Thatewy ©

DRAFT

3 May 1993

Private knowledge and public policy:
The rise of the American biotechnology industry

As the pages of Science and other professional
journals attest, in the 1990s it is difficult to find a
molecular biologist who does not have a financial stake in
marketing biotechnology. We here propose a study that
will explore the meaning of this professional reality for
the community of practicing molecular biologists. How have
corporate interests shaped their work? And how have public
policies and institutional constraints affected their
choices? Most importantly, what can this story tell us
about knowledge as property?

Our study of post~Asilomar molecular biology will
focus on the changing cultural and economic meaning of the
knowledge produced by this scientific field. Examining how
American science policy has shaped the shifting
relationships between molecular biologists and private
industry, we will place this very recent story in a larger
context. We will relate contemporary private science to
the history of biotechnology*in general,: and to the history
of academic-industrial relations. We hope to show how the

culture of molecular biology has been affected by the
increasing capitalization of the knowledge produced by the
field, and to thereby suggest some of the implications of a
more general quality of contemporary science, that is, its

role as intellectual property.

Background

While it is possible to interpret ancient beer-brewing
as the beginning of biotechnology, we date the beginning of
molecular biotech in 1971. Paul Berg at Stanford was
developing plans to implant DNA from Simian Virus 40 in the
bacterium e. coli. E. coli normally inhabits the human
digestive tract. Berg’s graduate student Janet Mertz
mentioned Berg’s plan to Robert Pollack, who was then
teaching a seminar on safety and ethics in working with
mammalian cell cultures, at Cold Spring Harbor Laboratory,
New York. Pollack began to wonder if the SV40 virus,
believed to be harmless to human beings, might become a
problem if introduced into the human digestive tract
through e. coli. At first, Berg dismissed Pollack’s
concerns. But when he consulted other scientists,
including Maxine Singer and David Baltimore,
he found that they too were critical of his plans. Berg
decided to bring up the question in a 1972 lecture at the
European Molecular Biology Organization, but the resulting
discussion did not clarify the problems. Berg decided not

to proceed with the experiment--partly because he thought
the virus would not be expressed in e.coli.?
Berg’s tentative plan and the open discussion it
provoked set off a worldwide debate. By November 1972, the

U.S. National Institutes of Health had established a am

Allergies and Infectious Disease had developed a policy for ts

the handling of virus samples. In January 1973, Berg or
vanlery 2-2

aS

The scientists involved, then, created the controversy over M/

biohazards committee, and the U.S. National Institute of pel

organized the first Asilomar Conference, held at the

Asilomar Conference Center, Pacific Grove, California. wl.

recombinant DNA. The debate focused on hazards that had
not yet been demonstrated, and on practices that had not
yet been widely used. The scientists involved were
expressing their fears--labeled by Nobelist James Watson as
"nysticism"--that they did not understand how viruses
worked, and they could not be sure that the new
combinations would not be disastrous.

The feared manipulation of DNA became a reality with
the development of a plasmid that would maintain its
replication functions even with inserted DNA in (November
1973)°. Meanwhile, the scientists continued their high-
profile, public debate. The "Berg Letter," published in
July 1974, asked scientists to defer further experiments
until the hazards could be evaluated. At the same time,
the biomedical research community organized an extensive

effort to promote genetic engineering research based on the
idea that "new evidence" showed that recombinant DNA was
not hazardous. Relaxation of some guidelines in the early
1980s provoked an increase in both corporate and NIH
funding for recombinant DNA research. And patent and tax
policies of both the Carter and the Reagan administrations
encouraged joint university-industry research, particularly
by permitting universities to patent the results of
research funded by the federal government. (Wright, 1993,
95).

At the same time, the commercial development of this
apparently dangerous new technology began to seem more
likely. Genentech, the first American firm to exploit
recombinant DNA technology, was founded in 1976. In 1980,
Genentech’s initial public offering set a Wall Street
record for the fastest price per share increase (from $35
to $89 in 20 minutes). Supported by U.S. tax laws and by
the availability of venture capital, other new
biotechnology firms rapidly followed Genentech’s example.
By the mid 1980s, many academic scientists were forming
their own companies, or agreeing to license their findings
to established biotech firms. The 1980 Supreme Court
ruling in Diamond v. Chakrabaty, that microorganisms could
be patented, facilitated this rush to develop the biotech
industry. In the following year, 80 new biotechnology
firms were created.

Just as scientists and entrepreneurs began trying to
make sense of the new molecular biotechnology, so too did
science policy analysts, political leaders and the public.
On 23 June 1976, in the midst of a lively public debate on
college campuses, in some municipalities and in some state
legislatures, the NIH issued guidelines for recombinant DNA
research. The NIH guidelines were grounded in four basic
assumptions about recombinant DNA research. First, some
experiments were so hazardous they should not be done at
all. Second, others could be undertaken if appropriate
safeguards were in place. Third, the level of containment
should match the estimated potential hazard of the work.
And fourth, the guidelines should be subject to regular
review and revision as changing scientific data permitted
new assessments of risk. The guidelines were not
"regulations," and in any case they applied only to
research funded by the NIH. This meant that a good deal of
recombinant DNA research could proceed unrestricted by
controls or limits in institutions that did not receive NIH
funding--most conspicuously, in the laboratories of private
industry. (Russell, 82-83)‘

The NIH appealed to the Pharmaceutical Manufacturer’s
Association for voluntary compliance just as the guidelines
were completed, but the response was unenthusiastic. A
spokesman for Upjohn said he feared that limits on
corporate recombinant DNA research would be "the first step

of another wave of bureaucratic intervention" into private

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industry. An Eli Lilly spokesman said the company had a
lot of experience with hazardous work, and while it would
consider the guidelines when appropriate, it would ignore
them if "we feel . . we are capable of guaranteeing the
safety of the exercise in question." (Russell, 83-84)

The first efforts to regulate the new techniques,
then, were of mixed efficacy. The 1976 guidelines did
create an oversight structure--forms for grant applicants,
a system of reporting and assessing, and soon. But their
impact on recombinant DNA research was inherently limited,
most conspicuously by the fact that industrial cooperation
was voluntary. Indeed, industrial compliance continues to
be voluntary and informal. The Office of Technology
Assessment has stressed that private firms would find it
much more difficult to fight private legal action should
any accident occur, if it could be shown that the corporate
laboratory did not follow the NIH guidelines. In effect,
the guidelines are the standard against which negligence
can be measured. But there are no penalties per se for
industrial violations of the guidelines, and the U.S.
system, in a laissez-faire manner, encourages the use of

new biotechnologies by private companies.

The boom years
In the 1980s, in an expanding economy and with few

legislative constraints, American biotechnology took off.
Genentech, founded in 1976 by venture capitalist Robert
Swanson and biochemist Herbert Boyer, released the first
recombinant DNA drug, human insulin, in 1982. Three years
later Genentech introduced a synthetic human growth hormone
for children with growth hormone inadequacy. In 1986, the
Food and Drug Administration approved the use of the first
human hepatitis vaccine made with recombinant DNA methods.
Meanwhile many companies began field testing genetically
altered bacteria for various agricultural uses; and the
first human gene therapy trials were approved in September
1990.°

Much of this growth was driven by changes in patent
protection standards that made it possible for "products of
nature" to be patended. In the Diamond v. Chakrabarty case
in 1980, the Supreme Court ruled that a bacterium
genetically engineered to break down crude oil was a
"manufacture" and could therefore be patented. Before this
case, the U.S. Patent and Trademark Office had maintained
that microorganisms could not be patented. But the
decision in Diamond v. Chakrabarty drew on existing
legislation, particularly the Plant Patent Act of 1930 and
the Plant Variety Protection Act of 1970, to rule that
living organisms could be intellectual property.

In the 1980s, Congress reinforced the Supreme Court’s
ruling by amending patent law to permit small businesses

and nonprofit organizations to keep the rights to
inventions developed with federal funding, and to permit
federal grantees to transfer their patent rights to private
firms. While providing the biotechnology industry with an
economic boost, these new patent laws also led to much
litigation over infringement.

In 1988, the first animal patent was granted to
Harvard University for mouse engineered to be exceptionally
susceptible to cancer. This transgenic mouse was the focus
of a public controversy. Researchers in both academia and
industry defended the patent-ruling, arguing that such
organisms promised unique medical and agricultural benefits
and deserved patent protection. But opponents of animal
patenting maintained that it would hurt small farmers,
violate a moral obligation to preserve the integrity of
species, and lead to decreased scientific communication as
researchers tried to protect their investments. Patenting
controversies have continued to play a role in
biotechnology policy and the public discourse, more
recently with the attempt by the National Institutes of
Health to patent fragments of genes before the genes had
been isolated or characterized.

While the biotechnology industry was exploding in the
mid 1980s, several molecular biologists were proposing to
create a public database that would serve a wide
constituency. Their goal was a complete map of the human

genome, and they began their project with the expectation
that it would be of little interest to private industry.
The map would help researchers looking for genes, its
promoters said, and could lead to more and better genetic
therapies. The human genome project formally began in
1987, and venture capitalists were not interested. But by
1993, they were key players, matching the federal
government’s $170 million budget for genomics research with
about $90 million in private funds. One journalist in |
Science observed that what was "heresy" when HGP began--
that the genome should be mapped by private industry-~had
become "dogma. "*

While the relationships between HGP researchers and
private industry are now the focus of some public
controversy, they are not only legal but have been
encouraged by federal science policy. The American
regulatory and court system minimized limitations on
genetic engineering, promoted liberal patent rights for the
products of biotechnology, permitted academic scientists to
license the products of research conducted with public
funds and approved gene therapy trials despite significant
uncertainties about the effectiveness of the therapies.
While the industry itself has complained a good deal about
overregulation by the Food and Drug Administration, the
Environmental Protection Agency and the U.S. Department of
Agriculture, American regulation has been relatively

tolerant when compared to that of other countries. In
economic terms, these policies paid off: By the end of
1992, more than 1,200 biotechnology companies employed
79,000 people, spent an annual $5 billion on research and
realized almost $6 billion in sales. More than 600 biotech
diagnostic products were on the market, as were 20
biotechnology therapeutics. More than 150 biotech
therapeutics were in clinical testing, and an estimated
2,400 product license applications were pending at the
FDA’s Center for Biologics Evaluation and Review.” The
biotech industry, despite a dismal 1992 that some analysts
have blamed on patent litigation, is commonly seen as one
of the most promising growth sector’s in the U.S. economy.
Many of those who are being and will be absorbed into this

growing industry are trained molecular biologists.

The molecular community

While there have been many studies of the
biotechnology industry, and of biotechnology policy, the
impact of these events on the culture of molecular biology
has received little attention. In a 1985 paper,
sociologists Markle and Robin attempted a predictive
assessment of this impact. "It seems to us that the
demands of biotechnology will alter basic science with a
subtlety that will be difficult to perceive." They
suggested that one manifestation of this alteration might

be found in the language used to describe biotechnology and

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molecular biology, the invocation of "basic research" in
corporate promotional materials, for example. The new
biotech could also transform academic goals, so that
"publish or perish" will be replaced by "profit or
perish."* They pointed out that an OTA survey in 1984
found that 85 percent of university researchers polled
believed that "university/industry relations have had no
effect on the way research is done” or on the "exchange of
information" in science. And 50 percent believed that the
quality of education had been enhanced by these
relationships.*® “Even if this optimistic,
probiotechnology scenario were true," they noted,
"molecular biology would advance in noncommercial areas
only if the basic science agenda were not .... altered by
biotechnology" a possibility they described as
"remote.'*° Conversely, critics of the new biotechnology
have predicted that it will lead to the subordination of
research to commerce. (Markle and Robin; 76).

For young molecular biologists, the corporate world
has become an attractive career option, particularly in the
form of a period of post-doctoral research at one of the
major biotechnology firms. A recent survey by the
Industrial Biotechnology Association found that 90 percent
of biotech firms offer post-doctoral training. Genentech’s
program is large and highly competitive--the company turns

away nine candidates for every one it accepts--and those at

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Eli Lilly and Pfizer are also widely respected.

Thus the rise of the biotech industry has already
begun to shape career paths, priorities and expectations
among molecular biologists. In 1993, it now seems possible
to focus a serious study on this question, not in

quantitative but in qualitative terms.

Research plan

We seek funding for a post-doctoral researcher for
three years of research and writing. The post-doc will
conduct 40 oral history interviews with selected scientists
(see list, appendix A). [Betsy: We need to start keeping a
file on scientists who could be interviewed. We have a
list from the NIH application, but we should be expanding
it] The post-doc will also plan, organize and conduct five
round-table discussions with leading individuals in the
biotech industry (see participant list, appendix B). Both
the round-table discussions and the oral histories will be
transcribed and made available to other researchers at the
Beckman Center archives, as a part of the center’s oral
history collection. And we will sponsor two academic
conferences to keep in touch with the community of students
of science who are working on related and relevant topics.

We seek funding for salary and benefits for this post-
doctoral researcher for three years; travel and expenses;

funding for conducting and transcribing the oral histories

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and round tables; and support for the conferences. The
center will provide an office, computer and clerical
support to the post-doctoral researcher.

This project will be coordinated with the Center’s
archival documentation study of the Human Genome Project.
We see these two projects as complementary, and hope that
the insights of the post-doc will help inform the
archivist’s work, and that the archivist’s findings will
help the post-—-doc.

We are clearly choosing a topic with manifest
difficulties of documentation and access, but wish to argue
that difficulty of access should not preclude historical
attention. The documentation of sixteenth century popular
culture in Italy is no less problematic than the
documentation of contemporary molecular biology and the
biotech industry--in volume, at least, the contemporary
records are far superior. And while there may be some
details to which we cannot gain access by the means we
propose (use of public records, interviews, use of whatever
corporate records we can acquire) we want to suggest that
it is still worth asking the questions and trying to get
the answers. This is particularly true given the policy
and economic implications of the events we are exploring.

The book resulting from this study, tentatively

entitled Private science and public policy, will explore

the rise of the biotech industry and its impact on the

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mores and culture of molecular biology. We are
particularly interested in how scientists have interpreted
the transformation of their field. The book will explore
several related questions. A rough outline is as follows:

1. Asilomar I and II. Why did scientists such as Berg
react to rDNA with so much anxiety? What was the real
threat posed by recombinant techniques? How did the
culture of Asilomar set the stage for the later
transformation of molecular biology?

2. The invention of molecular biotechnology. The
venture capitalists were intrigued by the pageantry of
Asilomar~-it may have drawn them to molecular biologists.

3. New relationships: How was the early scientific-
corporate axis negotiated? How did the agreements work?
What did the scientists interpret as their priorities?
What demands did the entrepreneurs make?

4. The boom years: 1980-1985. The stage was set for
the rise of highly capitalized biotech industry. A court
ruling legitimized the plans, and Genentech and Cetus both
set Wall Street records. Did this public financial frenzy
influence working scientists? Did it shape how they
thought about their work? How did its impact appear?

5. Inventing HGP: originally intended as strictly an
academic endeavor, HGP quickly became a corporate arena--
issues of proprietary information and possible gene

therapies, patenting DNA--for scientists, a dizzying

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change, directed research gone mad? Are these agendas
simply impossible? E.G. Map the chromosome as per NIH,
patent to please the corporate sponsor, work freely and
share data but also conceal, protect. The HGP
institutionalizes these tensions over the proper
distribution of knowledge.

6. Conflict of interest: Reconstructing community
norms. In the late 1980s and early 1990s, scientists began
to rethink ideas about conflict of interest and full
disclosure. What assumptions guided their debates? How
does the conflict of interest debate--which led to James
Watson’s resignation as head of NCHGR--shed light on the
changing culture of molecular biology? Is there a pattern
of noisy public debate followed rapidly by acceptance
within the scientific community? Are there resisters in
the community?

7. Building science policy: How can the economic
interests of a science best be served? What does the
applied v. basic debate mean in contemporary science? What
uses does it serve? What does this history tell us about
contemporary science and scientists?

8. Conclusions.

Our goal is to explore the role of American science
policy in the transformation of molecular biology. Through
interviews, public records and participant observation, we

will reconstruct the intellectual, technological and

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cultural metamorphosis of the field of molecular biology,
1972-1992. Our subject will be the scientists in context,
as economic and intellectual actors, dealing with the
rapidly changing social and intellectual mores of their
field. How has the capital value of the knowledge produced
affected scientific practice? Scientific communication?
How has it shaped the culture of professionalism in the
field?

We will draw on the existing literature on
biotechnology policy but focus our attention on the culture
of molecular biologists rather the culture of policy
analysts. We want to see the shifting meaning of this
science from the perspective of those creating the
knowledge.

That many molecular biologists feel threatened by the
shifting economic meaning of their work is suggested by a
recent program of the American Society of Cell Biology
proposing to use history to prove the value of basic
research. ASCB president Susan A. Gerbi is soliciting
"scholarly historical accounts of the process of discovery"
in the hopes that such accounts will demonstrate that
"federal investment in fundamental, untargeted biological
research will have future pay-offs in unforeseen
applications that will better the health of our citizens
and the economy of our country."™? But in practice much

of the research identified by practitioners as "basic" was

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focused on solving problems with economic and medical
implications. The Polymerase Chain Reaction, PCR, for
example, cited in the ASCB literature as a form of basic
research, was developed by a scientist employed in private
industry (Kary Mullis, then at Cetus) and intended to
facilitate the commercialization of gene therapy.?? The
development of tetracycline was part of a focused corporate
effort to discover better antibiotics. And the "basic
research on viruses that infect chickens" focused on a
widespread agricultural problem with economic implications.

While our attention will focus on the last twenty
years, we want to place this very recent history in
historical context, to show that it is a manifestation of a
long, slow change in the cultural meaning of science, and
to suggest that it has important implications for the

public management of science.

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End notes

1. See, for example, Science 31 July 1992 "Conflicts of
Interest" report, 616-626.

2. See Allan M. Russell The Biotechnology Revolution 40-43;

also C. Grobstein Double Image of the Double Helix: The
Recombinant DNA Debate (W.H. Freeman: San Francisco: 1979);
June Goodfield Playing God (Hutchinson: London, 1977);
Nicholas Wade The Ultimate Experiment: Man-Made Evolution
(Walker and Company, New York, 1977).

3. S.N. Cohen et al "Construction of Biologically Functional
Bacterial plasmids in vitro" Proceedings of the National
Academy of Sciences Vol. 70, No. 11, November 1973 3240-3244.

4. Russell, 64-65.

5. Steven A. Roseberg received permission from the
Recombinant DNA Advisory Committee advising the NIH to use
gene altered white cells in the treatment of melanoma. See
"Human Gene Therapy Wins Crucial Victory" Science News 9no
date?0 als, Wills, 230-231.

6. See Christopher Anderson "Genome Project Goes Commercial"
Science v. 259, 15 January 1993, 300-302.

7. See Ernst and Young "Biotech ‘'93: Accelerating
Commercialization" [BETSY: CAN STEPHANI ORDER THIS REPORT FOR
US? }

8. Gerald E. Markle and Stanley S. Robin "Biotechnology and

the Social Reconstruction of Molecular Biotechnology"

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Science, Technology and Human Values Winter 1985 10:1, 70-79.
9. Office of Technology Assessment Commercial Biotechnology:
An International Analysis (Washington D.C., U.S. Government
Printing Office, 1984).

10. Markle and Robin, 76.

11. Jean Wallace "More biotech PhD’s are opting to take
postdocs in industry” The Scientist 12 October 1992.

12. Susan A. Gerbi, President, ASCB, to Rosemary Stevens, 27
January 1993, describing the professional group’s interest in
commissioning some short historical accounts of major
discoveries with unexpected practical applications.

13. Get a citation to Mullis paper? What is the date?

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