what can we learn from open source and open standards
TRANSCRIPT
What Can we Learn from Open Source and Open Standards?
September 1, 2015
Andrew UpdegroveGesmer Updegrove LLP
What does Traditional Pharma Look Like?
All R&D costs borne by one companyAll risk borne by one companyAll patent rights held as long as
possible by one company
What do Traditional Pharma Results look like?Limited number of new drugs per yearLimited number of diseases/conditions
addressedDelayed sharing of research and resultsOngoing consolidation due to costsLimited distributionMarketing is profits-driven (regardless of
efficacy)
What do Open Standards and Open Source Look like?
Very broad, global collaborationVoluntary participationVoluntary sharing of burdensVoluntary sharing of valuable
intellectual propertyVoluntary uptake of deliverables
What do Open Source and Open Standards Results Look Like?Thousands of new efforts launched every yearUbiquitous global adoptionLowest cost implementationSpringboard for new businessesProliferation of platforms for innovationImmediate, or rapid disclosure of results
Why does this happen?
Because the participants trust the system and believe
in the rewards
Rewards CredibilityOpen Standards and Open Source
Build EcosystemsDiverse examples of the economic
benefits of network effects (railways, telecommunications, Internet, Wi-Fi, etc.)
Networks are much easier to create collaboratively than proprietarily
Lower strategic risk, more predictability
Level Playing FieldsRules ensure that all have an equal
opportunity to benefitIn open standards, it’s open admissions,
strict IPR policies, and RAND implementation
In open source, it’s open participation and licensing rules that assure equal ability to implement
In open standards, it’s consensus rulesIn open source, it’s meritocracy
Intellectual PropertyEach approach has found a way to deal
with intellectual property that is acceptable to the IP ownerIn standards, “Necessary Claims” will be
available to all on RAND terms, and indirect benefits exceed direct benefits to IP owners
In open source, IP owners have ample opportunity to monetize IP, dramatically lower R&D, and dramatically lower strategic risk
Common Goals
Everyone benefits from the same successIn open standards, the wider the uptake,
the wider the marketplace and the more certain the rewards
In open source, the more successful the project, the more prestige for the developers, and the more customers for the sponsors
What are the Lessons for Us?Success depends on:
Appropriateness of domain (not every development type needs broad collaboration)
Credibility of outcomes (will network effects, or similar drivers result)
Governance systems that ensure a level playing field
IPR rules that are acceptable and effective to the industry in question
Willingness of target participants to embrace approach
Key Lessons
All domains are different – while the high level principles must be applied, each domain will require a unique implementation of the open model
The art in designing an open model is to make it want to default to success
In order to default to success, all key stakeholder groups must be identified and provided with an often unique valuable proposition
The model must lead naturally to rapid implementation by the same participants
R&D Through Availability in the FieldWho are the stakeholders in the
resulting network effect ecosystem?Government health agenciesFoundationsResearch LabsProduction facilitiesTest vendorsDistributorsNGOs active in the fieldOthers?
How to Address the Clinical Gap?Form a non-profit investment fund
Applies a triage approach to funding, from infectious diseases (I) to high-profit margin drugs (III) and funds all types
No royalties on I, modest on II, and industry-standard royalties on III
All royalties are reinvestedExclusive licenses scale by tier as well (0 for
I, 2 years for III, five years for III); generic thereafter
Fund Governance and Funding
Balanced board of directors that includes representatives of all stakeholders, but controlled by non-commercial Directors
Advisory Boards from certain classes of stakeholders (Pharma, Government, Foundation, Manufacturers)
Initially funded by government, Foundations and Pharmas (who thereby become eligible to become licensees)
Also accepts “targeted” funding for specific projects in any tier
Questions?