November 29, 2004,
West Point, Pa. Politicians of yore promised voters "a chicken in every pot." Today's pols pledge "cheap drugs in every medicine chest." This, oddly enough, has become a largely bipartisan prescription. Democrats and Republicans alike propose reimportation of Canadian pharmaceuticals, faster approval of generic drugs, and other policies designed to reduce medication prices.
The mounting financial and legal woes at Merck only will fuel calls to "get the drug companies." CEO Ray Gilmartin's November 18 Capitol Hill testimony on what Merck knew about Vioxx and when has removed the public's focus from this drug giant's ongoing quest for cures. Merck now faces a prescription-strength headache, thanks to a stock price that has sagged 40 percent and both litigators and regulators who are circling overhead.
Nevertheless, before Congress reconvenes and President Bush begins his second term, leaders from Capitol Hill and the White House should arrange to visit Merck's research facility in this lovely Keystone State hamlet. Set amid rolling hills, scenic mansions, and horse-filled pastures 30 miles from Philadelphia, this 415-acre campus is home to some 10,000 scientists and support personnel, all dedicated to preventing, relieving, and curing disease.
Before seeing room upon room of well-scrubbed laboratories filled with cutting-edge scientific gear and enthusiastic, highly skilled employees, it is easy to wonder how some little capsule the size of a pencil eraser could cost $2.67 each, as does Merck's Crixivan, a life-saving anti-AIDS drug. Who do these people think they are, charging so much for that?
Dr. Michael Bogusky helps explain why. Standing in a white lab coat beside a mind-numbingly complex poster of the HIV virus and its deadly components, he says, "It's a high-risk business and many things fail. But we also learn from the failures, and that has an impact all around the world."
Time and again, Bogusky and his three-man team pour mysterious fluids into test tubes, slide them into something that resembles a microbrewer's vat, and then activate a 600-megahertz super conducting electromagnet. It is so strong that the structure that houses it was constructed from high-strength, non-magnetic aluminum, to prevent the damage that would befall a typical room with steel beams and fixtures. This $900,000 apparatus helps these scientists analyze novel molecules with computers, mathematical models, and methods far beyond a mere journalist's comprehension. All told, Bogusky works in a $3 million lab, featuring $2.5 million in instruments and $500,000 in special construction.
Bogusky's team does this every day. And nearly all of what they produce is useless. Last year, of the 300 to 400 molecules tested in this one lab, only three progressed towards clinical trials, with no guarantee of commercialization. Asked how many compounds on which he worked reached consumers during his 15 years with Merck, Bogusky listed three: Aggrastat (an anti-coagulant), and Crixivan and Stocrin, both AIDS drugs. Too bad Merck cannot sell such Herculean patience in pill form.
This (rare) hit and (frequent) miss atmosphere prevails in Dr. Graham Smith's lab. It is filled with large, brown glass bottles. One is marked "HPLC phosphate buffer." A cleaned beaker air-dries on a wooden dowel above a sink.
The bearded Smith stands in shirtsleeves and a Turkish kilim belt in the middle of his $4 million lab. He points to an LCMS Mass Spectrometer that smashes molecules from test compounds and evaluates them for healing properties.
"Of the 1,200 molecules tested here last year," Smith says, "eight went on to the next step. And not all of those will go on to become drugs." That means that Smith and his team of analytic chemists fail steadily, on average, for six-and-a-half weeks before discovering something of possible medical value. Another 32 days usually pass before they do so again.
Merck is in good company when it comes to throwing most of its darts straight into the floor. According to Dr. John T. Kelly of PhRMA, the drug-industry association, "Only five in 5,000 compounds that enter pre-clinical testing make it to human testing. And only one of these five tested in people is approved for sale."
Citing Tufts University data, Kelly adds: "On average, it costs a company $802 million to get one new medicine from the laboratory to U.S. patients." This process normally takes 10 to 15 years."
Drug researchers are not just patient. They are amazingly tidy, too. And if cleanliness is next to godliness, this place could be the Vatican.
"It's not like at home where you have a spot on your glass, and that's OK," says Joye Bramble, a biochemical engineer and 14-year Merck veteran. "Here, that's not OK."
Building 17, Merck's two-year-old, $180 million Biologics Pilot Plant located on West Point's Discovery Way, has glowing floors, gleaming steel fixtures, and smudgeless glass as if the place were scrubbed hourly by hyperactive Swiss maids.
Giant pipes and tubes located in the building's attic, nicknamed The Penthouse, pump steam, chilled water, and purified air through laboratories below. In some rooms, the atmosphere is refreshed 35 times each hour. In others for example, where ampules are filled with vaccines for clinical trials the air is replaced 100 times hourly, or once every 36 seconds. Small ceiling nozzles force air down, rather than across the room, so that random particles will be driven to the floor, not allowed to drift into any medication. Standing in the hallway, one can feel a steady breeze blow through cracks in the doors and across one's skin. "That's there to protect the product from you," Bramble says.
"We can grow cell cultures, bacterial cultures, mammalian cells, live viruses," Bramble adds. "There are only three or four buildings in the world like this." She points through the pristine double-pane glass of one particular bioreactor suite. "This room alone is on the order of $10 million" in value. "Universities don't have this. The National Institutes of Health doesn't have this."
A sign in one room reads, "Caution: Consider all systems and equipment energized." Nearby, big steel tanks with scores of shiny pipes flowing in and out of them ferment a confidential concoction.
"We're doing work on a new, important product that women will love," Bramble teases. Nearby simmers a batch of a vaccine in development since 1986, now in Phase II clinical trials.
Dr. Eliav Barr, Merck's senior director for clinical research, is a cardiologist by training. He saw patients until fairly recently, but now works on that same vaccine. It is designed to prevent the Human Papillomavirus. HPV occurs with disturbing frequency. It afflicts 50 to 75 percent of sexually active adults at some point in their lives. HPV causes genital warts, as well as cancers of the cervix, vulva, and anus. So far, tests have found the vaccine 100 percent effective against HPV-16, one of the virus' particularly menacing strains. Thanks to similar findings, the November 2002 New England Journal of Medicine predicted "the beginning of the end of cervical cancer," a disease that afflicts 10,000 American women annually and kills 4,000 of them. Worldwide, cervical cancer causes 250,000 deaths each year.
None of this comes cheap, either.
"Several hundred people are working on this exclusively around the world for Merck," Barr says. Consequently, the company has built clinics in Iceland, Peru, and Thailand. "Merck put equipment in, and we'll leave it in," Barr says. This will provide a steady stream of research data for obstetricians and gynecologists.
Merck also is responsible for building a $100 million structure specifically to manufacture the HPV vaccine. Indeed, the samples the Food and Drug Administration tests for safety and effectiveness must roll off the same production line that would generate actual doses for patients.
"All the performance qualifications have to be done on specific equipment," Barr explains. If the drug is approved, its price will reflect, in part, this huge up-front investment. But if the HPV vaccine fails to secure FDA approval, Merck will be the proud owner of a gleaming, $100 million white elephant. This sunk cost will have to be spread across the rest of Merck's product line. Alternatively, this money could be subtracted from shareholder dividends, employee salaries, or new R&D. These are lame long-term strategies.
Merck already pays huge bills, even before facing a potentially calamitous post-Vioxx situation at the hands of brokers who are unloading its stock, federal prosecutors who may levy huge fines, and tort lawyers who are salivating at payouts that could rival the huge asbestos and breast-implant jackpots. Site Facilities Director Greg Landis still calls this enormous establishment "a self-contained city, in all respects." He estimates its annual electricity expenses alone at $50 million.
That, and more, adds up. This is why new drugs cost what they do, and why price-controlled Canadian drugs, industry-led product discounts, and Rep. Henry Waxman's (D., Calif.) comment that "frankly, it doesn't make sense to me" that innovation and high prices are connected, all will make it harder for this lab and its counterparts to cover their costs. These factors boost the odds that the lights in these miracle factories will flicker, then fade to black.
The vaccine against this ailment is for pharmaceutical companies to teach Americans starting with Washington's bipartisan political class a simple but vital truth: Those little pills do not invent themselves.