NIH Flirts With Applied Research

New industry links profut researchers and their work, but critics fear ethics conflicts and damage to NIH's basic science mission. WASHINGTON--In 1983, Ira Pastan was chief of the molecular biology lab within the division of cancer biology and diagnosis at the National Cancer Institute. Like most of NIH's 3,100 intramural scientists, he had spent his career conducting basic research - in his case, probing gene regulation and hormone activity - in the hope of understanding how organisms function on the molecular level. That same year, Margaret Heckler, then Secretary of Health and Human Services, visited the Bethesda campus that Pastan had called home for the past quarter-century and declared NIH to be "an island of objective and pristine scientific research, untainted by the influences of commercialization." Today, a little more than five years later, Pastan, though still at NIH, is putting the finishing touches on an agreement with Merck Sharp & Dohme for a multimillion-dollar collaboration to develop a new cancer therapy. He's also testing a potential anticancer drug for Hoffman-LaRoche. Has NIH created an experimental "intrapreneurial" division? No, Pastan is still chief of the molecular biology lab, but he's also one of a growing number of intramural scientists who have embraced new government-sanctioned links with industry. This year companies will spend nearly $8 million as part of 48 separate agreements with NIH scientists to conduct collaborative research on the Bethesda campus. Last year 124 NIH scientists, including Pastan, collected $700,000 as consultants to industry, and many more gave corporate-sponsored lectures, earning an estimated $1.5 million. NIH scientist Michael Zasloff was pretty sure that he'd found a winner - a powerful healing substance in the skin of an African frog. His goal was straightforward: To turn his discovery into a new antibiotic that would fight disease. His question: How best to make the dream a reality? While some scientists in today's NIH are trying to work within the system, counting on new legislation to make the institutes more hospitable to applied research - and yes, even to entrepreneurship - Zasloff lacked sufficient faith. Despite being chief of the human genetics branch at the National Institute of Child Health and Human Development and receiving oodles of national publicity for his 1987 discovery, he was sure his dream couldn't be realized on the Bethesda campus. "You've got to remember the inertia within government," he says, "and the fact that they can only go so far in terms of industrial collaboration before they get into questions of conflict of interest." So Zasloff, 43, took charge of his life - and of his discovery, the bacteria-fighting protein that he had named magainin (the word means "shield" in Hebrew). Last April he left NIH to become an endowed professor of pediatrics and genetics at the University of Pennsylvania and its Children's Hospital. That departure from government allowed him to team up with a New Jersey-based venture capital firm that has launched a dozen start-ups in the health care field. Zasloff is now chairman of the scientific advisory board of a new company called Magainin Sciences Inc., which has set itself the self-admittedly outrageous goal of putting a new family of pharmaceutical agents on drugstore shelves within five years. "NIH could never move fast enough to respond to something like this, where the time element is critical," says Zasloff about why he headed to Philadelphia after 13 years at NIH. "The only way is through industrial collaboration." Zasloff agrees that the government is making major strides in fostering such cooperative efforts (see story on page 1). And he is pleased that former colleagues such as Ira Pastan can begin to realize their goal of helping patients without leaving their government jobs. But Zasloff says his case is different; he's talking big business. "NIH promised to expand my lab by one or two people after we discovered magainin, but that's not enough," he notes. "This type of work requires an administrative structure to produce, test, and market the drug, at a cost of many millions of dollars. That's hardly possible for an agency that has a hiring freeze and that every year has to fight off cuts in its budget." But money isn't the only obstacle. Current NIH guidelines would have prevented Zasloff from getting paid to consult for any company with which he might want to have a cooperative research agreement. That means, for example, that he could not have benefited financially from any collaboration with Magainin Sciences. "The lack of financial incentives certainly makes [collaboration] less attractive," he admits. "Although you can augment your salary by consulting for industry, the ideal situation would be to consult with the company that you wish to collaborate with. But that would break the rules." NIH scientists also face major hurdles if they wish to obtain a government-owned patent and license it to a company. "The advice is there," recalls Zasloff of his experience last year with his invention, "but it's in another building. And the burden is heavily on the scientist, most of whom don't know from Adam about patents. With a company, if I say something is worth pursuing, there are people ready to respond immediately." Despite NIH's faults, Zasloff says he doesn't want to appear too critical. "Remember, they're still pretty new at this game. I think it's wonderful what NIH has been able to do to encourage collaboration with industry. I just wish they could have done it sooner." --Jeffrey Mervis To some, those numbers are good news. Surely they've fattened the wallets of underpaid NIH researchers. And it's exactly what the Reagan administration ordered to spur the country's economic well-being. But there are plenty of scientists who worry that the new pragmatism will unleash potential conflicts of interest and compromise NIH's commitment to top-quality basic science. That possibility never entered Ronald Reagan's mind when, in October 1986, he signed the Federal Technology Transfer Act. The 1986 law encourages federal scientists to do joint research with private companies by creating two new incentives for collaboration. The first encourages infusions of company money into NIH research, either directly to support additional staff and equipment or indirectly through in-house spending that complements what is going on at NIH. Such a relationship, like Pastan's arrangement with Merck, is known as a CRADA (Cooperative Research And Development Agreement). The second Reagan-era incentive, spelled out in the spring of 1987 in an executive order, offers individual NIH researchers a significant share of the royalties from any government licensing of patents granted from discoveries in their labs. The intent of the law is to increase the likelihood that some of those scientific discoveries will wind up in homes and doctors' offices around the world. The push for applications has come from scientists as well as from politicians. As Pastan puts it, "When you have a product that might be developable, the government has no way of doing it. You need a company to take what you've done and test it, develop it, and, if it pans out, ultimately make and market it." Pastan doesn't argue that the world is necessarily better off because of his new interest in applied science. But he has his reasons for forging closer ties with industry. For one thing, he's trained as a physician. And he confides that a friend's death from cancer several years ago forced him to reexamine his career path. "I decided that what I had learned could be applied more directly to help people," he says simply. For Pastan to succeed, however, he must negotiate a maze of conflicting federal laws and regulations. Existing statutes meant to protect federal employees from potential or real conflicts of interest often clash with the new emphasis on industrial collaboration. "The U.S. code is geared to separating public and private activities," says Darrel Grinstead, associate general counsel within HHS, "while the Technology Transfer Act is trying to merge those activities for the benefit of the country." Grinstead highlighted the forces that are pulling government scientists in opposite directions during a talk at a December retreat for NIH administrators. "The goal of our policies," he said, "is to keep everybody out of trouble and maintain the integrity of the institution at the same time we eliminate barriers to the free flow of information and unnecessary restrictions on outside remuneration." It's a formidable task. NIH has already made one revision to a set of guidelines first published in August 1985 that spell out how scientists can legally engage in what is known as "outside work." And officials have created a welter of committees to review the growing number of requests for collaborative research and to resolve potential problems before they make headlines. Adverse publicity, in fact, is a major concern for NIH officials trying to comply with federal pressures to transfer technology without giving away the company store. Morale within the institutes was shaken by a series of well-publicized hearings in Congress last year that examined cases of alleged misconduct and potential conflicts of interest by scientists. Even though the only cases discussed involved university researchers who receive federal funding, it was clear that Congress also had NIH scientists in mind. As NIH director James Wyngaarden told participants at the December retreat, "We are hoping to develop guidelines that will ensure that we will not have to go before Mr. Dingell again [Rep. John Dingell (D-Mich.) is chairman of the House Commerce and Energy Committee and its investigations subpanel]. But we also want to make clear what the rules are for effective interaction with industry, as well as the limits to that interaction." Those rules began to change in 1980, when NIH scientists were first granted permission to receive money from industry for delivering open lectures on published work. That same year Congress passed a law that officially embraces industrial collaboration, and another law that allows private companies to receive exclusive licenses on patents held by the federal government. But the floodgates didn't open, because there was no good mechanism to carry out such collaboration and few rules to govern it. Even five years later, NIH would go no further than to make it possible for intramural scientists to get paid to consult with industry. To be sure, the scope of those consultations was - and still is - sharply limited: The information must be already in the public domain; the consultation must take place on personal time; and no scientist can receive more than $12,500 annually from one company, nor a total of more than $25,000 per year. Still, the new rules sent a strong signal to industry that NIH was open for business - a signal that became a beacon once Reagan signed the 1986 Technology Transfer Act into law. By no means everyone believes such a message is the right one for an agency with a well-deserved reputation for quality. "NIH's special status puts a special obligation on officials and staff to behave honorably and to give higher priority to their institutional obligations than to their individual monetary needs," argues John Eberhart, senior adviser within the intramural research program and a 40-year NIH veteran. "If they find such an obligation too oppressive, they should leave." Some scientists have done exactly that. The 1985 guidelines were written in part to stem a flow of talent from NIH caused by salaries that are one-half to one-third lower than in the corporate sector (See The Scientist, November 14, 1988, page 1). Pastan admits that the additional income from consulting "makes an enormous difference to me." But the $25,000 cap is an arbitrary one, NIH officials acknowledge: A lower limit would not ease the financial pressures felt by top scientists, it is thought, and a higher one would make them vulnerable to charges of selling themselves to the highest bidder. And nobody believes that the cap is the whole answer. A hefty pay hike would be a better solution, many administrators believe. "Ideally, NIH would be better off if we could prohibit consultants and pay people more," says Philip Chen, NIH deputy director of the intramural program, who is responsible for overseeing the institutes' plunge into commerce. "I think that most people would rather be paid a good salary and not have to worry about consulting." Another incentive for scientists to stay at NIH is to get them industry money. The 1986 law, allowing industry to pay scientists directly, attempts to substitute the carrot of professional advancement for personal enrichment. Notes Alan Oliff, head of Merck's cancer research group and a former NIH scientist, ~"A CRADA is meant to explore the possibility of developing a product. It's a way for a company to do joint research with a group of NIH scientists already working on the problem. With a consulting arrangement, we want someone's advice on what we are doing in-house." But that two-pronged approach to keeping NIH researchers happy has created its own set of problems for scientists. "You're constantly being forced to choose," says Jeffrey Schlom, a National Cancer Institute researcher whose work has generated four patents and led to extensive contacts with industry. "The choice is whether you want to bring in money for NIH [through a CRADA], or whether you want to send your kids to college [through consulting fees]. I don't think that's fair." Collaboration is not a new idea, of course. Industrial links to university scientists go back decades. But the government is different, and NIH scientists reaching out to industry soon learn that they must surmount a new set of hurdles. One obstacle is the need to comply with the government's wish to treat everybody equally. That approach can turn off a company which wants an exclusive license to the fruits of the work that has been patented. "Once I shifted my research to cancer treatment," recalls Pastan, "I starting having more contacts with industry. And I learned very quickly that a company isn't very interested in what you've done if it's going to have to share the results with whoever is interested." A second major issue is the need to maintain a dual allegiance to one's employers. Work involving a CRADA must be done on government time because its purpose is to advance work that the federal employee is already being paid to do. By contrast, consultations must be done on personal time because they do not relate directly to what's happening in the lab. That logic allows CRADA scientists to share with the collaborating company unpublished work and trade secrets while it requires consultants to talk only about what's already known. NIH's Chen knows that there will be some bumps and scrapes along the path to an effective and trouble-free collaboration with industry. He's even prepared a list of brainteasers. For example, suppose scientist X has a CRADA with company A at the same time he or she works with scientist Y, who consults for company B. Is that a conflict of interest? Or what about the scientist/inventor who is asked to help a company obtain an exclusive license for a government-owned patent on an invention? Is that part of the scientist's official duties, or a separate activity for which the company should pay a fee to the government? Such nagging problems have not dampened the initial enthusiasm of most participants. "The CRADA is a superb instrument for achieving collaboration with industry," believes James Barrett, president of Genetic Therapy Inc., a new biotech firm based on the work of NIH researcher W. French Anderson (see The Scientist, February 20, 1989, page 1). But many industrial scientists warn that the true test won't come until companies try to act on those collaborations that have borne fruit. "Our agreement is renewed yearly, and it's based on our commitment to put forth our best effort," says Oliff. "If the work shows promise, we'll move ahead as quickly as we can. But if a CRADA can't reduce the hassle of dealing with the government, then we may have to do it on our own."

NIH Flirts With Applied Research

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