Healthy Skepticism Library item: 16619

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Publication type: news

Martin J
Big banks, big pharma, big problems
New Scientist 2009 Oct 10
http://www.newscientist.com/article/mg20427295.500-big-banks-big-pharma-big-problems.html

Full text:

MONEY has thrown society out of kilter. Banks that once appeared to have mountains of cash have collapsed. As a consequence of the global recession, governments now recognise that banking is too important to be left to the bankers. States have taken action, from wresting control of financial institutions to introducing new regulations.

I believe the financial meltdown has implications for pharmaceutical research. The running of large pharmaceutical companies carries a social responsibility that is as heavy as running any bank. Recently, however, this unwritten contract between society and drug companies has not been fulfilled. Is our health now too important to be left to big pharma?

To illustrate my concerns, let’s look at the treatment of heart disease. Many important cardiovascular drugs have been invented: statins, ACE inhibitors, beta blockers, fibrinolytics. But in the last 10 years, few of significance have emerged, even though the pharmaceutical industry has spent unprecedented amounts of money on research and development: in each year of that decade, Pfizer spent about $6 billion, Eli Lilly $3bn, and GlaxoSmithKline $2.5bn.

This splurge is reminiscent of how banks misused their funds before their collapse, but the industry has been insulated from the recent economic changes and has accumulated vast cash piles from the sales of medicines (in the UK, mostly through sales to the National Health Service). On average, each top-20 pharmaceutical company has access to about $7.5bn in cash.

Could the cash piles of big pharma be mobilised in a more efficient way for the public good? Two years ago such a suggestion would have been scorned. Now, however, it should be considered. As was the case with the banking sector, I believe that there is a real risk that the big pharma industry might collapse.

I believe that there is a real risk that the big pharma industry might collapse
Increasing spending on R&D cannot be continued indefinitely with such meagre progress. If a collapse of the pharmaceutical industry does occur it might not be for decades, but one of the biggest lessons of the banking collapse is that no one can predict economic forces with much certainty. The fall of big pharma could be imminent.

There is another way to fund the development of new treatments. Many innovative ideas that have changed society have arisen from the combination of curiosity and academic freedom found in universities. This is where small amounts of funding can produce big results. In recent years, university research has been exploited by industry to produce new drugs, such as blood clot-busting “tissue plasminogen activator”, courtesy of the Catholic University of Leuven (KUL) in Belgium.

Now, while big pharma has so much money it doesn’t know what to do with it, universities are being starved of resources and research funding has decreased in real terms. At the same time, university research strategy is under-organised and there is ignorance of how to exploit intellectual property and utilise patents. Nevertheless, the potential of universities is enormous.

Sadly, because of intense competition for limited funds, academic scientists are now driven to perform predictable low-risk science in small packets that will give quick results in time for the next grant application. The end result is that we have a plethora of small groups with strong leaders that act independently, fragmenting effort. At the same time, little translational research is being performed, even though politicians pay endless lip service to the idea.

So on one hand we have an unproductive big pharma which is cash rich, and on the other a cash-poor university system that has produced fistfuls of Nobel prizewinners. The way forward is obvious: inject the money into university research. Experience tells us this can have major benefits. One of the most successful initiatives in the last decade has been the spin-out of small biotech firms. My own, Ark Therapeutics, emerged from University College London and is now a public company with three phase-III clinical trials under way. Similarly, Biogen sprang from the Massachusetts Institute of Technology and Genentech from the University of California, San Francisco.

Now is the time for government action. Big pharma is international, so measures would ideally have to be taken by the European Commission at the pan-European level, by the federal government in the US or as a joint initiative.

Nationalisation, or internationalisation, of the $150bn cash mountain of the top 20 companies is probably unthinkable. However, the tax system could at least encourage pharma to invest more wisely. In the UK, for example, immediate funding could be generated for university research if the Chancellor of the Exchequer were to extend R&D relief for corporation tax to big pharma. But more money is not enough. The universities themselves would have to become more businesslike about how to achieve commercial goals – such as creating a new drug – while preserving their academic freedom. Control must not be allowed to follow the cash, though, or the creative ethos of the university may be stifled.

The involvement of small spin-off biotech companies could be a condition of receiving such funding, generating jobs. One hundred new companies could be created from British universities alone over 10 years if big pharma money were blended with a proactive way of recognising patentable inventions and managing university science.

The credit crunch has been a vivid reminder of the responsibility that comes with cash. Now is the time to rethink how research can be efficiently harnessed for the good of society.