The Academia-Pharma Complex

January 02, 2013

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 reform. As we begin a new year, I hope the scientific community will make big strides toward an open model of drug discovery for the benefit of humankind.


Reform begins with a diagnosis of what ails us. Many roads lead to the Bayh-Dole Act of 1980, long ago in the PreInternet 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, take a look at this graph of Pharma productivity, which shows the number of drugs per billion US$ R&D spending over time, and please note the log scale on the spending axis:



What you’re seeing is the opposite of the famous efficiency gains in computing power dubbed Moore’s Law, hence the flipped moniker Eroom’s Law. Sure, we just 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, single-gene 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 in public funding over several years:



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.


This 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 mis-allocation of social 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 we are currently at historic highs of 83%. We’re squandering so much talent when we ask people who’ve endured a decade of intense, specialized training and established 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 imported from Academia with taxpayer subsidies.


Eternally an optimist, I’m encouraged by the diversity of experimentation. Among the experiments I’m watching closely is the maturation of academic drug discovery, and efforts by the pro-entrepreneurship Kauffman Foundation, e.g., the free agent model, to empower scientists.


The open science Cambrian Explosion continues apace in 2013…


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  • Brian D. Ackley


    We’ve come to define success as only big advances, but because the problems we address are big, complex and open ended, science makes progress in saltatory fashion. That means that long periods of seeming stagnation are followed by bursts of advancement. This is the nature of the beast, and while I think that open models of data sharing and discussion may bridge some of these periods, it may also lead to more false starts as people run with ideas that may be faulty.

    We as a community have difficulty assigning value to knowledge that comes from basic discovery. It’s like trying to value to each brick in a building. How do you attribute contributions to the development of a successful drug like Kalydeco? Do you assign a modicum of attribution to all the papers that are cited in the work leading up to it? What about personal discussions? What about meeting abstracts? And if so, do all the people who worked on understanding the etiology, progression and treatment of the disease receive some compensation from it’s success? No, that would be impossible. These types of successes stand not only on the shoulders of giants, but also on the shoulders of lots of ordinary people who are never noticed.

    Certainly we can continue with our model of find genetic basis of disease, ram poor cell based model through drug battery, test in mice and then wait for failure in human trials. Or we can look at ourselves, and go back to thinking about science as a community of people, all of whom contribute, and success is therefore attributed to the community, not just to the person who puts the last piece of the jigsaw puzzle into place.

    As an example of the problem, KU was willing to pay ~$75M to try and recruit Dale Boger back to KU. Let’s ignore the irrationality of asking someone to move from Scripps to KU for a moment. They were thinking, If he patents a blockbuster drug, it pays back the University many times over. If not, that’s quite a sunk cost. It’s really just buying a lottery ticket. Big expense for a potential big payoff. When he turned them down, did they turn around and invest in 75-100 new PIs, anyone of whom might contribute to a myriad of small successes that could lead to improved health and welfare for humanity? No they did not, because that holds no value for the University.

  • Andrea

    I keep thinking about this problem from the perspective of a patient. Patients raise funds through charity to find a cure for x….but patients are often so far removed from the science they seek to fund. I know from experience that patient communities have the passion and drive to raise funds for research that can impact the future of a disease. The hard part is knowing what to fund and what will have an impact. In the current system we hand over billions in donations to health charities and universities who then decide where the funds will go….but how do we know that this is the best way to decide what gets funded?

    How do we empower and educate patients, and connect them more directly to the science that can help them?

    PS – I agree with Brian that we need to place more value on basic science too – which often doesn’t have the same return as finding the next blockbuster drug.

    • Ethan Perlstein

      Thanks for your comment, Andrea.

      Under the current model, health charities, disease foundations and universities use peer review to disburse donations. The government research agencies NIH and NSF use a similar evaluation model to disburse tax dollars. Eroom’s Law and the 40-year old Apprentice demonstrate that the system is broken.

      Would having patients and their social networks more involved in the inception, conduct and communication of basic research reverse the trend? I’m not sure how to quantify the effects of passionate public support and oversight but I’m sympathetic to the argument that bringing patients and the public into the fold would make scientists more accountable and remind them why basic research matters.

      As you know, crowdfunding is a symbiosis between the public and scientists. We need to keep experimenting with this new model. The next big step in the maturation of crowdfunding will be >$100,000 for drug discovery, and rare disease, e.g., cystic fibrosis, are to me the logical places to start.

  • Ross Mounce

    What about the Open Source Drug Development team?
    Worth a link in your main post? I think that’s awesome, open drug discovery that’s worth a plug :)

    Here’s a keynote by Matt Todd he gave recently at the Open Knowledge Festival in Finland if you want to know more:

  • Richard Bookman

    I thought you might be interested in this quote from Stephen Friend at a 2011 NAS workshop on discovery in an era of open networked science:

    “Just as Eisenhower in the 1960s talked about the military-industrial complex, I think we now have a medical-industrial complex in which the goals of individual researchers to get tenure, the goals of institutions to improve their reputation, and the goals of the pharmaceutical industry to make money create a situation in which the patients are not benefiting.”

    page 28 of the pdf…..


  • Adele Culp

    Fascinating post. I discovered you via Morning Edition. I find what you are contributing to the change in science funding and open science is exciting and expect it will have significant ripple effects. I look forward to following your work as I have interest in mental health and mental health research. I love the layout of your blog and webpage. It is easy to navigate and so soothing to look at, not to mention your ease with the written word. I’m impressed all around.

  • jrank5

    Ethan, I too heard your story on morning edition. I was moved by your determination to do something that will benefit mankind. I have an interest in Mental health for similar reasons as yours. My father was mentally ill, and also an addict. I believe, although never diagnosed, he was bipolar and when down he would self-medicate. He ended up taking his own life. My sister has schizophrenia and is in treatment and able to live a productive life. She works as a mentor for those who are experiencing mental health issues. I too experience depression and anxiety and it has been a long path in trying to find the right treatment and medications that work well for me. I think your motivation to research and attempt such a feat is very admirable. Your mother would be proud!