Shot In The Arm

The fact that the medical and biotech communities are moving so quickly on the SARS front must mean that companies are similarly hard at work on a vaccine and antiviral drugs to treat it, and we can all expect to be protected from the disease within a couple of years, right? Not exactly. While SARS is rapidly turning into a health emergency in China and could have a serious impact in a virulent form in North America, biotech and pharmaceutical companies aren't exactly elbowing each other out of the way to come up with anti-SARS products. And both the government and the marketplace itself are to blame.

Even after Tommy G. Thompson, secretary of Health and Human Services, called a meeting of 60 industry executives two weeks ago to personally ask for their help battling SARS, companies have been willing to appoint only small teams to look at the problem or to scour their shelves for possible anti-viral compounds, which would be tried in federal laboratories. Few, if any, companies have been willing to launch a full-scale search for drugs to fight SARS.

In large part, the reason for their reticence is economic. In recent decades, the pharmaceutical industry has virtually abandoned the market for drugs designed to combat microbes such as the virus that causes SARS. Convinced that infectious disease had all but been eradicated, pharmaceutical companies stopped looking for the next penicillin in the 1970s and instead turned their attention to drugs for such chronic--and extremely profitable--conditions as hypertension, high cholesterol, depression, impotence, allergies, and baldness. As a result, by the late '80s, even as many bacterial infections were becoming resistant to existing antibiotics, there weren't many new drugs in pharmaceutical-company pipelines. Indeed, in the past 30 years, the Food and Drug Administration (FDA) has approved only one new class of antibiotic.

Yet, in recent years, the world has seen a succession of emerging infections, many coming from developing Asia and Africa, ranging from AIDS and the hantavirus to Ebola, Legionnaires' disease, and now SARS. Even ancient scourges like tuberculosis are developing resistance to existing antibiotics. Yet only in response to the AIDS epidemic have we seen new treatments come out of the drug and biotech industries. And that required a massive investment in publicly funded basic research, supported by the government, as well as private research into antivirals and vaccines, conducted by industry executives with the understanding that the market for AIDS drugs and vaccines in the developed world--where consumers can pay high prices--is enormous.

Drug companies are now scrambling to play catch-up and produce new antibiotics and antivirals, but they are not about to pursue cures for diseases like SARS on their own. Going after an emerging infectious disease demands that companies rearrange priorities, shift research funds, and even move personnel and laboratory equipment away from drugs they are currently developing. That's not a decision executives are going to make lightly without a clear sense of what the market for an ultimate product might be. When only one in 100 promising new biological or chemical entities makes it all the way to FDA approval, and companies spend between $500 and $800 million on average to get a single product to market, it should come as no surprise that investors are wary of letting drug and biotech companies waste time and money on pursuing products that might not have a market. "No company like mine can take a risk on a drug or vaccine when we have no idea what the market will be," says Una Ryan, president and chief executive of AVANT Immunotherapeutics, Inc., a vaccine company based in Needham, Massachusetts. After all, even with a crash program, a SARS vaccine might be available in one year, but antiviral drugs will take considerably longer and cost a considerable amount to develop, test for safe human use, and market.

Given the pharmaceutical industry's unwillingness to focus on infectious diseases, the government may have to step in and support research on viruses like SARS. But, though the National Institutes of Health announced this week it was stepping up research on a SARS vaccine, the Bush administration has not encouraged private-sector research. In fact, it has scared industry away by expropriating drugs from manufacturers. Two years ago, for example, companies watched aghast during the anthrax scare as Secretary Thompson obtained a rock-bottom price from German pharmaceutical giant Bayer for its antibiotic Cipro, which combats anthrax, by threatening to yank the company's patent on the drug and allowing generic manufacturers to sell it. Most bigger pharmaceutical and biotech companies have little stomach for a situation in which the government lowers profit margins in such a manner. As Sidney Taurel, the chairman and chief executive of drug giant Eli Lilly, put it in a speech on Capitol Hill last year, "Government is not going to get new miracle drugs for cost plus ten percent."

SARS is only an indicator of a wider trend. Just as the government has done little to encourage companies to research emerging viruses, so too has it failed to recognize the reality of what it will take to get drugs and vaccines to combat terrorism. In its proposed anti-bioterrorism program, Project BioShield--a plan for purchasing drugs, vaccines, and diagnostic tests for a national bioterrorism stockpile--the Bush administration would allow a company to spend several million dollars of its own money on developing a new drug or vaccine, only to see the government possibly award the contract for producing it to another company. "There is not a pharmaceutical company in the solar system that will agree to some of the terms in BioShield," says George Painter, CEO of Chimerix, Inc., a start-up that is developing a drug to treat smallpox. In addition to possibly giving away discoveries made by one company to another firm, Project BioShield excludes products that might have a commercial market outside the government bioterror stockpile. So let's say a small, struggling biotech company comes up with a new, broad-spectrum antibiotic that can fight both tularemia, a potential bioterror threat, and bacterial infections caused by a nasty bug known as staphylococcus--a product that is desperately needed by hospitals. The government specifically refuses to help the company through the research and development process, and it won't contract the company to manufacture the drug if and when it wins FDA approval. To top it off, BioShield offers companies no protection from liability should products developed with government funding cause side effects.

Why are Project BioShield and the government's response to SARS and other infectious diseases so ignorant of market factors? Blame consumer outrage over the rising cost of drugs and profits in the pharmaceutical industry. As one government official put it, "The last thing the administration wants to do is look like they're giving a windfall to the pharmaceutical industry at a time when we're talking about drug prices."

To be sure, there are plenty of reasons to criticize the pharmaceutical industry, including its accounting and pricing practices, its army of lobbyists, and its willingness to devote a huge percentage of its budget to marketing (see Arnold S. Relman and Marcia Angell, "America's Other Drug Problem," December 16, 2002). But, for all their faults, the biotech and pharmaceutical industries are still the nation's best--and only--hope for producing drugs and vaccines needed to battle emerging diseases and bioterror threats. If we are serious about being prepared, we will have to play by the market's rules.

By Shannon Brownlee