Fresh off its successes in the green-energy patch, the Obama team is turning its investment skills to the life sciences. Last Friday, President Obama announced his intention to increase the federal government’s involvement in the business of biotechnology.
His plan is for a new federal center inside the National Institutes of Health (NIH) that would be focused on the development and commercialization of new drugs. The National Center for Advancing Translational Sciences (NCATS) would engage in early drug-development work, eventually handing off programs to private companies for completion. In return, the government would take a guaranteed royalty stream on drugs that eventually made it to market. The center would get its seed money by tapping other NIH programs. Longer term, the administration’s plan is to provide billions in dedicated federal funding to the new drug center.
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Several legislators have already questioned whether NCATS is needed. Rep. Denny Rehberg (R., Mont.) — chairman of the Labor, Health and Human Services, and Education Appropriations subcommittee, which funds the NIH — has said NIH should not search for a director for NCATS until Congress has given its approval. Last week, the NIH began circulating an advertisement for the new director’s job anyway.
The NCATS idea reflects the belief of the president and NIH director Francis Collins that the for-profit drug industry has ignored promising areas of science because these opportunities appeared financially dubious. Collins has said that government can plow scientific fields that profit-driven companies ignore. He suggested during an interview on CNBC earlier this year that NIH drug developers would also get a break from regulators at the Food and Drug Administration. His reasoning seems to be that government regulators could place more trust in government drug developers.
The president’s move to get the federal government further into the business of developing new medicines is coming at a time when his regulatory agencies have been badly squeezing the American life-science sector. The longer and larger development programs mandated by skittish regulators have made the cost of developing drugs dramatically higher — with fewer new programs getting funded, and a smaller number of drugs reaching the market as a result.
These trends, in turn, have discouraged private investment. Companies in the U.S., Europe, and Canada raised slightly more than $25 billion in 2010. This is about the same amount of money that they raised five years ago, but more of the money this time came in the form of profitable companies’ entering large debt transactions in a low-interest-rate environment, not in the form of true venture capital to start new companies.
In other words, venture investors are concentrating money in fewer companies because developing and launching new drugs has gotten so expensive. The result is far fewer new biotech initiatives. Five years ago, biotechnology companies raised almost $5 billion in venture capital that went to early-stage ventures. Last year, new companies raised about half that amount.
The new Obama drug initiative is of a piece with the administration’s abiding faith in the virtue of government investment as a trump to private entrepreneurism. At the core of this religion is a faith that that the political allocation of capital leads to better, or at least more “equitable” outcomes.
The achievements of the NIH are monumental, but its domain is basic science. This involves the discovery of scientific principles that can lead to new avenues of practical research. NIH funding has led to the discovery of molecular signals that often became the targets for new drugs. But the NIH was never in the business of actively developing the drugs themselves. That was always the work of the private sector.
For one thing, NIH has never been very good at drug work. The government already spends $30 billion a year on life-science research through the NIH — more than $50 billion once money from other agencies is factored in. Yet by its own count, the NIH has helped to discover only 84 drugs over the past 60 years. By comparison, in recent years, the private sector has spent about $60 billion and launched more than 30 products annually.
This is very dangerous indeed. The creators and the oversight one and the same. Perhaps like when a Fed official becomes Sec of the Treasury. Except it is not just livelihoods in jeopardy but life itself.
The Gov't should stay out of industries, period. Which companies will get the most promising drugs? Those that contribute the most to campaigns. Whom will be liable for any adverse events? You can't sue the federal Gov't and win. Will NIH drugs get preference over other meds in the same class or that treat the same disease? You bet they will. Which drugs will be prefered on Medicare/Medicaid/Tricare/Federal employees plans? We don't need to guess. The tyranny that we see in America is not Niagra Falls rushing upon us, but the slow drip of a faucet that doesn't catch our eye until the basement is flooded.
Francis Collins seems to be smarting, still, over Craig Venters success in beating him on the human genome project with private funding. Venter did in 3 years, wth his small but well funded organization, what was going to take Collins a decade or more, with a vast number of collaborators from around the world. Getting government involved in drug development will result in exactly what Dr. Gottlieb predicts here.
follow the money- this actually makes no sense when you look at the FDA's out of control shutdown of new devices and drugs by regulation, generic drugs that have been around 70 who production have been shutdown by inspetors; i suspect you'll find some crony capitalism tied to obamacare
If Obama really wanted more drugs on the market, all he has to do is instruct FDA to permit all drugs that complete Phase II review to market. That would save billions and bring cheaper drugs to market. Of course, it would give the regulators less power...
(1) The closer that public research goes in the direction of drug discovery, the less distance that private companies have to go.
(2) Public research, unlike private research, is public. Meaning that knowledge discovered can be built on by many private companies. Duplication of effort caused by the creation of private knowledge which is then kept secret is simply wasteful. We as a society would be better off investing the energies that go into the duplication of knowledge into creating new knowledge and new drugs.
(3) There has been a serious decline in drug discovery by private companies.
(4) Market incentives create a bias for private companies to create drugs that treat catastrophic illnesses. Humanity would benefit from a broader array of drugs.
(5) The conflict between the public sector and the private sector created by ideologues like Dr. Gottlieb is fake. He probably is a libertarian (i.o.w. has a tendency to gravitate towards unreasonable utopian visions).
The public and private sectors can and should work cooperatively to create more profits and more benefits to humanity, not against each other.
This is nonsense, sorry. Governmnent is the problem right now - we can't raise money for our project in drug development because of regulations, pure and simple. By having govt direct research will simply create a survivorship bias and the projects undertaken will be highly political and not at all the inventive stuff needed.
The reason the money follows the high risk stuff (or the orphan drug route) is not "market incentives" David, that is a joke - it is because there is an easier time with the damned government process when the risk/benefit ratio is extreme. The FDA can't find the bathroom and we are expecting it to become smart and efficient because another govt bureaucracy is at work? Wrong.
The work will be repetitive and not push anything through the FDA one day faster.
There are projects now with innovative people like my company everywhere that will develop and no govt lab would ever in a thousand years look at - all another govt agency funding research will do is ensure the fat cats get fatter and innovation goes away, totally. It will be like getting tenure for boondoggles - it is 100% madness and reflects a stupidity of how things work and develop that is, as always, breathtaking from the statist mindset - govt is the problem!!
I disagree with your argument in general and in particular with point #4. Market forces create a motivation (your use of "bias" here is subtly offensive) for companies to develop drugs for common, chronic diseases. This is because their costs are practically all overhead, and they make money on volume. So hypertension, high cholesterol and diabetes have attracted lots of attention from pharma.
Please forgive me my current unspeakable thoughts and feelings.
*&@#$?%!)^@?*%#$)+@?/*^@+$/@$!!!!!!
Mr. Gottleib...please bequeath me just a smidgeon of your obvious intellectual and emotional expressive self-control. In return, I offer my sincere gratitude for researaching and exposing this insane NCATS
I am at a lost for acceptable words to express the outrage I feel about this...this NCATS, the latest abomination concocted by Obama and all his minions.
From 2008, per Mr. Obama.....
"I want to fundamentally transform America!"
"This is the beginning of the fundamental transformation of America!"
Can't say we were not warned!
Back in 2008 those words struck fear, dread, and loathing in every cell of my body. Then, I could only imagine what he meant. Now, I admit to having been devoid of any imagination for what he and all those minions had/have in store for America. Just more proof that I will never understand the fascist, statist, progressive mindset other than as the sinister collective quest for power, wealth, and control over individual freedom and fortune.
This new acronym NCATS really stands for the
National
Catastrophic
Abomination
To
Science
I agree with Dr. Gottlieb's premise if not every detail of his argument. Specifically, NIH has done some pretty good clinical research and has supported much more. It typically takes on the things that are seen as generally important but that pharma won't touch.
But his diagnosis of NCATS is on the money. This is yet another example of President Obama and comrades attempting to nationalize an activity that is better left to the private sector.
Of course we need government promotion of drugs; then we'd have good drugs like Kreibozen and Laatrile that selfish drug companies have kept off the market for years. We'd also have the Fish Carburator and the interasetor.
Pharmaceutical Research is heading outside of the country. This story is meaningless; emerging markets will be the main focus of drug discovery for years to come.
