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Pills, Power, and Policy
The Struggle for Drug Reform in Cold War America and Its Consequences
By Dominique A. Tobbell
UNIVERSITY OF CALIFORNIA PRESSCopyright © 2012 The Regents of the University of California
All rights reserved.
The Building of a Pharmaceutical Research Network
There have been many miracles in medicine during the last few decades, but when an historian of the 2000's comes to write the medical chronicle of the 1900's, he may, I submit, find that at least one major cause of these miracles was the inauguration of close, effective cooperation between science and industry, with pharmaceutical firms serving as a link between academic scientist, clinical investigator and the practicing physician. —FRANCIS BOYER, director and former chairman and president, Smith, Kline & French, 1968
Between 1930 and the early 1950s, the American pharmaceutical industry underwent a transformation. Due to changes in the research and regulatory environments, the industry went from being one dominated by small and medium-sized companies specializing in the bulk manufacture of fine chemicals or the wholesale manufacture of pharmaceuticals to one dominated by several large, fully integrated companies, with extensive research facilities, growing medical departments, and significant marketing capability. This transformation did not come about smoothly; it required the concerted efforts of industrial and academic researchers, corporate managers, and government officials. Moreover, the changes taking place in the pharmaceutical industry depended on the circulation of research knowledge between industry and academia, and of administrative knowledge between governmental and academic science administrators and corporate executives.
This chapter explores the circulation of pharmaceutical knowledge—research and administrative—throughout a network composed of people and institutions from the drug industry, academia, and the government, and shows how critical these networks—and the knowledge moving throughout them—were to the success and growth of individual firms and the industry at large in the decade after World War II. These very same networks would later form the basis of the American drug industry's resistance to the pharmaceutical reform movement of the 1960s and 1970s.
THE AMERICAN DRUG INDUSTRY IN THE POSTWAR DECADE
At the end of World War II, the American pharmaceutical industry consisted of two types of core companies. First, there were the manufacturers of fine chemicals, Merck and Pfizer the largest and most important among them. They bulk manufactured the chemical intermediates and the active pharmaceutical agents in drug production—the so-called fine chemicals—and sold them to the second type of core firm, the "old-line pharmaceutical companies." Included among this group were Abbott Laboratories, Parke-Davis & Co., Smith, Kline & French, Squibb, Upjohn, and Eli Lilly. These firms were integrated producers and wholesalers of pharmaceutical products, which purchased pharmaceutically active compounds from fine chemical manufacturers, packaged them as drugs, and sold them under their own trade names to physicians, pharmacists, and hospitals. Because of their emphasis on the marketing of drugs, the old-line pharmaceutical companies maintained small staffs of detail men who were responsible for selling the companies' drugs to pharmacists, physicians, and hospitals. In contrast, because they did not commercialize their own drug products, the fine chemical manufacturers tended to lack any significant marketing organization.
In the immediate postwar years, however, more and more of the old-line pharmaceutical firms began integrating backward into the production of their own fine chemicals, undermining the sales base of fine chemical manufacturers like Pfizer and Merck. At the same time, Pfizer and Merck were producing an increasing number of innovative pharmaceutical compounds but these were not as profitable as they could have been because the firms lacked the capability to effectively market those drugs themselves. Instead, when they developed new drugs, Pfizer and Merck still sold the active ingredients to other pharmaceutical companies, which packaged and marketed them under their own trade names. As a result, in the early 1950s both companies began to integrate forward into making their own finished products. Pfizer did so by building up its own marketing organization, whereas Merck merged with Sharp & Dohme, a pharmaceutical firm with a well-established sales and distribution system.
Research was, clearly, the foundation of innovation. During the interwar years, the leading American pharmaceutical companies had already made research part of their competitive strategy, establishing their own in-house research laboratories and forging collaborative relationships with academic biomedical, chemical, and clinical researchers. Through these collaborative efforts, several research-based drug firms had developed synthetic hormones and vitamins as new therapeutic agents; in 1935, a pharmacologist at the German company I.G. Farbenindustrie discovered a new anti-infective agent, sulfanilamide, while screening dyestuffs for antimicrobial activity. Following this discovery, industrial and academic researchers began routinely screening chemical and natural compounds for antimicrobial activity, which led to the isolation of hundreds of different sulfa drugs and antibiotic agents, including penicillin in 1940. The development of the sulfa drugs and penicillin launched what medical historians have termed a "therapeutic revolution." For the first time, physicians now had access to an array of drugs that could actually cure their patients of infectious diseases rather than simply relieving their symptoms, as older drugs had done.
By the early 1940s, in order to extend their research capacities, most of the core pharmaceutical firms in the United States had developed elaborate research networks with the biomedical community through the provision of grants-in-aid and fellowships to academic researchers, and the hiring of consultants from academic institutions who would advise firms on matters such as corporate research policy, the recruitment of researchers, and specific research projects. During World War II, these relationships intensified. When the Committee on Medical Research of the Office of Scientific Research and Development contracted with drug companies to develop penicillin, synthetic antimalarial drugs, steroids, and replacement blood products, the companies used their existing connections with academic researchers to meet the wartime demands. These wartime successes confirmed the value of corporate research to drug company executives and by the end of World War II, the leading pharmaceutical companies were expanding their research facilities and staff, increasing the amount spent each year on research, and looking for ways to capitalize on the fundamental biomedical research being carried out in academic laboratories.
The new focus on innovation had a profound effect on the organization and corporate strategy of drug firms after the war. The isolation by drug firms of hundreds of new antibiotic agents (only some of which were clinically useful) led to numerous drugs with very similar therapeutic effects being introduced to the market. Because each of these antibiotics did essentially the same thing, the firms marketing these different drugs could not compete on the basis of therapeutic effects. Instead, to distinguish their products from one another, firms competed for market share through intensive marketing efforts. As a result, those firms that lacked marketing organizations found it incredibly hard to compete with fully integrated firms. This factor led the fine chemical manufacturers, such as Merck and Pfizer, to integrate forward into pharmaceutical marketing in the early 1950s.
At the end of World War II, American drug companies were also dealing with a relatively new regulatory environment. In 1938, Congress had passed the Federal Food, Drug, and Cosmetic Act following the death of 107 people who had taken the sulfa drug Elixir Sulfanilamide. The Massengill Company, which began marketing the new drug in September 1937, failed to test the toxicity of the solvent—diethylene glycol—in which the drug's active ingredient was dissolved. The solvent turned out to be highly toxic. Despite the 107 deaths, the FDA did not have the authority, based on the Pure Food and Drug Act of 1906, to prosecute Massengill for putting a harmful drug on the market. Instead, all the FDA could sue the company for was mislabeling their drug as an elixir—a term used to describe an alcohol solution, which the diethylene glycol solution was not. The failure of the 1906 Act to adequately protect the public's health led Congress to pass the Federal Food, Drug, and Cosmetic Act, which for the first time included a safety provision for drugs. The act mandated that drug manufacturers submit a new drug application, containing documented evidence of their drug's safety, to the FDA. If the agency raised no objection to the application, the drug was considered approved for marketing.
The new regulations had organizational consequences for drug firms. Every new drug—including all its constituent chemicals—produced by the industry's research laboratories now had to be rigorously tested for toxicity. As a result, the medical departments of drug firms became increasingly important; the physicians who staffed and consulted with them were responsible for conducting and analyzing these safety tests. Thus, by the end of World War II, as the innovativeness of research-based drug companies grew, the medical departments of these companies—and their relationships to academic clinical investigators—became all the more critical.
The ability of drug firms to adapt to the changing research, business, and regulatory environments of the 1940s depended in no small part on their ability to call on the advice and experience of researchers and administrators in academia and government. Academic researchers were in the best position to identify and recognize the importance of new research knowledge, while science administrators—especially those with government experience—were skilled at integrating research knowledge with organizational strategy. Merck & Co. was particularly adept at forging relationships with academic researchers and government officials and using those relationships to help create organizational change at the company.
ADMINISTRATIVE KNOWLEDGE NETWORKS AT MERCK & CO.: MANAGING POSTWAR ORGANIZATIONAL CHANGE
By the end of World War II, Merck & Co. was the largest producer of vitamins in the United States, and the second largest worldwide behind the Swiss firm Hoffman–La Roche. Indeed, since the early 1930s, Merck had been at the forefront of research in the identification and synthesis of vitamins, culminating in the company's commercialization of vitamins B1, B2, B6, C, and K by the early 1940s, and vitamin B12 in 1949. Merck was also one of the most innovative firms in the antibiotics and steroid fields, introducing streptomycin to the market in 1946, and cortisone in 1948. In the decade after the war, Merck & Co. underwent significant organizational change as it expanded its research programs and developed new marketing capabilities. The company's ability to adapt to the changing business and regulatory environment, and to take advantage of the advances in pharmaceutical-related fields of research, was in large measure due to the knowledge networks it had developed with academic researchers and government officials in the previous decade.
Merck's innovations were the result of the company's growing commitment to research during the 1930s and early 1940s. In 1933, Merck's president, George W. Merck, had established the company's research organization, recruiting to it academic researchers from some of the country's leading chemistry and pharmacology departments. To head the research laboratory, Merck hired the Princeton chemist Randolph T. Major. Major then recruited Karl Folkers from Yale University and Max Tishler from Harvard. Both men—who became research directors at Merck in the early 1940s—brought to Merck links to some of the best chemists in the nation. Folkers, for example, brought the networks he'd developed during his graduate studies in the chemistry department at the University of Wisconsin and his postdoctoral work at Yale University, while Tishler brought his own networks from Harvard.
In addition to building its research networks, Merck & Co. had, since the war, developed an administrative network composed of science administrators. These men (and they were all men) had served in government or military agencies and held appointments at elite universities, in addition to serving either as consultants to drug firms or as company executives. Because of their diplomatic and bureaucratic skills and through their work with government agencies, science administrators mediated among academia, industry, and government agencies. As they moved among these different institutions, science administrators brought with them research and regulatory knowledge and administrative practices and skills.
The archetypal science administrator was Vannevar Bush. Bush, who served on Merck's board of directors from 1949 to 1962, received his Ph.D. in engineering from the Massachusetts Institute of Technology and Harvard University in 1916. He continued his academic career at MIT, serving as dean of engineering and vice-president of the university from 1932 to 1938. In 1939, Bush assumed the presidency of the Carnegie Institution of Washington, a position he held until 1955. During World War II, he chaired the National Defense Research Committee from 1940 to 1941 and went on to direct, from 1941 to 1947, the Office of Scientific Research and Development (OSRD), which coordinated and sponsored all military research during the war. After the war, the OSRD was dismantled and many of its responsibilities transferred to the newly created Research and Development Board of the Department of Defense, which Bush chaired for one year. In addition to his continuing government service, which included developing the nation's postwar science policy, creating the National Science Foundation, and presiding over the Carnegie Institution, Bush began a career in business, joining the board of American Telephone & Telegraph Co. in 1947, and of Merck & Co. in 1949. From 1957 to 1962, Bush served as chairman of Merck's board of directors.
Indeed, what distinguished Merck & Co. from the other leading pharmaceutical companies at the end of World War II—and which facilitated the creation of its administrative network—was the company's relationship to Vannevar Bush and the OSRD. In part, this sustained relationship grew out of the friendship that developed during the war among Bush, Merck's president, George W. Merck (who served as head of biological warfare in the War Department), and the Merck consultant Dr. Alfred Newton Richards. Like Bush, Richards—a pharmacologist and physiologist—crafted a successful career as a science administrator, moving back and forth among academia, government service, and industry. From 1939 to 1948, Richards was vice-president in charge of medical affairs at the University of Pennsylvania, and from 1947 to 1950 he served as president of the National Academy of Sciences. During the war, Bush appointed Richards to chair the OSRD's Committee on Medical Research (CMR), placing Richards in charge of all military biomedical research. In that position, Richards directed the CMR's projects including the development and mass production of penicillin, steroids, synthetic antimalarial drugs, and synthetic blood substitutes. Richards also served in various capacities within the Merck organization from 1931 through the early 1960s, including serving on the company's board of directors between 1948 and 1960.
A.N. Richards's adept management of the CMR and Merck & Co.'s involvement in the CMR's penicillin, steroid, and antimalarial projects left many researchers involved with the CMR and its projects with a very favorable opinion of the company. So much so that after the war, several individuals who had served in the OSRD found their way to Merck—as executives, directors, and consultants. John T. Connor, for example, who served as the OSRD's general counsel, joined Merck soon after the war. In his position at the OSRD, Connor had responsibility for working out contractual arrangements between the OSRD and its corporate and academic contractors, which included MIT, Harvard, the University of Chicago, Caltech, Westinghouse, and Standard Oil of New Jersey. In negotiating and executing these contracts, Connor became well acquainted with the scientists and business managers working at these institutions. During his tenure, Connor consulted regularly with Richards and worked on several occasions with George W. Merck. Through these interactions and his experience more generally in the OSRD, "it became clear to [Connor] ... that Merck had the outstanding research organization working on the [penicillin] problem ... and [he] came to have a great appreciation for the entire company."
Excerpted from Pills, Power, and Policy by Dominique A. Tobbell. Copyright © 2012 The Regents of the University of California. Excerpted by permission of UNIVERSITY OF CALIFORNIA PRESS.
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Table of ContentsForeword
Introduction: Pharmaceutical Politics, Then and Now
Part I: Forging Pharmaceutical Relations
1. Knowledgeable Relations: The Building of a Pharmaceutical Research Network
2. Workforce Relations: The Invention of the Pharmaceutical Postdoctoral Fellowship
3. Professional Relations: Crafting the Public Image of the Health Care Team
Part II: Allied against Reform
4. Cold War Alliances: Kefauver’s Bid for Pharmaceutical Reform
5. Expert Alliances: The Creation of the Drug Research Board
6. Generic Alliances and the Backlash against Regulatory Reform
What People are Saying About This
"Based on extensive research, Pills, Power, and Policy is intelligently written, and its points are illustrated with highly readable examples."Health Affairs
"Tobbell contributes . . . fine historical attention to the development of large pharmaceutical companies . . . with a longer story of lobbying and politics."Times Higher Education
"Pills, Power, and Policy is an important contribution to our understanding of the science and politics of the pharmaceutical industry."