I'm not saying that this is the best environment, but it is the environment that we have, and these arguments are not outrageous. Besides, this is the environment that biotech startup are coming from, and top universities are making big dollars from royalties. That's why I said that it's really complicated.
All grants are allowed to charge indirect costs to the grant fund. These indirect costs are used to cover the cost of facilities, maintenance and all the little bits that no one ever thinks about. No one buys a piece of equipment expecting there to be no maintenance whatsoever. These indirect costs are always governed by an agreed-upon rate set between the host institution and the funding entity. The federal government in particular has very clearly spelled out rules regarding this. For example - the grant that funds my work right now has a very clearly legislated indirect cost rate of 8%. If our indirect costs exceed that 8% monthly, we can lose our funding.
Now where we get into the part where you're not 100% accurate, and I believe being a bit inflammatory is the triple dipping. Institutions can get a grant to purchase equipment, and then charge the same grant for the use of the equipment. The institution can charge for the personnel hours that run the equipment on related projects, they can charge that indirect cost that we discussed earlier, but that's about it. It's not as if they can just make up a number and charge the government that much to use the equipment for related projects. There are circulars from the Office of Management and Budget that dictate what you can and can't do with your money - for example, colleges and universities have to adhere to the cost principles outlined in OMB A-21, available here: http://www.whitehouse.gov/omb/circulars_a021_2004 if you want some light reading.
On top of the basic OMB circulars, all federal grants have additional legislation that add further stipulations to how money can be spent, but come from any number of 1000 sources, so I'm not going to cite them. Anyway, the institution cannot just charge the government for use of the equipment.
Secondly - they are not paid 'overhead' for making the equipment available. They are paid an indirect cost rate to maintain, store and generally keep the facility running for grants. This rate is very clearly spelled out in any grant documents. I've not seen 60+% in any grant I've ever worked with. In smaller institutions they tend to be around 10-20%. On the larger campuses, the average indirect rate was 32%.
Anyone familiar with the finances know that there are legislation and regulation in place to dictate all of this, and while it may be convoluted, it's really not as predatory as you make it out to be.
I run a company that has won many Federal grants and subcontracted a lot of work to universities in the Boston and Cambridge area.
Let's look at the current indirect rates for universities I've worked with:
1) Harvard: up to 69.5% for Federally funded research [1]
2) MIT: currently 56%, but in 2010, it was 68% [2]
3) Boston University: 63.7% [3]
4) Northeastern University: 54.5% [4]
60% as an average is much closer to what I see than 32%. The Boston Globe says the national average is 52% [5].
P.S. On a tip from a friend, I'll add that MGH's indirect rate is 74% [6]
[1] http://osp.fad.harvard.edu/content/fa-cost-rates-federal-spo...
[2] http://osp.mit.edu/rates/facilities-and-administrative-fa-ra...
[3] http://www.bu.edu/osp/files/2012/03/RateAgreement22Feb2013.p...
[4] http://www.northeastern.edu/research/raf/files/Indirect-Cost...
[5] http://www.boston.com/news/nation/2013/03/17/harvard-mit-thw...
[6] http://resadmin.partners.org/RM_Home/Documents/2011%2005%200...
You, as the final stage of your research, using government money.
Say you do get something. Now you want the government to also be involved in the commercialization of the discovery? I think people would argue they are already involved enough, what with the FDA and all.
Further: the person making the discovery spent half a decade of their lives after college to get a PhD, and very likely many years of post-doc, to be extremely specialized in an extremely narrow area of some field. Now you want them to be product managers and manufacturers and businessmen as well?
This is one problem patents solve: Division of labor. Let those who are good at science and technology do their thing, and let people who are good at commercializing do their thing, and let IP ensure one both sides have means to reap appropriate rewards.
You don't know that for sure. On the other other hand we do know things, like without the open source ethic Wikipedia wouldn't exist.
An example: Pfizer closed down their Lansing michigan plant and wanted to force their employees to relocate to San Diego, without doing a real analysis of the decision, and on the eve of the move came to find out that the one person running their fermenter culture system didn't want to move - he wanted to raise his daughters on a farm and San Diego was too expensive for his pay grade. So they lost the ability to basically do every bioassay that they were doing in Lansing. Three years later, I had the opportunity to work next to the massive san diego pfizer campus. The facility was 2/3 empty and pfizer was struggling to find extra tenants and toying with a 'bio-incubator' idea.
So, a few things:
1. this testing environment would not fly today, as it should not have then. Testing on children who may not have the ability to give informed consent is unethical.
2. polio was the most dreaded disease in America, for many reasons. More people contributed to the development of a treatment--through the March of Dimes--than for any other disease up to that time. Even though the vaccine was feared and widely known, the mass tests were fiercely opposed by some. When the positive results of the test were announced, the nation treated the news much like the end of a war with exultation, presidential awards, and ticker-tape parades.
3. the polio vaccine was relatively safe and straightforward, as killed vaccines generally are. The killed vaccine was first tested in culture to make sure it was dead. Unlike many other pharmaceuticals, where the effectiveness even after a test can be murky and side-effects abound, a killed vaccine is relatively easy to understand. Testing a drug that may lessen the impact of a particular type of cancer is considerably harder, both in itself and because of today's protective regulations.
4. the polio vaccine was developed by a very small team run by a zealot. The resources required were considerably less than the resources required to develop other drugs. Look at the development of the sulfa drugs for a counter-example: Bayer delayed their widespread release even after they had concluded they were effective and patented them because they wanted to make sure their patent was valid (source: "The Demon Under the Microscope", by Hager.) Bayer had spent a lot of time and money developing the drugs and wanted to make sure they got a return. (Ironically, it was quickly realized that the patented sulfa drugs were in fact a combination of active and inactive parts and the active parts could not be patented; and soon after penicillin was introduced, sidelining the sulfa drugs. It's a fascinating story, well worth the read.)
Source for info about Salk: the excellent "Splendid Solution: Jonas Salk and the Conquest of Polio" by Kluger.
Also your objection "Testing on children who may not have the ability to give informed consent is unethical." is nonsense. Polio is a fundamentally childhood disease. Not developing a drug that saves children (but not adults) because children cannot give 'informed consent' is unethical, too. If you think there aren't childhood diseases that we are trying to cure in the contemporary era, you are crazy.
What I meant--but articulated poorly--was that the children selected for the tests were from a school for the differently abled because they were, at the time, seen as less valuable. That idea is no longer acceptable.
I wonder if the US government could offer free licensing to all national companies, which would seem to be the best of both worlds?
(Note: I'm not a US citizen, I'm British. s/US/UK/ and the basic result is the same...)
The short explanation goes like this: before Bayh-Dole patent rights were indeed with the federal government, but the Government did a rather poor job of turning the accumulated IP into money. Bayh-Dole was passed in the late Seventies, during the Carter-Reagan recession, and the idea was that the patents should now lie with researchers and universities because they would have a better idea how to exploit them, and it was unsaid that with this alternative funding channel open federal research expenditures could be reduced.
The long version is that it is really complicated. A whole new ecosystem has grown up around this environment, and the patent system as is is very suitable for actual commercial processes but not at all for basic methods used in processes.
Also: Stanford v. Roche