BIO's 'Cooperation' With Regulators

Competition Author: HENRY I. MILLER America learned long ago that what's good for General Motors isn't necessarily good for the country. This axiom applies to the biotechnology industry, as well. The biotech industry's major trade group-the monolithic, Washington, D.C.-based Biotechnology Industry Organization (BIO)-has been part of the problem, rather than the solution, on a variety of regulatory issues during the past decade. They were at it again in a big way in July. In fact, the organization-heavily influenced by industry titans like St. Louis-based Monsanto Co.; Ciba-Geigy Corp. of Greensboro, N.C.; and Pioneer Hi-Bred International Inc. of Des Moines, Iowa, all members of BIO-has readily accepted and recently even proposed regressive, overregulatory policies that act as a market-entry barrier to smaller, highly innovative competitors. In a Faustian bargain, big companies get market-share protection and shelter of existing products while government bureaucrats get bigger budgets and bigger empires. The smaller and newer companies lose out, as does the nation's academic research enterprise. Research and development on disease- and pest-resistant garden and crop plants are early casualties, while the huge chemical pesticide industry is protected. Good old-fashioned competition and the best in American innovation go to hell. It is useful to recall that the large agrichemical/agbiotech companies that control BIO-by virtue of their vast resources and via membership on the board and on key committees-are among the world's largest producers of chemical pesticides and therefore have a vested interest in slowing the development of competing, potentially superior products. They have it covered both ways: They are content to keep selling highly profitable agricultural chemicals, but are also well positioned to confront unnecessarily high and expensive regulatory barriers on biotech products. BIO has failed to oppose even Environmental Protection Agency (EPA) policies considered hopelessly unscientific and regressive by the overwhelming majority of the scientific and professional community-including proposals (under both the pesticide and toxic substances statutes) that single out field trials of recombinant DNA-manipulated microorganisms for regulation while exempting all other microorganisms and chemicals. However, BIO's puzzling behavior over the past few years in dealing with two of the primary regulators of biotech products, EPA and the Food and Drug Administration (FDA), is explainable. As my Hoover Institution colleague and Nobelist Milton Friedman counsels, look for the self-interest. The unholy alliance between the powerful BIO and EPA is a cozy one. For a decade, new, anti-innovation regulations under EPA's pesticide and toxic substances statutes have sidestepped scientific advice in order to single out new biotech products-that could supplant chemical pesticides or clean up toxic wastes-for special regulatory scrutiny. But in return for EPA policies that confer a particular advantage on certain BIO members (such as mysterious exemptions from regulation, which would benefit only a few, select companies-those that are inserting viral coat proteins into plants, for example), the association has consistently encouraged and endorsed EPA's proposals. At the same time, other scientific and professional associations, including the American Society for Biochemistry and Molecular Biology and the American Society for Microbiology, have relentlessly criticized EPA's general approach and its specific proposals as being unscientific, devastating to research, and contrary to the public interest. BIO even supported EPA's bizarre decision to expand the regulation of pesticides to include whole plants with enhanced resistance to pests or disease-products that would enable farmers to use smaller amounts of chemical pesticides while sustaining crop yields. If EPA has its way, the field testing of improved varieties of corn, tomatoes, cotton, and marigolds would be regulated more stringently than chemicals similar to DDT, parathion, or sarin. (I am not making this up.) EPA is arguably the most regressive, confrontational, and scientifically challenged regulatory agency on the planet, but BIO spent July of this year telling the Congress how much it wants the new EPA regulation. BIO's feverish lobbying narrowly failed to defeat a pivotal amendment to EPA's appropriation bill that would have legislatively limited the agency's expanded influence. BIO unblushingly described EPA to Congress as "flexible in their regulatory approach," and as being eager to minimize the impact of regulation on biotechnology. BIO gushed that it and its companies have "enjoyed a good working relationship with EPA." Even under the onslaught of big industry's big guns, the amendment, which would withhold funds from EPA for regulating "whole agricultural plants subject to regulation by another federal agency," barely passed the House. A spokesman promised that BIO would continue the battle in the Senate. BIO is thus lobbying for new and duplicative regulation of plants by EPA, an agency with no scientific or policy experience in that arena, and despite the fact that it creates significant, new, insupportable burdens. New plant varieties selected or created by plant breeders (with less-precise genetic techniques) for pest and disease resistance have, after all, been around for a long time-and without EPA regulation. It is significant that the BIO-favored approach creates new barriers against smaller, more cash-strapped companies. It is likewise important that the new EPA policy could virtually extinguish university research on understanding the nature of pest-host interactions, which is needed to develop alternatives to agricultural chemicals. Devotees of conspiracy theories may find it interesting that the implausible EPA plant pesticide policy was crafted by Bush administration EPA assistant administrator Linda Fisher, who passed through the government's revolving door and is now vice president for government relations at Monsanto, which is also on BIO's board and key committees. BIO and the Clinton regulators have danced cheek-to-cheek before. In 1993, BIO and FDA hatched a plan. With a single policy change, they would have reversed the regulatory agency's successful and progressive 15-year policy of treating biotech products the same as similar nonbiotech products. FDA and BIO planned to require the registration of new biotech foods, although there was no possible public health gain to warrant significant new costs to the government, industry, and consumers. To a public concerned about food safety, the mere requirement for registration implies inaccurately that there is something fundamentally different and worrisome about these foods-a message that should have been hard for the biotech industry to, er, swallow. Moreover, higher costs alone would undoubtedly discourage the use of the newest, most precise, state-of-the-art techniques to improve food production. The policy would deprive consumers of the fullest choice of new, more appetizing, and more healthful products. The July 18, 1994, BIO Bulletin claimed that industry was playing hardball with FDA by accepting premarket registration while rejecting premarket approval. But the latter is a straw man: Premarket approval has never been regarded as a serious option in any arena because its costs would make food biotechnology uneconomical and unable to compete in the marketplace. Thus was proposed another regulatory requirement that the biggies wouldn't mind terribly, but that would be a genuine burden to smaller, more vulnerable, less-experienced companies. Plant science, food, and nutrition experts persistently criticized the proposal, and following the November 1994 elections the new Republican Congress made pointed inquiries about FDA's intentions. Whether out of despair, embarrassment, or the recognition that the 104th Congress would be negatively disposed toward new, gratuitous regulation, BIO had a change of heart: On Jan. 5, 1995, it withdrew support from the FDA proposal. The administration followed suit: Six weeks later, FDA officially deleted the food-biotech registration policy from its regulatory agenda. Another threat to the biotechnology industry on which BIO's position seems incomprehensible is the Convention on Biological Diversity (H. Miller, The Scientist, June 12, 1995, page 13). After initial opposition, BIO flip-flopped and became a major booster of the treaty, which, while boasting laudable goals-including the conservation of habitats in developing nations and the availability of some resources for that purpose-is burdened with the likelihood of new international biosafety regulations for biotech. The kind of biosafety regulation being contemplated-for field trials of all new biotechnology-derived plants-would discourage innovative research and development, commit the United States to a kind of highest-common-denominator level of regulation, and deprive domestic regulatory agencies of discretion in setting regulatory policy. BIO is again on the wrong side of an injurious regulatory decision by U.S. policymakers. Industry biggies plotting with the Clintonites to crank up the level of regulation? It sounds about as plausible as the president having just a green salad for lunch. It's no wonder that the congressional committees with jurisdiction over EPA were nonplussed by these goings-on. The key to the conundrum is human nature: You can always count on people to do what is in their self-interest. Sometimes the self-interest of industry, and often that of government regulators, is inimical to what is best for the rest of us. The deeper one looks, the more diabolical and clever is industry's strategy. In unguarded moments (or post-retirement), company executives have described the strategy: Very high regulatory obstacles early on, to discourage small biotech companies; to keep even large, traditional seed companies (which don't have experience with big-time federal regulation) from actually doing the genetic manipulation and the field trials; and to mollify the biotech critics. Then, once the biggies have the field (literally and figuratively) to themselves, they want to lower the barriers, so the big companies can develop and test their products more cheaply. It seems the kind of multicompany industrial strategy that the antitrust laws were intended to discourage. Consider who benefits from EPA's regressive but BIO-boosted policies: EPA gets to create a costly new bureaucracy for regulating garden and crop plants; the big agricultural chemical/biotech companies thrive, while their smaller competitors struggle against artificially high market-entry barriers; and BIO continues to be the darling of its largest, most influential members. Red tape, long delays, and astronomical costs will delay field validations of improved varieties of plants for food and fiber, and of microorganisms for bioremediation. Ultimately, there will be fewer product choices for farmers, consumers, and anyone interested in toxic waste cleanup. Clinton administration policymakers are unlikely to find their way out of this regulatory miasma. The Congress can craft legislative remedies for these flawed policies-but will do so only if the abused constituencies and other stakeholders make their displeasure heard. How ironic that the Clinton administration, so often disparaged as anti-industry, should make such a hash of attempted "cooperation" with a major U.S. industry. But it should come as no surprise. The administration's minions may have learned some of the vocabulary of free markets and regulatory reform, but they neither understand nor have a commitment to them. And industry isn't always much better. Henry I. Miller is the Robert Wesson Fellow of Scientific Philosophy and Public Policy at the Hoover Institution and Consulting Professor at Stanford University's Institute for International Studies. (The Scientist, Vol:9, #19, pg.1 , October 2, 1995) (Copyright © The Scientist, Inc.)

BIO's 'Cooperation' With Regulators

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