Path Dependence: Genome Canada’s Commercialization of Research

SPIEGEL: So the Human Genome Project has had very little medical benefits so far?

Venter: Close to zero to put it precisely.1

Biologists such as Richard Lewontin and Evelyn Fox Keller have long been challenging the view of the genome as a simple recipe that contains everything we need to know about organisms. The genome, our cells, our bodies, and the environments they inhabit are far more complex than most scientists suppose, they argue. Until recently, however, they have been marginalized voices. When the human genome was first sequenced 10 years ago, most assumed that dramatic advances in medicine, and biotechnology in general, were just around the corner. But as time went on, it has become increasingly clear that Lewontin and Keller are right.

In the interview quoted above, Craig Venter, the avatar of commercial biotechnology, claims that we have learned essentially nothing of practical value from the genome, and that earlier hopes were based on “false expectations”. Venter, of course, doesn’t think the genome is unimportant. He is hard at work sequencing everything he can get his hands on. But he isn’t optimistic of practical applications for several years to come.

Rewind back to 1999. Venter and the Human Genome Project were on the verge of announcing their success. In Canada, it was the height of Brain Drain paranoia: between 1994 and 2000 the number of news stories mentioning brain drain grew exponentially. It was the perfect opportunity. Canadian molecular biologists had been lobbying the government for substantial funding with little success since the mid 1980s.2 With the confluence of the brain drain and the hype generated by the Human Genome Project, they finally succeeded.

In April 1999, biologists Thomas Hudson, Jim Friesen, and Barry McLennan argued for federal support of their new foundation, Genome Canada. They heavily emphasized Canada’s brain drain problem, claiming that Canada lost five “highly trained researchers” for every one it got back, and that a large reason for this problem was a lack of federal funding for research. According to Friesen, “Coming back to Canada as an investigator, the genome program in Canada, which did exist for four years, dropped dead five weeks after I set foot in Canada, because science funding had been cut.”

They also exploited Canadian fears of being left behind by the United States and other nations, arguing that Canada had largely missed out on the recombinant DNA revolution and had taken 10 to 15 years to catch up. We could not afford to be left out of the impending genomics revolution as well.

One of the primary selling points for Genome Canada was its commercial potential.3. They initially promised $1.50 in funding from other sources for every dollar provided by the federal government, and planned to become self-sufficient off of venture capital funds and intellectual property licensing. This goal explains many of Genome Canada’s controversial policy decisions.

Genome Canada funds research primarily through funding competitions. All of its competitions require projects to secure 50% of their funding from other sources and place a high priority on demonstrable, near-term socio-economic benefits. Their 2003 and 2004 competitions went even further, with the 2004 competition requiring:

a proposal for the transfer, dissemination, use or commercialisation (as appropriate) of the anticipated results of the research proposed. The plan should demonstrate how the research results will contribute to job creation and economic growth in Canada and their impact on society, quality of life, health, and the environment, as well as the creation of new policies in these areas….

The application must also include individuals with the appropriate expertise (e.g., public health administrators and policy experts, entrepreneurs, venture capitalists, economists, sociologists, market analysts, technology transfer experts, legal advisors, etc.) who will develop and implement the plan to realize the social and/or economic benefits of the research.4

These requirements produced a backlash from Canadian scientists, 40 of whom co-authored a letter to Science on June 25, 2005 charging that basic “curiosity-driven” research was suffering at the expense of Genome Canada’s policies.

In future posts for The Bubble Chamber I plan to explore William Brian Arthur’s theory of economic path dependence in further detail, but the basic intuition behind it is fairly simple. There are many products and technologies that become more more attractive to purchase or pursue as they are adopted by more people. An easy example of this is the internet. The internet isn’t very exciting with one, or just a few people. But as each new person joined the internet it became more and more attractive for subsequent people to join as well. However, this bandwagoning effect can have negative effects as well – if such a technology gains an early lead over another similar technology, the technology with the initial lead can come to dominate even if the lagging technology is superior in the long-term. A common (though disputed) example of this is the QWERTY keyboard layout, which many allege is inferior to other layouts.

Arthur and others have argued that such examples, where a suboptimal outcome results from natural market activity, are fairly common. When they do occur, they are what economists call  market failures. The market has caused us to reach a situation where everyone would be better off if we had reached a different state, but there is no market mechanism that will allow us to reach that more desirable state. Market failures are a prime justification for the intervention of government into the economy.

One of the often-cited causes of path dependence is high initial setup costs for technologies. If companies are forced to invest a great deal of capital to develop a technology, they will have a great incentive to keep promoting that technology even if it becomes apparent they would have been better off by initially choosing another technology. High initial setup costs also discourage a diversity of approaches to developing a technology and thus increase the chance that a suboptimal path of development will be chosen. Genome Canada, by providing access to the expensive equipment required to pursue genomic technology, in this sense reduced path dependence.

However, Genome Canada’s other polices have exacerbated path dependence: the opposite of what a public foundation ought to be doing. As Venter’s lead quote illustrates, Genome Canada’s commercialization goals were wildly optimistic. Their 2003 demand for projects that would produce practical results within 5 years was, in the end, impossible to fulfill. This has potentially, as the scientists writing to Science feared, pushed Canada’s genomic research in the wrong direction for long-term commercial success, as the type of medical diagnostic projects intrinsically favored by Genome Canada’s polices are of dubious scientific value. This could end up being the height of irony for Genome Canada’s founders, as their efforts may actually hurt Canada’s long-term competitiveness.5

Honestly, however, I’m not a nationalist. I don’t really care if Canada falls behind. My greater worry is that this mindset is being duplicated worldwide. If the entire scientific establishment is herded towards short-term applications at the possible expense of long-term understanding, the consequences could be quite severe. Richard Lewontin, for instance, argues that the entire field of biology has gone astray in its focus on DNA and reductionist explanations, harming not just our understanding of the world but also our social and medical practices. In the next installment of this series I will take a look at the history of agricultural science, where I believe a similar argument can be made.

  1. SPIEGEL Interview with Craig Venter: ‘We Have Learned Nothing from the Genome‘” July 29, 2010
  2. Theodore William Everson “Genetics and Health in Context: Genome Research Funding and the Construction of Genetic Disease (Dissertation)” University of Toronto (2006).
  3. Everson, p. 194-5.
  4. “Guidelines and Evaluation Criteria for Competition III”, July 2004.
  5. Though, to be fair, Canadian genomics is doing quite well by current bibliometric measures.

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