the government than they are of industry or commercialism, which is profoundly distorting their mission.

Also, it's not conflicts of interest we have to tackle. We have to get all this commercial patenting and licensing activity out of the heart of the university. When the Bayh-Dole Act was passed there were a few dissenting voices. But Joshua Lederberg, a Nobel-prize winning scientist, did raise some prescient questions about whether universities should actually be handling all this commercial activity themselves. He expressed concern that it would corrupt the universities' mission too much.

My recommendation is for the federal government to create third-party licensing bodies, in various regions of the country - these could be private contractors or pseudo governmental agencies - which would assume responsibility for the universities' technology transfer and commercialization needs. These offices would be staffed with the best technology-licensing experts, a team of top lawyers, and people with strong business backgrounds. Whenever a professor-inventor had a research discovery that he or she wanted to see commercialized, he or she would work with this office to see about making that happen. Centralizing these functions would make it much easier for industry to keep track of new university inventions. It would also free the universities and their professors to focus on what they do best: cutting-edge research and teaching.

The profits generated by these pseudo-governmental entities would be ploughed back into new, federal, peer-reviewed research grants. Inventors would also get a percentage, as would the inventor's institution.

Has this been done before? Is there any historical precedent for your proposal?

There is. Before Bayh-Dole, many universities were wary of engaging in anything that smacked of commercialism. Even schools like MIT contracted out all of their patenting and licensing needs to a third-party, a company called the Research Corporation. Some people say the Research Corporation didn't do good enough job. But if these third-party offices I'm proposing were well staffed, and they were drawing on research discoveries stemming from multiple institutions, they would certainly function far better than the system we currently have. A majority of our colleges and universities simply do not have the financial resources, the level of cutting edge research, or the professional expertise needed to do this technology licensing and commercialization well. It is extremely costly and wasteful to have so many individual campuses pouring money into this, without much success.

What can we - the students, faculty, and the public - do?

It is critical that we continue to insist on strong public support for higher education. When tuition costs rise, parents and students need to hold their universities and their public officials accountable. The public has to realize that this taxpayer funding is vital to preserving the university's public mission. Without it, universities have no choice but to turn to industry as supplicants. This does not put them in a good bargaining position, and it gives industry far too much control over their research and their affairs.

We call on these institutions to remain dedicated to the public interest, not merely the interests of private industry. We should be skeptical when state legislators tell us they are funding a new biomedical center on campus, while gutting the share of the state budget that goes to funding undergraduate education. We should be especially skeptical when legislators tell us that the university is going to spin off new high-tech companies and stimulate high-tech jobs, since this is not the role of the university.

Faculty and students also need to do more digging to examine what's going on in their own campuses, and expose it. Remember, universities are vulnerable on this score. They depend on the public for such a huge part of their support: research grants, student aid, state subsidies, tax breaks. They have a lot invested in continuing to be seen as independent institutions dedicated to education, disinterested research, and strong academic values. In theory, this should make them more responsive when problems are exposed since they don't like to be seen in a bad public light.

Unfortunately, universities are often very tight-lipped when it comes to this kind of information so faculty and students need to be tenacious to break open the locks. They should insist on full and open disclosure of any contract that the university signs. They should investigate current contracts, and make sure that they fully respect the academic culture, protect academic freedom, and do not permit industry excessive control over the research process or publication of the final results. The same is true of conflicts of interest. Professors' financial ties should be made public and easily accessible.

It is only by opening up this process that we can have a true and genuine debate about what is an appropriate level of university-industry engagement.

See the CorpWatch interview with Jennifer Washburn, March 11, 2005