Abstract

One of the most challenging goals of the Palo Alto VA's Rehabilitation Research and Development Center (RR&D) is the transfer of its laboratory prototypes to companies for manufacture. Without a purposeful program of technology transfer, devices developed here would remain mere research curiosities and would not benefit disabled veterans.

Despite past obstacles to technology transfer, there now exist a variety of tools and incentives that can promote commercialization of RR&D's prototype devices.

Background

Commercializing the Center's rehabilitation products is a formidable task since many of them face a limited market, are costly to develop, are sold to people with limited financial means, involve third party payers, and are subject to many Federal regulations. For these reasons, investors and manufacturers are often hesitant to address this market, even though the need for the product may be great.

For RR&D, the process of commercializing a prototype device requires a substantial commitment of manpower and resources. Contacts with potential manufacturers must be developed and maintained; advanced prototypes and enhancements of the project may be required for demonstration; supporting documents and promotional materials must be developed and produced; and patentability and marketability must be investigated.

Objective

An important part of RR&D's mission is to develop assistive devices which will directly benefit disabled veterans. Since the VA cannot by law manufacture the devices developed at the Center, it must rely on industrial companies to build and market them. The goal of technology transfer therefore, is to promote RR&D's prototype devices to commercial businesses, move the expertise embodied in the prototype to an interested company, and to often work with that company to insure a manufacturable and marketable product that can serve individuals with disabilities.

Method / Approach

Over the past seven years the repertoire of tools that facilitate technology transfer has increased dramatically. Despite the existence of these tools, there is no simple protocol that is universally applicable to every technology transfer situation. In each instance, a different complex mix of preparation, documentation, demonstration, contacts, and serendipity is required. Some of the tools and methods available to RR&D are described below.

VA Technology Transfer History

A Technology Transfer Section (TTS) has been formed within RR&D to accelerate, encourage and promote the transfer of technology, including the commercialization of RR&D prototype products (now numbering thirty-one) through collaboration with industry. This group serves to advise, organize, supervise, and coordinate all of the Center's TT activities. It also serves as a resource on these matters to other investigators within the Center, explores and maintains contacts with industry, arranges workshops, prepares agreements, and carries out negotiations when appropriate.

TTS has now formulated a strategy for technology transfer that comprises three programs: 1) Recruitment - identifying potential new products from within the Center, 2) Evaluation - identifying criteria and methods for screening projects for commercial potential, and 3) Availability - developing and maintaining manufacturer contacts, disseminating information, and negotiating agreements or licenses.

Within TTS a systematic way to evaluate the technology transfer potential and commercial feasibility of RR&D's projects has been developed. The prototype product's value in each of the following areas is determined: 1) its value to a potential licensee including potential market size, risks involved, and competitive advantage offered; 2) its value to the user or purchaser including importance of need, satisfaction of need, and alternatives to the product; and 3) its value to the VA including concurrence with the Center's mission and existence of champions inside and outside the Center.

A first round of assessments on six projects has provided valuable feedback about the evaluation process, as well as giving a common reference for discussion about specific projects. Project values which scored low in the assessment process can now be seen as targets for improvement. For example, the value to licensee might be rated low because of small potential market size. This can provide impetus to the investigator to find wider applications for the particular technology.

A Technology Transfer Advisory Board has been formed by TTS to provide broad expertise in all facets of technology transfer. It consists of twelve non- government specialists in the fields of technology licensing, patent and Federal law, marketing, third party payers, product design, venture capital, rehabilitation medicine, rehabilitation service delivery, manufacturing, and business. The Board members have been helpful in suggesting new tactics and continue to provide business and marketing advice.

TTS has developed a working database which contains information on all of our projects, as well as information on the TT process. In addition, a database of VA decision-makers, funding sources and foundations, rehabilitation professionals, clinicians, engineers, potential manufacturers of RR&D prototypes, students, users, press and media people, and interested lay people is being maintained.

To increase the awareness of colleagues, users, manufacturers, health professionals, entrepreneurs, and others of RR&D's projects and products, the OnCenter newsletter is published two or three times a year. It highlights new developments and opportunities in technology transfer, reports on specific products or projects, and solicits ideas, suggestions, and inquiries about RR&D's work. The distribution of OnCenter has lead to numerous personal contacts that are the prelude to successful technology transfer. Five issues of the newsletter have been published and mailed to over 2500 individuals and organizations in the TTS database. In addition, RR&D routinely publishes and disseminates a Progress Report every two to three years. It describes all projects being undertaken in the Center's four program areas.

To assist in the technology transfer and subsequent commercial availability of promising devices and techniques developed at RR&D, the VA has established the Technology Transfer Service (VA-TTS) in Baltimore, MD. The VA-TTS funds commercial prototypes of RR&D's devices and evaluates them clinically within the VA system. Devices they approve may be recommended, prescribed, and purchased by the VA for use by disabled veterans. Three RR&D projects have employed this technology transfer procedure.

Legislation

The passage of the Technology Transfer Act of 1986 by the U.S. Congress authorized local Federal laboratories to negotiate and enter agreements directly with industry for the purpose of commercializing government technology. This legislation represents a significant change from the previous laws which essentially prohibited such collaboration. It offered the first real prospect for RR&D to participate actively in the commercialization of its products. Before that time, it was considered a conflict of interest for government employees to be involved in the commercialization of technologies developed in Federal laboratories.

Funding and Partnering

The Technology Transfer Act established a mechanism called the Cooperative R&D Agreement (CRADA) to promote and facilitate the transfer of technology from a Federal laboratory to private commercialization. It permits a private company to fund and work with RR&D toward the development, manufacture, and marketing of a specific rehabilitation device.

In addition to CRADAs, RR&D can also enter into collaborations involving the exchange of knowledge, facilities, or personnel where no money changes hands.

In 1982 Congress established the Small Business Innovation Research (SBIR) program to provide small business with the opportunity to acquire Federal R&D funds to stimulate the development and commercialization of technology for public and private benefit. Under Phase I of an SBIR competitive award, a small business can receive up to $100,000 for up to six months to evaluate the technical merit and feasibility of an idea, while in Phase II they can receive an additional $750,000 for up to two years to expand the Phase I effort and develop the technology in preparation for commercialization.

Under a funded SBIR project, both a small business and RR&D (serving as a consultant) can receive funds that support moving a research prototype out of the laboratory and into the marketplace.

The Small Business Technology Transfer program is similar to an SBIR, with awards of $100,000 and $500,000 for Phase I and Phase II respectively. It is intended to stimulate and foster scientific and technological innovation through cooperative research and development carried out between small business concerns and research institutions, foster technology transfer between small business concerns and research institutions, and increase private sector commercialization of innovations derived from Federal research and development. The participation of a federal laboratory is mandatory in an STTR and appears to be an ideal arrangement for a small company that desires to commercialize RR&D projects.

The FDA Orphan Drug Medical Device Grant Program appears to support technology transfer for medical devices for diseases and conditions that affect small populations or have little financial incentive to research. They will provide grants of up to $100,000 a year for up to 3 years for clinical trials for existing prototypes and a similar amount over two years for projects with additional development. Public and private non-profit and for- profit organizations are eligible to apply for these awards.

Palo Alto Institute for Research and Education (PAIRE)

PAIRE is a non-profit organization within the VA Medical Center that can administer funds from CRADAs, SBIRs, STTRs, and negotiated contracts that would be difficult to handle under existing circumstances. It can support the hiring of personnel, equipment purchases, and petty cash reimbursements required while working under these situations.

AZTech, Inc.

AZTech is a not-for-profit, community-based enterprise operated by the Rehabilitation Engineering Research Center on Technology Evaluation and Transfer under a grant from National Institute on Disability and Rehabilitation Research. The company will evaluate a prototype rehabilitation device for commercial potential, identify corporate partners and establish business agreements that are intended to move the product to market. Inventors (including those who use assistive devices), companies, and research centers are encouraged to participate in this program. A small application fee and a working prototype are required. [1]

Business Gold

The National Technology Transfer Center (NTTC) has developed an electronic bulletin board system called Business Gold, as an easy, convenient means of accessing information on the newest federally funded technologies. Updated regularly, the online system provides a new directory of Federal R&D laboratories and new Federal technologies available for commercialization, current Small Business Innovative Research solicitations, electronic mail facilities, Federal R&D information, and related announcements. Future enhancements include a conference calendar of technology transfer events, a publications list, and education and training opportunities. The service is free, and there are no online or report charges.

Results

RR&D now has over eight years experience with technology transfer. Some of the lessons learned are:

1. Tech transfer does not come about quickly, even in the best of circumstances. It requires large doses of preparation, experience, and chance.

2. The time from transferring a working laboratory prototype to seeing a product on the market can be reasonably short if the company is small, adequately funded, and smart and thorough in its approach.

3. Hiring the RR&D developer is often critical to the small company's success. Even though the VA loses a valuable investigator, there may be no more effective means of fulfilling its mission to transfer its technology.

4. The movement of promising technology to industry offers the private sector valuable knowledge, expertise, and R&D effort which they might otherwise not be able to afford.

RR&D's successes include:

1. arranged for seven Center products to go into commercial production;

2. produced and distributed a technology transfer Guidebook authored jointly with a private company;

3. published five issues of OnCenter aimed at technology transfer professionals and potential manufacturers;

4. collaborated with VA Technology Transfer Service in Baltimore and with Gallaudet University in Washington to put field four Center products into field evaluation;

5. negotiated the following: two Cooperative R&D Agreements with private companies; one license agreement; a publishing agreement; and two agreements with private companies for patents and licensing;

6. filed twelve disclosures of inventions with VA's General Counsel in Washington.

Discussion

Bringing a good project idea to the point of commercialization requires a concerted, long-term technical effort, several infusions of funding, and plenty of patience on the part of RR&D investigators.

Technology transfer is like gardening: no one can build a rose, but a good gardener can produce a better one by tilling the soil well, selecting the right seeds, getting the bugs out, and doing the right kind of fertilization, watering, and pruning.

References

1. AZTech Brochure, RERC-TET, University of Buffalo, 515 Kimball Tower, Buffalo, NY 14214-3079.

Acknowledgement

This work is supported by the Department of Veteran Affairs' Rehabilitation Research and Development Service.