Pharmageddon continues

This time it’s Glaxo Smith Kline (GSK). You may remember that GSK was in the papers recently because it was one of the only big pharma companies with a potential vaccine for ebola. Well, now they’re cutting their R&D staff. According to the rumors flying over at In the Pipeline, the biggest cuts are going to happen at their research park in North Carolina.

How these things typically happen is the pharma in question just eliminates a whole research division or therapeutic area. Your job is not spared because you made your company a zillion dollars on the patent you sold to it for a dollar 10 years ago. I used to be in favor of this quid pro quo arrangement. You give me the means to do my research, I give you the fruit of my labor. But now, I’m not so sure. Like everything else, there are predators in the executive suites and on Wall Street who have zero appreciation for the amount of work it takes to create a new drug entity and plenty of people who think they own it. In some respects, researchers have only themselves to blame for not protecting their own interests, those being the need to earn a living in order to consume calories to sustain life and have a roof over their heads.

GSK’s cuts come on the heels of cuts at Astra-Zeneca, which decided to get rid of its antibiotics research unit. Yeah, try to figure that one out. And then there was Amgen that recently announced that it would cut up to 4000 jobs globally including at its research facility in Seattle. So, while the flood of layoffs in the US R&D industry has slowed down a bit since the high water mark of 2009-2010, it’s still not finished yet. After all, sooner or later, the industry will run out of people to lay off. But we’re still going to see pulses of carnage here and there, dumping more over-educated, over-qualified, experienced and talented chemists and biologists into the already saturated labor market. Fun, fun.

In other news, the left sometimes *almost* grasps what the problem is with pharmaceutical R&D but as soon as those of us who really know what’s going on turn our backs, we get more clueless BS from people like Dean Baker. Don’t get me wrong, I’d love to have him on my side. But he doesn’t seem to spend any time talking with people who have actually, you know, been there. There is something bizarrely automatic about the left’s misunderstanding of how drugs get invented and developed. Maybe this has something to do with the complexity of the process. Or maybe it’s just laziness.

Here’s the basic outline of the misunderstanding: The NIH, which we all pay for, does basic research. Then it collaborates with a big drug company and that big drug company turns around and sells that basic research for a ginormous profit. All the big company does is scales the sucker up, runs some admittedly expensive clinical trials, and then produces and markets the drug, delivered fresh and complete from the NIH labs, directly to you the consumer at an enormous markup.

There is just enough truth about the greed of the executive and finance movers and shakers to make this look plausible. Unfortunately, it is one of those beautiful theories easily destroyed by ugly facts.

I don’t want to go into this again because it will take at least several posts to unpack but the NIH rarely delivers a pristine drug to industry. No, the whole idea of basic research is that it is basic. That doesn’t mean it isn’t hard or not valuable. It means there is sometimes little more than a nugget of a something to follow up on. The “drugs” are sometimes nothing more than fragments or completely undruggable. (Undruggability is a whole different topic) Sometimes, there is no drug delivered to industry. Sometimes, it’s merely the suggestion that a specific protein target may or may not be involved in some undesirable endpoint.

The role of industry R&D is to take this very basic research and through many years of real, genuine, honest-to-god research, turn it into something resembling a drug. It is a very expensive process. I’m not surprised at the numbers being batted around. That is not to say that we can’t cut back on the amount of marketing that pharma does. At the end of the day, what is more valuable to you? The researchers that invent an ebola vaccine or the marketers that tell you why you need it? But to get real drugs from real research, a lot of money must be spent in order to pay for many trials and errors and reagents and lab equipment and researchers who need to be fed and housed.

That being said, it sure does look like there is a plan to exploit NIH and academic labs. If you get rid of all your R&D units in the name of shareholder value, or at least cripple them with endless, non-productive mergers and acquisitions and layoffs, you may end up without anything to market. And there are a lot of geeky students out there who are willing to work at subsistence wages to get a PhD. Why not use them as your new staff? That certainly looks like what is happening. It’s a bit of a self-fulfilling prophecy.

What is missing in the equation is the experienced R&D staff that will know “when to hold’em and when to fold ’em” when it comes to actually making the potential drugs. In other words, there will be a lot of reinventing of the wheel in academic labs as they sort through how to do it on limited soft money.

It’s a research strategy only a banker could love.

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One bright spot for the journal famished: Nature is experimenting with making its journal archive and current issue available as a free “read-only” version. That’s to circumvent the habit of some poor researchers who have to sneak around to satisfy their paper habit, a phenomenon known as “dark sharing”. You have to know someone who has inside access to a license, usually some friend who is still in industry or someone at a university. This is what we are reduced to: sharing illicit copies of nerdy papers like they’re banned versions of Tropic of Cancer. Read-only versions that you can’t save or refer to later is  better than nothing, I guess, though not quite as good as getting a subscription to Nature and Science for Christmas.

 

The Ring of Gyges (It’s a post election blog)

Note: This is a post election blog but it has a slow buildup.  It will all make sense by the last paragraph.

Last week, Glaxo Smith Kline (GSK) was fined $750 million for failing to clean up a production facility in Puerto Rico.  Here’s a quick summary of how the case went: The plant in PR produces Cidra among other products.  It was cited by the FDA for violations of good manufacturing processes.  The FDA told the plant to clean it up.  GSK sent a woman named Cheryl Eckard, a quality assurance manager, to PR to look into it.  Eckard reported back that the plant was in worse shape than previously thought.  And GSK ignored her.  Repeatedly.  GSK did not address the issues of the PR facility.  I guess what the FDA doesn’t know won’t hurt them.  Eckard got to be a pain in the ass, so GSK fired her.  That’s when Eckard decided to blow the whistle.  As part of the settlement with the government, GSK has to fork over $96 million to Eckard for damages.  She’ll never get another job.

Derek Lowe, who writes the excellent pharmageek blog In the Pipeline has this to say about the suit:

I’ve written about this sort of thing before, and I continue to think that this is a good law. It takes a tremendous amount of nerve to put your own livelihood at stake to report something that’s going wrong (and isn’t being fixed). The incentives need to be there. If we were a perfectly altruistic species, any of us would have no problem sacrificing ourselves immediately for the good of the whole. But the very fact that there’s such bad conduct to take the risk of reporting on tells you that we’re not that sort of species at all.

[…[

I’m not enough of a libertarian to think that the market will take care of all such behavior without an extra possibility of punishment backing it up. I think that we really do need regulatory authorities (although we can argue the details after that statement!), in the same way that we really do need police forces. Both of those groups can (and do) abuse their authority at times, but both of them also provide a much-needed function, human nature being what it is.

And the nature of big organizations being what it is, too. “Never explain by malice what can be explained by stupidity” is a pretty good rule, and in a large company, you can add inertia, backside-covering, careerism, and deciding that a given mess is someone else’s problem. The bigger a company, the more chances there are for these things to happen. Perhaps the possibility of a $750 million dollar fine will help to concentrate attention in such cases – and if not, well, how about a billion? Try for two?

The FDA busts production facilities all of the time but most companies suck it up and fix the problem or shut the facility down, as happened with the makers of the Today Sponge.  Remember Seinfeld’s Elaine Benis who picked her lovers based on whether they were Spongeworthy?  The company that made the sponge couldn’t get rid of bacteria in the manufacturing step and they couldn’t identify and fix the problem so no more sponges.  That’s the way it should work.

So, we see that regulation of what goes into our bodies is working.  And no one would argue that that is a bad thing.

But when it comes to the financial industry that handles our money, it’s a fricking free for all.  What we have is like a never ending season of Deadwood.  There’s very little regulation, no one agency that’s minding the store, financial entities who choose their own regulators, trillions of dollars gambled away, young hotshot assholes who think they are smarter than the rest of us and deserve whopping bonuses, and companies who should be paying massive fines for fraud instead receiving billions of dollars in taxpayer bailout money instead of being shut down for failing to clean up their act.

No one is accountable for any of their actions in the financial industry.  They get away with anything and everything.  Their actions have brought the world economy to the brink of catastrophe and we were spared that by a hasty and ill structured financial bailout package that hasn’t fixed anything.  Not only have the financials learned nothing, but they turn out to be the biggest terrorists we face.  All they have to do is threaten to send the stock market plunging and presidents and legislatures give in to their demands for more chips to gamble on the world economy.

The result of letting the financials off the hook is misery for millions of workers from Ireland and Iceland to America and Greece.  It is simply inexcusable for these people to continue to operate unchecked.

So, before Speaker Boehner decides to slash taxes for many of his buddies with a cent or two for the rest of us and before he decides to make it almost impossible for me and my buddies to retire, the very first thing I expect him to do is hold the financials accountable. The people have spoken.  They want change.  But if we want real change, we can’t put the cart before the horse.  No one should get a tax break while the fox is still guarding the hen house.  I want to see takeovers of failing banks by the FDIC, no matter how big they are.  I want to see banks fined heavily for fraudulent foreclosures.  I want to see a real mortgage program so that people can stay in their houses and pay a reasonable amount to the investors who stupidly got themselves and us into this mess.

No presents until someone pays for the party. Don’t look to taxpayers to pick up the tab or sacrifice even one more cent.

That is what I want Speaker Boehner to concentrate all of his efforts on in the next two years.  Everything else is superfluous.  He’s got a lot on his plate holding the people who got us into this mess responsible for their actions and accountable for the high deficit spending that was necessary to keep us from teetering on the edge of insolvency.  There is no greater responsibility he has to the rest of us than making the financial industry solvent again without any additional sacrifice from us and I expect him to take this job seriously this time and forego stupid Republican slogans and grandstanding.  The last thing I want to see is Speaker Boehner blaming the victims, ordinary American citizens, for this catastrophe.

Human nature has not changed in the more than two thousand years since Plato wrote his story about The Ring of Gyges.  The magical ring was found in a cave by a poor shepherd.  The ring gives its wearer the ability to become invisible.  With that invisibility, the shepherd was able to sneak into the palace, seduce the king’s wife, kill the king and take over the kingdom and all of its riches.  The moral of the story is that morals themselves are not innate.  Society has a role in correcting misbehavior.  If a person can operate invisibly, they can get away with murder.  We shouldn’t assume that anyone can resist the temptation to take advantage of an opportunity if they think they won’t be held accountable.

Speaker Boehner now has the opportunity to shed his partisan skin and show the rest of us that he means to make people accountable.  Or he will be the first one tossed out in 2012.

The Republicans have now been warned.  If they don’t make bankers and the financial industry accountable, they will be held accountable instead.

Austerity without accountability will get you fired.  We’re holding Republicans accountable now.  Don’t test us.