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Academia (vs. Industry)

The Drug Industry and the Obama Administration

Over at Forbes, John Osborne adds some details to what has been apparent for some time now: the drug industry seems to have no particular friends inside the Obama administration:

Earlier this year I listened as a recently departed Obama administration official held forth on the industry and its rather desultory reputation. . .the substance of the remarks, and the apparent candor with which they were delivered, remain fresh in my mind, not least because of the important policy implications that the comments reflect.
. . .In part, there’s a lingering misimpression as to how new medicines are developed. While the NIH and its university research grantees make extraordinary discoveries, it is left to for-profit pharmaceutical and biotechnology companies to conduct the necessary large scale clinical studies and obtain regulatory approval prior to commercialization. Compare the respective annual spending totals: the NIH budget is around $30 billion, and the industry spends nearly double that amount. While the administration has great affection for universities, non-profit patient groups and government researchers (and it was admirably critical of the sequester’s meat cleaver impact on government sponsored research programs), it does not credit the essential role of industry in bringing discoveries from the bench to the bedside.

Terrific. I have to keep reminding myself how puzzled I was when I first came across the “NIH and universities discover all the drugs” mindset, but repeated exposures to it over the last few years have bred antibodies. If anyone from the administration would like to hear what someone who is not a lobbyist, not a CEO, not running for office, and has actually done this sort of work has to say about the topic, well, there are plenty of posts on this blog to refer to (and the comments sections to them are quite lively, too). In fact, I think I’ll go ahead and link to a whole lineup of them – that way, when the topic comes up again, and it will, I can just send everyone here:
August 2012: A Quick Tour Through Drug Development Reality
May 2011: Maybe It Really Is That Hard?
March 2011: The NIH Goes For the Gusto
Feb 2011: The NIH’s New Drug Discovery Center: Heading Into the Swamp?
Nov 2010: Where Drugs Come From: The Numbers
August 2009: Just Give It to NIH
August 2009: Wasted Money, Wasted Time?
July 2009: Where Drugs Come From, and How. Once More, With A Roll of the Eyes
May 2009: The NIH Takes the Plunge
Sep 2007: Drugs From Where?
November 2005: University of Drug Discovery?
October 2005: The Great Divide
September 2004: The NIH in the Clinic
September 2004: One More On Basic Research and the Clinic
September 2004: A Real-World Can O’ Worms
September 2004: How Much Basic Research?
September 2004: How It Really Works
There we go – hours of reading, and all in the service of adding some reality to what is often a discussion full of unicorn burgers. Back to Osborne’s piece, though – he goes on to make the point that one of the other sources of trouble with the administration is that the drug industry has continued to be profitable during the economic downturn, which apparently has engendered some suspicion.
And now for some 100-proof politics. The last of Osborne’s contentions is that the administration (and many legislators as well) see the Medicare Part D prescription drug benefit as a huge windfall for the industry, and one that should be rolled back via a rebate program, setting prices back to what gets paid out under the Medicaid program instead. Ah, but opinions differ on this:

It’s useful to recall that former Louisiana Congressman and then PhRMA head Billy Tauzin negotiated with the White House in 2009 on behalf of the industry over this very question. Under the resulting deal, the industry agreed to support passage of the ACA and to make certain payments in the form of rebates and fees that amounted to approximately $80 billion over ten years; in exchange the administration agreed to resist those in Congress who pressed for more concessions from the drug companies or wanted to impose government price setting. . .

Tauzin’s role, and the deal that he helped cut, have not been without controversy. I’ve always been worried about deals like this being subject to re-negotiations whenever it seems convenient, and those worries are not irrational, either:

. . .The White House believes that the industry would willingly (graciously? enthusiastically?) accept a new Part D outpatient drug rebate. Wow. The former official noted that the Simpson-Bowles deficit reduction panel recommended it, and its report was favorably endorsed by no less than House Speaker Boehner. Apparently, it is inconceivable to the White House that Boehner’s endorsement of the Simpson-Bowles platform would have occurred without the industry’s approval. Wow, again. That may be a perfectly logical assumption, but the other industry representatives within earshot never imagined that they had endorsed any such thing. No, it’s clear they have been under the (naïve) impression that the aforementioned $80 billion “contribution” was a very substantial sum in support of patients and the government treasury – and offered in a spirit of cooperation in recognition of the prospective benefits to industry of the expanded coverage that lies at the heart of Obamacare. With that said, the realization that this may be just the first of several installment payments left my colleagues in stunned silence; some mouths were visibly agape.

This topic came up late last year around here as well. And it’ll come up again.

37 comments on “The Drug Industry and the Obama Administration”

  1. Hap says:

    1) Can you tell me how many drugs NIH has pushed through trials, please? I know they’ve done initial trials for lots, but I wasn’t aware they’d ever pushed any drug through trials. I know that doing P2 and 3 trials would have stepped on the drug industry, but if one argues that NIH is the key mover in making drugs, one would expect them to have that crucial capability. If they don’t have it, and you help to get rid of the companies that do, where are you going to get drugs?
    2) Profits now likely reflect discoveries and work from ten years ago, so unhappiness with drug company profitability relative to the rest of the economy seems misplaced.
    3) Lots of businesses are profitable, and while I can understand frustration that the people who helped make them so haven’t shared in the profit, how does President Obama expect the country to generate the money necessary to pay off the debts that he and his predecessors have helped to amass without those profits or the people and companies who make them?
    Politicians make fun of the “ivory tower” distancing of academics from reality, but they seem to live inside their own reality distortion field. I had hoped that the response to unwelcome news would not be to turn up the field, but….

  2. Anonymous academic says:

    @2: the aspect to this that I find ironic is that I haven’t met anyone who works in academia on a field remotely related to drug discovery who believes this common fantasy about who actually makes drugs. I’m not a huge fan of the pharmaceutical industry for any number of reasons, but I know enough about the process to have a healthy respect for how difficult their job is, and how different than mine. Most of us are relieved that a) someone else gets to pour hundreds of millions of dollars into failed clinical trials, and b) we can focus on our research instead of dealing with the messy, depressing details of drug discovery.
    That’s not to say that ivory tower folks aren’t oblivious at times; I put particular blame on university PR departments which put out press releases claiming that “new protein structure offers hope for curing cancer”, as if SBDD were as simple as fitting Lego blocks together. (People who writing modeling software, this goes for you too.)

  3. Chris D says:

    The pharma industry’s manifold and persistent ethical failings make it really, really hard for outsiders to remember or believe that they’re doing something incredibly difficult, important, and expensive.

  4. SP says:

    Pfizer paid no corporate income tax in the last 3 years and is holding all their profits offshore while lobbying for a repatriation amnesty. So the question about, “Who’s going to pay off the debts?” doesn’t apply to the largest drug company either way.

  5. Cato the Elder says:

    I was reminded of this article:
    Marcia angell sounds like a delightful person.

  6. gcc says:

    As a molecular biologist in academia and a complete outsider to the pharmaceutical industry, I do often hear the beliefs about drugs all coming from work done at universities and the NIH.
    Since I started to follow this blog a few months ago, I’ve definitely started to develop a better appreciation for pharmaceutical companies and the work they do, but I’d like to learn more.
    Can anyone recommend any books that are sort of a counterpoint to ones like “The Truth About the Drug Companies: How They Deceive Us and What to Do About It” and “Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients”?

  7. Mike W says:

    The deal the industry made with the government in return for supporting ACA was just another gangster shakedown. This is how business is done in Washington, and only a fool would expect the government to hold to that deal any longer than is convenient.

  8. Anonymous says:

    Extremely interesting perspective in Forbes. I followed the link within the Forbes article to the Report to the President on Propelling Innovation in Drug Discovery Development and Evaluation. ( ). There were 30 invited experts that presumably provided input to PCAST and thus the report (although it doesn’t actually say what their input was). Of the 30, 8 were from industry and 2 appeared to be from VC. Of the 8 from industry, 6 or 7 were from big pharma (depending on whether you count Biogen as big pharma or not).
    Here’s the conundrum: at a time when big pharma is being excoriated as not having innovation, and the infrastructure relying on small, nimble innovative companies, there was no input from those small companies (except perhaps 2 VC-types). Why would the Obama administration believe ANY innovation arise outside of academia when they weight their input to academic scientists or non-innovative enterprises?

  9. Chemjobber says:

    6: While I have not much love for John LaMattina, he has written a couple of books defending pharma and their drug discovery process.

  10. emjeff says:

    Did you expect any less from the Socialists in the White House now?

  11. Chrispy says:

    As industry whacks back their R&D spending it is worth considering who will develop the drugs of the future. We are riding a wave of approvals for programs started ten years ago. In many cases, those programs would not be able to get off the ground today. Certainly, at the level of basic research, there are very few companies that maintain any efforts at all. Industry has eaten their seed corn, and when they turn to academic publications for leads/targets they discover that the results are woefully irreproducible.

  12. Anonymous says:

    My mom worked at Merck during the good times, and she always used to always defend the pharma industry against those who thought they were a bunch of greedy MBA’s. Now that most of the scientists inside the pharma companies think their bosses are a bunch of greedy MBA’s, they’re a lot less willing to defend the industry’s reputation when it’s attacked. The people whacking R&D have only themselves to blame.

  13. Truman says:

    I understand that strong-arming an industry into essentially making an $80 billion ‘contribution’ seems rather absurd, but isn’t it important to consider how much that same industry has benefited from government-backed research?
    As Mr. Osborne states, “the NIH and its university research grantees make extraordinary discoveries.” Without those discoveries, “for-profit pharmaceutical and biotechnology companies” that “conduct the necessary large scale clinical studies and obtain regulatory approval prior to commercialization” seem to me to ultimately profit from those initial discoveries.

  14. anon2 says:

    With the sequester, people were complaining that NIH’s budget was cut, and hence new drugs would no longer be made for the diseases in obvious need. My feeling was that they should cut NIH’s budget even more, as a lot of what is done under its umbrella is simply silly and unecessary, including much of the academic granting. What is needed in terms of academic grant granting is a completely new system that does not guarantee “estabilshed, name” professors any budget that is proposed, while also cutting silly, non contributatory grants to labs that are only there to be there…..

  15. Hap says:

    Biomedical research has done a lot of good in discovering new and useful knowledge and (at least in some cases) in finding new compounds that either act as lead compounds or were actually developed into drugs.
    1) The discovery of knowledge and its propagation into useful things is part of why research organizations like NIH exist – if people couldn’t use the knowledge they found to do useful things (and to make money, since that’s why lots of people make useful things), they probably would not exist or would be much smaller.
    2) That part about developing drugs is pretty important – taking a compound from being a known lead compound with activity in cells or even in animals to having an actual drug takes lots of money and expertise (almost certainly somewhere well into the hundreds of millions and probably over a billion dollars). Saying that NIH is responsible for drugs without having any responsibility for this step is not logical.
    NIH does (at least in some cases) have “walk-in” rights to drugs, but considering they haven’t ever been used, I don’t know how effective they would be. They would be a more direct and honest pathway to changing drug prices, though.

  16. Anonymous says:

    Billy Tauzin is a whore who received, and continues to receive, huge payoffs from PhARMA consulting,in part for getting into law that Medicare must pay full price for perscription drugs, so we cannot negotiate for them like other groups do:
    Funny Medicare cant do for perscription drugs what it can do for other medical services covered in A and B.
    The pharmaceutical industry appears to have bought enough influence in the present administration so that this fraud cannot be overturned. Thanks to this blog, however, I see if it was overturned, R and D would be sent to China and India to allow marketing to stay as high as it is.
    What a f*cked up world we live in.

  17. Anonymous academic says:

    @15: How many of the lead compounds are even discovered by NIH-funded labs? My understanding was that the biggest contribution of academic research was understanding the basic pathways and mechanisms underlying various diseases, or sometimes methodological and technological advances that facilitate drug discovery (for example, semi-routine determination of GPCR structures), and not actual proto-drugs.

  18. another process chemist says:

    #13: A key assumption behind this statement is that all NIH-funded discoveries will lead to profit – they can also lead to losses. It would be interesting to know what percentage of academic “breakthroughs” turned out to sinkholes into which pharmaceutical companies sank billions of dollars before raising the white flag.

  19. Anonymous says:

    We babyboomers are entering our prime medicine consumption years. Of course we want a free lunch just like our parents got from FDR and LBJ. Unfortunately free lunches are hard to come by unless you make someone else pay. Pharma has no friends because of their own actions in squandering Society’s admiration for these inventors of new life saving medicines. We can take it out of their hides and no babyboomer will care about the consequences on future generations. It is called rationing by not inventing new drugs. Today’s payers and consumers will all be happy and no one will know what wonder drugs were not invented.
    Face it, if I started a drug discovery project today, at my current age I have a 60% chance of being dead by the time the drug is approved. Future drugs are of no consequence to me or most of my peers, and we certainly do not want to pay for the next generation of drugs out of our pockets. For us free drugs today are much more important than new drugs in the future that are unlikely to impact our lives. It will be future generations who will suffer the consequences of todays actions.

  20. Hap says:

    I don’t know about leads (there’s lots of people trying, presumably in part with NIH funding but I don’t know if there are leads) – mostly I was thinking of taxol. That lack, though, would be consistent with my point, I think (not many drugs/leads + their purpose being to develop enabling ideas/knowledge/technology).

  21. Sigivald says:

    “I am altering the deal. Pray I don’t alter it further.”
    This applies to all “deals” where one side holds – effectively – all power and there’s no authority to appeal to.

  22. Richard says:

    In response to “another process chemist” and “Truman” above, see here for the quality of research coming out of academic institutions (Universities and NIH), and the subsequent frustration of scientists at pharmaceutical companies:
    Nature, March 28, 2012 – A former researcher at Amgen Inc has found that many basic studies on cancer — a high proportion of them from university labs — are unreliable, with grim consequences for producing new medicines in the future.
    During a decade as head of global cancer research at Amgen, C. Glenn Begley identified 53 “landmark” publications — papers in top journals, from reputable labs — for his team to reproduce. Begley sought to double-check the findings before trying to build on them for drug development.
    Result: 47 of the 53 could not be replicated. He described his findings in a commentary piece published on Wednesday in the journal Nature.

  23. Anonymous says:

    Actually, many people think doctors invent drugs. It may be because doctors sometimes announce results of clinical trials, publish papers and are interviewed by media.

  24. watcher says:

    23: Are you trying to suggest that the MDs do not make the drugs? All the ones that I’ve ever worked with certainly are of the opinion that they are making a new drug, beginning with the pills that are handed to them which appeared from some committee approval process within the organization.
    And even the MDs that later dispense the drugs always act like they know all there is about the medications they want to give you. Oh, this one has improved side effects, only 1 in 100 have problems, and so you should be ok. Why are you complaining about feeling xxxxx or YYYYY or ZZZZZ? My reply typically is, well sir, if I am then in the 1%, to me it is 100%, and I do have that side effect. That usually ends the objection.

  25. Insilicoconsulting says:

    What’s the proportion of money and effort spent by pharma on understanding the often subtle and deep biology underlying diseases, as opposed to, validating academia proposed drug targets and acting on them to discovery drugs?
    If academic drug target results often don’t hold up then what prevents the industry from doing much of the legwork itself and to a much much greater degree?
    As for the Obama administration, the most apt character would be “Two Face”, turned by the joker:-). (And I am not American/European to care)

  26. Calvin says:

    Interesting stuff especially here in the comments. Essentially this is the usual misunderstanding/ignorance that academics and those outside the industry have around translation. Typically, that’s why we see all the press releases about “Genius Cambridge scientist cures cancer”.
    The majority of academics are pretty ignorant as to what is involved in translating some interesting research into something that might be a product.
    I’ve seen some get to grips with it pretty quickly but there is always a learning curve and a lot of wheel reinvention. It would be cheaper and quicker to give it to the groups (pharma) who specialise in this.
    All of the work between hit id and phase one is, for the most part, something that academics know nothing about. I something think they don’t even know it exists; they often believe that hits from screens are drugs.
    This is not meant as a criticism of academics since in most cases they’ve got the inclination and time to investigate all the cool science; but translation is a different ball game and it’s much more complicated and takes much longer that it looks from the outside.

  27. SP says:

    Ironically the Begley paper has polluted the literature as much as many of the things they claim are not reproducible. The things they are testing are conclusions, not experimental results, and it’s no surprise many don’t reproduce. If I were less charitable I’d say that all those ignorant pharma people don’t even know all these biological subtleties exist and think everything is about inhibiting a target.
    For example, Gilliland reported that STK33 kinase knockdown is synthetically lethal with mutant KRas in blood cancer lines. Amgen made an STK33 inhibitor and it had no effect on the same lines. Irreproducible, they report! Congratulations, you’ve discovered the difference between kinase domain inhibition and expression knockdown.
    We don’t know how many more false reports in the paper are like this because they had to sign CDAs on some studies and won’t even report the full list of things they claim can’t be reproduced. Shoddy industrial work.

  28. SP says:

    I should mention that the STK33 knockdown has been reproduced by multiple independent labs, so take one off their list of 47.

  29. NJBiologist says:

    @27, 28 SP–When exactly did genetically modified cells become the pinnacle of biological relevance?

  30. SP says:

    That’s sort of beside the point, isn’t it? They reported a finding that could lead to other conclusions but didn’t guarantee that this was some risk-free path to a Ras drug. If you want to see if someone’s research is reproducible, you should do the same experiment, not test some other hypothesis and when it doesn’t validate conclude that the related experiment is not valid.
    And I should clarify that I’m not that negative about the Amgen research- done right and in a transparent way, reproducibility is a reasonable thing to test (I support the reproducibility initiative.) I’m just using the same tone towards a questionable bit of industry research that many in this and other threads use towards academics- they all think screening hits are drugs! What morons!

  31. Todd says:

    Thank you for saying it NJBiologist so I don’t have to. Seriously, you do realize that the point of the knockdown (from the industry’s point of view) is to see if a target is druggable, right? If inhibiting it doesn’t work, that means that the conclusion is wrong. That doesn’t mean the research is wrong, per se, as much as it is unusuable.

  32. SP says:

    Inhibited kinase activity != absence of the protein. You do know proteins, even those with catalytic domains, also do things besides catalyzing reactions, like scaffolding other interactions, right? Again, calling it Irreproducible because it didn’t lead to something else you hoped would follow is disingenuous at best.

  33. RD says:

    Since when do pharma people not try to reproduce published work?? From my observations, that’s usually how we figure out that the academic work is “incomplete”. It’s not reproducible.
    Of course, I never worked for Amgen (and now I don’t think I want to).
    BTW, it’s laughable for anyone to say that we pharma people think all screening hits are drugs. Nothing could be further from the truth.

  34. Anonymous says:

    SP: Amgen work also included STK33 knockdown as a control. They could not reproduce the results of the original paper, sorry. I do not care a slightest bit if other academic lab reproduced the “exiting discovery”. For I work in academia, not Amgen, and know very well what should be done to get the grant money to stay alive.
    bit cynical ? Yes. But that is the life dictated by modern funding system.

  35. zorkbirder says:

    Academic groups have discovered 5000 of the last 5 drugs.
    Academics are quick to claim a new target, gene, or pathway will lead to new drugs, but modulators of nearly all such targets lack sufficent efficacy and/or tolerablity to become useful drugs.

  36. blouson moto says:

    le meilleur site moto

  37. Anonymous says:

    I understand what #34 is saying. My paper was reviewed at one of the top 3 journals and reviewer asked us to include an experiment published by another group as control. We finished everything reviewers asked for in one year, but this one experiment could not be reproduced. We accordingly wrote our response. Reviewer had one line comment.”Since authors could not complete experiment in comment no. 35, I recommend rejection of manuscript.” We then published it in another name brand but non-top 3 journal. It is possible that some people may have made different choice since one experiment could have gotten paper into top 3 journal and change the future of first author and his/her family. I am now starting 7th year of postdoc with no interviews from academia or industry in past 3 years of search.

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