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Tuesday, July 4, 2017

What would it take to revitalize pharma R&D?

Academia and industry both have the same disease.

D o a search for “most hated man in America,” and your browser will suddenly be filled with pictures of pharma executive Martin Shkreli. Of course, there are many others arguably deserving of obloquy, like Wendy Cameron and Robert Coury at Mylan, whose names will forever be associated with the price of the EpiPen.

But they might not be around for long: the one thing industry hates is bad publicity. The same is true of our universities, and that means as universities become more industrialized and profit-oriented, the anti-freedom shenanigans of their students will become a liability. Only then will the universities start discouraging them.

As university research continues to deteriorate, scientists have no choice but to look to industry to take up the slack in biology and medical research. After eight miserable years, the job market is finally starting to open. But what we're seeing is still cause for despair.

Over the past couple decades, pharma companies of all sizes have gutted their research programs. Sure, there are still a few bright spots, but the trend has been to insource wherever possible and, frankly, in fields like neuroscience, to grab at straws. Billions of dollars have been wasted because not enough research was done.

To cure this, we first need to diagnose the cause. There are three pathologies at work here.

1. Over-taxation

Pharma believes they're overtaxed, and they're right. Evidence for this is the frantic attempts by Pfizer to escape, first from taxy Connecticut to slightly-less-taxy Massachusetts, then to even more slightly less taxy Britain by buying A-Z, then to a-lot-less-taxy Ireland by buying Allergan. Companies would move to Jupiter, if they could, to escape the greed of the US government. (Luckily, Cher, if she's kept her word, will be there to entertain them.) The US even passed a special law—arguably unconstitutional—to stop them.

Now, lots of people hate big pharma, but they should ask themselves: if they hate industry so much, why are they so loath to let them leave? Is this the sort of thing a free country should be doing?

So steps 1, 2, 3, and 4 are to eliminate the corporate income tax, eliminate the taxation of offshore profits, eliminate the tax for repatriation of profits, and stop treating companies like pariahs. This is economics 101.

2. Arrogance

I've written many times about the tendency of pharma to grab findings from the research literature and then complain when they can't reproduce them. I've worked with people from the industry, and they're great guys and ladies, but frankly this approach is enormously destructive.

Academia has lots of problems of its own, as I'm discovering. They never validate their assays—sometimes they don't even test them. Academics must publish fast or die. So we get people skipping controls and overinterpreting results. I've also seen arrogance and cherry-picking. And just yesterday someone showed me an instance of fraud.

But one thing academics aren't is incompetent. Their techs might spend twenty years measuring one or two things. If they say there's a change, there's a change. The industry guys will never be as good as someone who lives and breathes the same assay for their entire life. So their error bars are two, sometimes three times as big, and that makes their findings non-significant. And so they say: see, we told you.

The arrogance of this approach is astonishing. Fortunately not all of them are like this.

3. The reward system is screwed up.

In academia, the product is papers. The rewards are grants, tenure, and social status. In industry, the product is a drug and the reward is money. In neither case is the primary product knowledge or truth. Truth is only produced indirectly. We humans are like rats in a maze: when a short-cut to the reward is possible, we'll take it.

Academics rely on journal reviewers to separate out truth from falsity. For academics, it is the strictness of the reviewers that keeps journals like Science and Nature on top. In industry that role is played by the FDA.

Academics succeed by making important discoveries. That means they must be first at all costs. If they suspect there's competition, they'll blast through their experiments and publish garbage just to be first. Industry people pride themselves in doing a good job. There are few rewards for innovation and huge punishments if they get blamed for something. I know one company that has no product, no IP, and performs no service. They have no chance of ever making a profit. Yet the employees still strive to do superlative work right up to the end.

These are all flaws in the reward system, so neither party can be reformed from within. Change must come from outside. It's like when you ask someone for a favor: unless they fear retaliation for saying no (even if your only leverage is to weaken the friendship), it's pointless to ask them in the first place. It's pointless to ask industry or academia to change. They need outside help.

The reward system must be set up to reward scientists for important discoveries instead of the number of papers they write. This would require some metric besides citation index and paper count to evaluate their work. Companies need to be financially compensated for doing good, innovative basic research.

I will leave figuring out how to do this to somebody else. I've got a paper to write.

created jul 04, 2017; last edited jul 04 2017, 9:47 am

See also

Big pharma has gone nuts
Merck's scheme to demand reimbursement when they can't repeat academic results will only create an adversarial relationship between academia and industry.

Bad Pharma: Fact or Myth?
The pharmaceutical industry is dying. When it's gone, some of the blame for its loss will be laid at the feet of the authors of all those pharma-bashing books.

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