The Academia-Pharma Complex

Ethan O. Perlstein

I provocatively call the nexus of government research and regulatory agencies, university biology departments and medical schools, and drug companies the Academia-Pharma Complex. This vast public-private partnership financed by US taxpayers to develop drugs is on an unsustainable path and desperately needs Open Science. Reform begins with a diagnosis of what ails us. Many roads lead to the Bayh-Dole Act of 1980, long ago in the pre-Internet Age. Bayh-Dole grants patent rights to non-government entities for inventions resulting from publicly funded research. These non-government entities include universities.

As described in a trenchant analysis in The Economist from 2005, the primary legislative intent behind Bayh-Dole was to spur (and simplify) the commercialization of publicly funded research, which prior to Bayh-Dole was stagnating inside numerous disparate federal agencies engaged in R&D efforts. Once in the private sector, discoveries would be forged into products, in this case new FDA-approved drugs. In a nutshell, here’s how it works. Professors in biology departments spend NIH-disbursed grant money on project proposals that have been positively evaluated by academic review committees. The study of biological processes invariably yields patentable results. In those instances, Professor John or Jane Q. Smith makes a beeline for the university technology transfer office, which has the Herculean task of shepherding patents into the promised land via licensing agreements that generate revenue streams to the university.

However, in practice a deluge of public and private funds and research scientists flow into the drug discovery pipeline but fewer and fewer drops trickle out the other end. Although I found examples of Bayh-Dole boosters, a balanced scholarly review of the law published in 2006 spelled out the flaws of a closed approach:

“By vesting such comprehensive discretion and flexibility in patenting and licensing with individual institutions, the Bayh-Dole Act provided the nation and the world with a large-scale experiment in how public institutions manage public assets as private goods. The outcomes have been positive on nearly all counts, but the Act inadvertently created a misalignment between the private interests of university technology transfer offices and public interests that benefit the innovation system at large or that enable access to IP for humanitarian purposes.”

I dug around and found more data-driven support for opening up biomedical research. First, consider the now (in)famous graph of Pharma productivity that shows the number of new drugs approved per billion US$ R&D spending DEcreasing over time. It's the opposite of the efficiency gains in computing power dubbed Moore’s Law, hence the flipped moniker Eroom’s Law. Sure, we had a bumper crop of new drug approvals in 2012. Leading the way was the groundbreaker Kalydeco, a new drug approved for the treatment of some cases of cystic fibrosis, the poster child of rare/orphan diseases. But new first-in-class drugs for many devastating diseases, e.g., psychiatric and neurological diseases, are nowhere in sight. Not coincidentally, the success of Kalydeco depended on open collaboration between academics, industry, disease advocacy groups, not-for-profit foundations and patients.

Second, consider the age of scientific independence, i.e., age at first R01 award. The R01 is the bread and butter grant for tenure-track and tenured professors in Academia that provides $100,000s per lab in public funding over multi-year increments. In 1980, the average age of professors receiving their first R01 money was 36. By 2011, the last year for which we have data, the average age had climbed to 42, where it plateaued at the end of the booming late 1990s, when NIH’s budget was doubled to around $30 billion. It’s hovered there ever since, and making matter worse sequestration has driven funding success rates to historic lows.

A prolonged and unnecessary apprenticeship exacerbates the distorting effects that Bayh-Dole has on research choices, and encourages academics to engorge grant proposals with preliminary results and skimp on truly daring, basic research aims. It’s also a serious misallocation of human capital whose enormous potential would be unleashed in an open system. According to recent stats, less than 20% of people who enter the NIH-funded graduate training pipeline emerge on the other with a tenured professorship. The downward trend was apparent even in the early 90s, when the ratio was closer to 50/50.

Think about this for a second. The very capable and creative people who run the gauntlet of graduate school, one or more postdocs, AND an assistant professor search committee are a highly selected bunch. Even in so-called good years, R01 rejection rates were around 70%, and believe it or not but decades ago ~40% of NIH grant proposals were funded. We’re squandering so much talent when we ask people who’ve endured a decade of intense, specialized training in exchange for low wages, and established scientific excellence as researchers, to hang out for an extra decade at precisely the same time when many of them are starting families, usually after delaying parenthood.

Of course, I anticipate challenges from establishment thinking as well as organizational resistance. But the first step to recovery is calling a spade a spade. I expect secrecy from Pharma, but not from Academia, which I think abuses the freedom to pursue knowledge for its own sake on the public’s dime. At the same time, I expect more innovation to originate within Pharma and not simply be hastily imported from Academia with taxpayer subsidies.

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