EACH YEAR, 12,500 WOMEN in the United States alone die from ovarian cancer. To public health advocates, women's rights activists and the friends and families of those who have suffered from ovarian cancer, the disease's high incidence and mortality rates constitute a national health emergency. But for Bristol-Myers Squibb, the crisis represents a golden opportunity. The pharmaceutical corporation exercises exclusive control of taxol, an experimental drug which shows promise in treating ovarian cancer.
If taxol continues to perform well in clinical trials, Bristol-Myers stands to earn billions of dollars. Patients are already clamoring for the drug, and its price will be high. Zola Horovitz, vice president for business development and planning at Bristol-Myers, says, "Taxol will probably cost more than any oncology product that's ever been developed."
In a sense, this is not remarkable. By their very nature, pharmaceutical corporations capitalize on people's illnesses to make profits.
What is noteworthy about the taxol case is that Bristol-Myers Squibb is poised to make so much money for having done so little. It did not discover, develop or test the drug. The U.S. federal government did all those things. Nor does Bristol-Myers own the land where the Pacific Yew tree, from which taxol is derived, grows. The U.S. government owns much of that property, and the company is paying little or nothing for access to the trees that grow on it.
The tale of how Bristol-Myers came to gain control of taxol is a startling story involving the exploitation of a loophole in a federal law, a rapidly spinning revolving door between business and government, short-sighted public officials and an aggressive, greedy company. Representative Ron Wyden, D-Oregon, and a lonely public interest group are trying to halt the government's virtual giveaway of taxol, but it is not clear what effect they will be able to have.
Public investment, private profits
The National Cancer Institute (NCI) developed taxol over several decades, conducting its first studies of the substance in the late 1960s. NCI has spent more than $12 million on taxol research, tests and clinical trials to date, and it plans to spend at least $23 million more.
In the words of Samuel Broder, director of NCI, "NCI was totally responsible for [taxol's] development" until 1991. Researchers first discovered taxol's medicinal value through a government-financed screening program of hundreds of natural products. As well as initially collecting the yew bark, NCI has done all biological cell screening, chemical purification, isolation and identification, large-scale production and dosage formulation of taxol. NCI has done the toxicology, filed and documented an Investigational New Drug application with the Food and Drug Administration (FDA) and sponsored all clinical studies of the drug.
NCI's work has shown that taxol has tremendous potential. In clinical trials, taxol effectively treated ovarian cancer in 30 percent of patients, even when other chemotherapy had failed. The drug binds tumors, arresting their growth and sometimes shrinking them. Taxol also shows promise in combating breast and lung cancer, and NCI plans to further test the drug for about 30 other cancer indications.
Ultimately, the drug may prove to be among the great success stories of publicly financed cancer research.
But virtually all of the financial benefits from taxol will accrue to Bristol-Myers, as a result of agreements between the corporation and three government agencies. The agreements cede control of the drug, and the tree which contains it, to the drug company.
"The agreements are extraordinary because they give near-total control of a life- saving plant species to one drug company, and because they provide exclusive, federally funded technology to Bristol-Myers Squibb," said Wyden during a recent congressional hearing investigating the taxol agreements.
The giveaway of taxol - and NCI
The agreement between NCI and Bristol- Myers, signed in January 1991, has in effect turned the taxol-researching departments of the government agency into an arm of the private pharmaceutical firm. NCI will cooperate exclusively with Bristol-Myers in bringing taxol to market, and will refuse to show data from its trials to anyone besides that firm.
In 1989, NCI advertised for a private sector collaborator to bring taxol to market. Of the four firms that applied, NCI chose Bristol-Myers, already the market leader in cancer drugs. The resulting agreement, formally known as a Cooperative Research and Development Agreement (CRADA), defines how NCI and Bristol-Myers will collaborate to bring taxol to market.
The CRADA gives Bristol-Myers exclusive access to government-funded taxol research. "All new studies and raw data ... shall be maintained as proprietary and confidential," the CRADA states. "NCI shall make the raw data available exclusively to Bristol-Myers Squibb for use in obtaining regulatory approval for the commercial marketing of taxol."
The confidentiality provision applies not only to government researchers, but also, for example, to university scientists who receive NCI contracts for taxol research. Researchers are permitted to publish the results of their investigations, but only if they do not disclose the underlying data - the detailed, clinical data the FDA requires before it will approve the marketing of a new drug.
The exclusive access Bristol-Myers gains to NCI research virtually ensures that Bristol-Myers will be the first to receive marketing approval for taxol.
NCI defends exclusive agreements like the one with Bristol-Myers on the grounds that they are necessary to bring promising drugs to market quickly. "It has been our experience that pharmaceutical companies require the assurance of some exclusive rights to an agent before they will expend the considerable resources necessary to develop the agent" through marketing approval and distribution, the director of NCI, Samuel Broder, wrote Wyden.
But James Love, director of the Washington, D.C.-based Taxpayer Assets Project (TAP), dismisses Broder's assertion, at least as it applies to taxol. "The exclusivity isn't needed," he says. "Why is Rhône-Poulenc trying to break into this market? They were the losers in the taxol bidding. If they are willing to proceed, despite the Bristol-Myers monopoly on the government bark and research, it can hardly be argued that exclusivity was needed for taxol to be developed." Rhône-Poulenc is developing taxotere, a compound closely related to taxol.
If Bristol-Myers is first to market with taxol, the firm will win a marketing monopoly due to the FDA's designation of taxol as an "orphan drug." For seven years, no other firm will be allowed to sell taxol for ovarian cancer. With no competition, Bristol- Myers will be free to set prices as high as it dares, fettered only by a weak pricing clause in the CRADA that NCI has no criteria to enforce.
The "fair pricing clause" in the CRADA, obtained by Multinational Monitor under the Freedom of Information Act, reads: "NCI has a concern that there be a reasonable relationship between the pricing of taxol, the public investment in taxol research and development, and the health and safety needs of the public. Bristol-Myers Squibb acknowledges that concern, and agrees that these factors will be taken into account in establishing a fair market price for taxol." This will allow Bristol-Myers to set taxol's price without any reference to its costs in developing and producing the drug.
The National Institutes of Health (of which NCI is a part) reserves the right to intervene if it determines that Bristol-Myers' price for taxol is not "reasonable." But, according to the pricing clause, an acceptable price for NCI could be one which reaps windfall profits for Bristol-Myers at the expense of cancer patients.
And gigantic windfall profits are almost guaranteed. While Bristol-Myers' Horovitz says taxol will be the most expensive oncology product ever - meaning it will cost patients at least several thousand dollars per treatment - sources at NCI report that NCI has brought taxol from yew tree bark to medicinal form at a cost of approximately $1,000 per treatment. Bristol-Myers' production expenses are almost certain to be lower than NCI's, since the company will produce taxol in greater quantities.
Behind the giveaway
The giveaway of taxol may have been fostered by Dr. Robert Wittes, who has spun through the revolving door between NCI and Bristol-Myers Squibb with amazing speed. In the late 1980s, Wittes oversaw the clinical trials of taxol in his position as associate director for cancer therapy evaluation at NCI. He then left NCI to work for Bristol-Myers, becoming the firm's senior vice president for cancer research. After a stint of less than a year at Bristol-Myers Squibb, Wittes returned to NCI in August 1990, this time as chief of its medicine branch, which conducts in-house research.
Wittes refused to be interviewed for this article and did not respond to the single written question, "Did you assist Bristol-Myers Squibb in the preparation of its taxol CRADA proposal?" Bristol-Myers did not return repeated phone calls or answer written questions concerning Wittes.
Love asserts Wittes was instrumental in helping Bristol-Myers win control of taxol. "It seems clear that Dr. Wittes gave Bristol-Myers a huge advantage in preparing for the CRADA bid," he says. Love, who calls Wittes "the mystery man of the taxol story," thinks Wittes should be required to disclose more about his relationship with Bristol-Myers. "We would like to know what Bristol-Myers paid Dr. Wittes for his role in preparing the taxol CRADA, but no one in the government is willing to make him answer that question."
In addition to Wittes' potential conflict of interest, more systemic problems also helped foster the sweetheart arrangement between Bristol-Myers and NCI. Neither taxol nor the idea for using taxol to treat cancer is patentable, since both have been in the public domain for decades. But Bristol-Myers will gain monopoly marketing rights for taxol under the Orphan Drug Act, passed in 1983 to encourage drug companies to develop and market drugs for rare diseases. For diseases affecting small numbers of patients, Orphan Drug Act supporters believed, granting market exclusivity might provide enough financial incentive for pharmaceutical firms to develop treatments in which they otherwise would not have been willing to invest.
Ovarian cancer qualifies as a rare disease under the Orphan Drug Act, even though it is the fifth-leading cause of death among women cancer victims, and even though one out of 70 U.S. women will develop this disease during her life. Ovarian cancer has an estimated client population of 164,000 - large enough for Bristol-Myers to earn huge profits, but well under the 200,000-patient cutoff in the law.
While the drafters of the law were well-intentioned, in practice drug corporations have manipulated the Orphan Drug Act to earn monopoly profits on drugs they would have brought to market even without guaranteed exclusivity. TAP's Love says, "A drug company can drive a Brink's truck through the loopholes in the Orphan Drug Act."
One major problem is that once designated an "orphan" by the FDA, a drug retains that status - and the company which controls it maintains exclusive rights to it - for seven years, irrespective of how much the drug earns for the company. (A bill proposed by Senator Howard Metzenbaum, D-Ohio, would create a $200 million cap, so a drug would lose orphan status once it earned that amount.)
Perhaps an even more serious problem is that corporations can file for a very narrowly defined treatment group and later add new orphan designations for different applications of the same drug. Known as "salami slicing," this practice enables drug companies to market a drug to more than 200,000 patients - the Orphan Drug Act's cutoff point - and still maintain orphan status.
For example, the FDA granted Bristol-Myers orphan status for taxol as an ovarian cancer treatment. If the drug is later approved for other "orphan" diseases, Bristol-Myers will remain taxol's exclusive marketer, even if the total patient population for taxol is over the 200,000 patient limit.
Calls for reform and restraint
Wyden and TAP are trying to shine light on the taxol giveaway, hoping they can mount enough pressure to have the agreement rescinded or to extract guarantees that Bristol-Myers will not gouge women with its taxol prices. Wyden's tough questioning of both NCI and Bristol-Myers officials at congressional hearings on taxol have undoubtedly been an important step in this direction.
Wyden and TAP are also calling for fundamental reforms in the Orphan Drug Act. In addition to supporting Metzenbaum's $200 million cap on orphan drug earnings, TAP is calling on Congress to ensure that orphan drug prices maintain a reasonable relationship to the controlling company's costs, not just to what the market will bear. It is requesting that Congress require a corporation controlling an orphan drug to disclose its revenues from sales of the drug and its costs incurred in developing, manufacturing and marketing the drug. TAP has also suggested that Congress and the FDA reconsider the policy of automatically granting exclusive rights to orphan drugs.
Despite Wyden and TAP's best efforts, legislative action seems unlikely. Even if Congress were to pass reforms to the Orphan Drug Act, President Bush would probably veto them; in 1990, Bush vetoed modest amendments to the Orphan Drug Act which would have removed AIDS drugs' orphan designation. However, NIH has indicated some willingness to rethink its fair-pricing policy; this may be taxol patients' best hope for affordable treatment.
Bound and gagged
Meanwhile, NCI-Bristol-Myers cooperative efforts continue apace, and it will be very difficult to derail them. The CRADA gives Bristol-Myers the right to terminate its agreement with NCI if it determines that developing taxol will not be commercially successful. NCI can terminate the agreement only if it determines that the company "has failed to exercise best efforts" in commercializing the drug.
NCI also agreed not to help any other company develop taxol, virtually forever. The agreement states, "NCI agrees to refrain from assisting any commercial party other than Bristol-Myers Squibb for the commercialization of taxol during the term of this CRADA, and during any period thereafter in which Bristol-Myers Squibb is engaged in the commercial development and marketing of taxol." NCI is bound by this clause as long as Bristol-Myers does not abandon the drug and "public health needs are adequately served."
If the CRADA were terminated, Bristol-Myers would have equal voice with NCI in determining what happens to all data, studies, raw material and taxol supplies.
The new bark collecting season began with spring weather, and NCI is continuing its taxol trials. "Barring unforeseen delays," says Zola Horovitz, the Bristol-Myers official, "the Food and Drug Administration could approve taxol for treatment of refractory ovarian cancer in early 1993."
Until June 1991, Bristol-Myers paid a small fee for yew tree bark to the Forest Service, on whose land it harvests much of the bark it needs for taxol. "Run-in value was between 5 and 15 cents a pound," says Dick Miller, the Forest Service's Pacific Yew coordinator.
Now, after signing an agreement with the Forest Service, Bristol-Myers takes the bark for free. Through its bark collecting agent, Hauser Chemical Research, the firm gathered 825,000 pounds of bark from Forest Service land last year.
Forest Service officials defend this giveaway by pointing out that Bristol-Myers pays the agency to conduct yew-related programs. "They're not getting anything for nothing," says Miller. Bristol-Myers reimburses the agency for "all the costs for administration, permits, transfers" and for other expenses, including an environmental impact statement and an inventory of the yew on federal land. Bristol-Myers paid the Forest Service $882,692 for these activities in 1991.
Bristol-Myers can potentially receive half of this money back from the government as a tax credit, because the bark collected from public lands will make taxol for clinical trials. The Orphan Drug Act provides a 50 percent tax credit for expenses related to clinical tests of "orphan" drugs, like taxol.
The Bureau of Land Management, which controls different federal lands than the Forest Service, sold 64,391 pounds of yew bark to Bristol-Myers last year for $13,216, or 20 cents per pound. Bristol-Myers paid 15 cents per pound the year before: $1,555 for 10,368 pounds.
BLM justifies the low price by pointing to how the bark will be used. "Our highest priority is to make the bark available to cancer patients. Cancer patients are as much a part of our public as anyone else," says Leslie Robinette, a BLM spokesperson.
Wyden has challenged the legality of the Forest Service and BLM agreements, questioning whether the yew bark should be given away so cheaply and whether the Forest Service and BLM have the authority to give Bristol-Myers access to the trees. A Congressional Research Service analysis of the agreements, commissioned by Wyden, found that the agreements "seem vague and ambiguous in several critical ways. It is not clear that the free disposal of this resource is authorized; it is not clear what actions beneficial to the United States BMS [Bristol-Myers Squibb] definitely will perform; ... it is not clear what the costs to the federal government will be; and it is not clear how yew harvests will relate to the usual land and resource planning and decision-making process."
Killing the goose
In their rush to supply bark for taxol, both resource agencies have come under fire for allowing bark to lie wasted and yew needles to go unused, and for paying insufficient attention to the needs of future cancer patients.
According to Wendell Wood of the Oregon Natural Resources Council, bark collectors, who are paid by the pound, often strip bark that is easily accessible and leave the rest behind. "They have no incentive to take bark off the top of the tree; they just take the bottom," he says.
Hauser claims it monitors harvested areas to check for wasted bark. "If [collectors] don't take the bark, they're out of a job," says Phil Hassrick, vice president of Hauser.
The Forest Service and BLM contend that they have learned from the past harvest seasons and that this year bark collection will be more closely supervised.
Even if the bark is not wasted, stripping it kills the tree; large-scale bark-collecting efforts thus endanger the future of the species. There is, however, an alternative, as Wood notes. Yew tree needles also contain taxol (though it is more difficult to extract taxol from needles than from bark). Harvesting the needles does not kill the tree, so the needles could provide a sustainable source of the drug. If taxol production does not shift to needles, says Wood, "You kill the goose that laid the golden egg."
The Forest Service's Miller says concerns about the sustainability of the tree species are unwarranted. He contends that synthetically produced taxol will soon be available, making the yew tree an unneeded source. "In three to four years, we're going to be out of the woods. The amount of bark used will be diminishing rapidly," he says.
- D.N.