Eugene Goldwasser retired in 2002 after a forty-seven-year career as a biochemistry professor at the University of Chicago. Like most academicians, he spent most of his working years laboring in obscurity. The primary focus of his research, his obsession really, resulted in just one major discovery. His colleagues admired his dedication. But some whispered about what he didn’t receive over his long career—the fame, the glory, and the money that rightfully should have been his from being one of the leading medical pioneers of the second half of the twentieth century. His discovery has prevented tens of thousands of deaths from tainted blood transfusions and enabled millions of cancer and dialysis patients to live longer and more productive lives. Yet he never won any prestigious awards. And very few people—certainly not the general public, nor the patients he helped—even know his name.
Goldwasser, a soft-spoken academician whose unassuming manner hides a ruthless intolerance for scientific error, spent more than two decades pursuing a single hormone. It is a tiny molecule that swims briefly in the bloodstream, stimulates red blood cell production, and then disappears. He knew from the outset of his search that the protein would help anemia patients if he could find it and produce it in sufficient quantities. Yet the pharmaceutical industry, through all his lonely years of halting progress and heartbreaking setbacks, scorned and ignored him.
After he finally succeeded in isolating the protein, Goldwasser shared the fruits of his research with Applied Molecular Genetics Inc., which later became known as Amgen. He was instrumental in transforming the firm from a struggling start-up into the largest and most profitable biotechnology company in the world.
The interplay of Goldwasser’s search for erythropoietin, or Epo, as it is affectionately known by physicians who work in the field, and Amgen’s success in turning it into a hugely profitable drug is a paradigm for the modern drug industry. Goldwasser’s career spanned the half-century after World War II, which witnessed an extraordinary explosion in the basic knowledge about the biochemical processes that make up life on earth. Hundreds of drug and biotechnology companies are seeking to mine that knowledge in their search for new therapies. The commercialization of Goldwasser’s work on Epo is only one piece of that vast mosaic. But it was one of the first therapies of the biotechnology era, and it turned Amgen into the biotechnology company that every struggling start-up would like to become.
The Epo story is instructive for everyone concerned about the rising cost of medicine. After the artificial version of Epo entered the marketplace, its story turned into a sordid tale of endless patent litigation, adroit marketing, and political fixing designed to discourage rivals, promote the overuse of the drug, and maintain its high price, which is largely paid by the federal government’s Medicare program. Like all drug companies, Amgen claims that the high price of Epo is necessary to fund its search for innovative new drugs. Yet a close look at Amgen’s research performance during the fifteen years after Epo’s arrival reveals a company whose labs were unproductive by every measure. Its biggest success was coming up with a slightly modified version of the original Epo molecule, which enabled it to go after other companies’ markets. This is the classic “me-too” behavior of large pharmaceutical companies, which innovative start-ups like Amgen were supposed to supplant.
It took decades for Goldwasser to find and purify the first small vial of human erythropoietin. Private companies rarely support that kind of research. It takes too long, and the odds of success are even longer. Every step of Goldwasser’s journey was funded by the federal government. His journey was typical in that regard, too. Virtually all the basic science that enables modern medicine to move forward takes place in the nonprofit sector—at universities, research institutes, and government labs. And governments, in particular the U.S. government, are by far its largest financiers.
The pharmaceutical industry and its biotechnology stepchild occasionally contribute to the basic scientific understanding of disease. But the private sector’s main role is to develop and commercialize therapies based on that knowledge. It is called applied research. But as we shall see in subsequent chapters, even in this arena the public sector plays a large and sometimes dominant role. The Goldwasser-Amgen story provides an excellent opening snapshot of the complicated relationship between basic and applied research in the public and private sectors and shows how private firms rely on public research to come up with important new drugs. And this particular story, in the time-honored tradition of scientific serendipity, also reveals how one man’s solitary quest helped jumpstart an industry.
Eugene Goldwasser was born in 1922 in Brooklyn, where his father ran a small clothing manufacturing business. In the middle of the Depression, the shop failed, and his father, desperate for work, moved the family to Kansas City, where an uncle owned another small clothing factory. The move forced Goldwasser’s older brother, a science major at New York University, to drop out of school to work in the family business. His loss became the younger brother’s gain. While still in high school, Eugene read his brother’s copy of Sinclair Lewis’s Arrowsmith (1925), a novel about an idealistic doctor, and Paul de Kruif’s Microbe Hunters (1926), a popular account of pioneering microbiologists such as Louis Pasteur. He decided to pursue a career in science. He excelled at the local community college, which he attended for free, and won a scholarship to the University of Chicago, where he majored in biological sciences.1
After Japan’s attack on Pearl Harbor, Goldwasser took a full-time job in the university’s toxicity lab, which had been deemed an essential industry because of its top-secret investigation into antidotes for chemical warfare agents. After graduation in 1944, he was drafted and sent to Fort Detrick, Maryland, where he worked on anthrax. When the war ended, he returned to Chicago to complete a doctorate in biochemistry, and in 1952, married with a young son, he took a job as a research associate at the Argonne Cancer Research Hospital (later part of the University of Chicago hospital system).
At Argonne Hospital, Goldwasser was reunited with Leon Jacobson, the noted hematologist who had run the toxicity lab during the war. Jacobson had been deeply involved in a top-secret program to study mustard gas, which the army’s Chemical Warfare Service feared would be deployed by Germany and Japan. Soldiers in World War I who had been exposed to nitrogen mustard died horrible deaths, ravaged within days by a multitude of infections after the gas suppressed the bone marrow’s ability to produce infection-fighting white blood cells. The fear that the Axis nations would use the banned gas never materialized. But like so many government programs from the war years, the mustard gas research project had a major spin-off. Jacobson, among others, speculated that nitrogen mustard in minute doses might prove useful in fighting leukemia and lymphoma, which are characterized by a proliferation of the mutant white blood cells. Alfred Gilman and Louis Goodman, who would later write a famous textbook on clinical pharmacology, conducted similar experiments at Yale University.2 Researchers at both schools found that tests on a handful of subjects generated brief remissions. These results were the first stirrings of cancer chemotherapy and generated tremendous excitement throughout the medical community.3
By the time Goldwasser joined Jacobson’s lab as a full-time researcher, the senior scientist’s priorities had shifted to the new threat—nuclear war. The Atomic Energy Commission wanted to find ways to counter radiation sickness, which, like mustard gas, severely compromised the body’s ability to produce blood cells. As early as 1906 scientists had speculated there must be something in the blood that signaled bone marrow to replace red blood cells, which wore out while ferrying oxygen around the body. Scientists had already given the molecular trigger a name—erythropoietin, after erythropoiesis, the medical term for red blood cell formation. But no one had ever found Epo, much less isolated it for study.
In 1955, Jacobson challenged Goldwasser, new to academic life, to find the elusive protein. If the molecule could be purified in large quantities—perhaps from animals, as had been done with insulin—it might prove useful in treating people suffering from radiation sickness. “You’ll be rich and famous,” Jacobson told his young protégé. “This was a time when everyone was scared to death and children in the schools were taught to crouch under their desks,” Goldwasser recalled. “It was a time of foolish panic, but it gave me every young investigator’s dream. I had all the money and space I needed. And I didn’t have to write any reports. I thought it would take about three months.”
The search would last more than twenty years. The average person produces two to three million red blood cells a second—more than a thousand pounds of blood over the course of a lifetime. But researchers could dry the amount of Epo needed to produce that lifetime supply and form it into a tablet no larger than an aspirin. Moreover, the blood contains more than two hundred proteins, and Epo puts in only a brief appearance. Looking for Epo in the blood was like looking for dimes on a long stretch of sandy beach.
Goldwasser spent the first several years of his search trying to figure out what part of the body produced Epo. His research team carefully removed different organs from laboratory rats until they determined that the absence of kidneys triggered anemia. They next made animals anemic, under the assumption that their kidneys would overproduce Epo in an attempt to end the red blood cell deficiency. This overexpression, they speculated, would leave recoverable traces of Epo in the blood.
In the late 1950s, Goldwasser and members of his small team began taking regular trips to a slaughterhouse in Bradley, Illinois, an hour’s drive from Chicago. They injected soon-to-be-slaughtered sheep with a chemical that destroyed their red blood cells and made them anemic. They waited a day before capturing their blood serum, assuming the sheep kidneys would overexpress Epo into the blood to correct the imbalance. Back in the lab, they distilled the blood serum into fractions they hoped were relatively pure, and then injected each one into anemic rats to see if any improved their red blood cell count. From time to time, there were tantalizing hints of activity from the trace amounts of Epo in one of the fractions. But he could never isolate it, much less get enough to test in humans.
The sheep experiments dragged on for fifteen years. Goldwasser received tenure and raised a family. He and his young son used to spend holidays and weekends in his University of Chicago labs injecting laboratory rats and testing their blood, but his son, frustrated by the glacial pace of scientific progress, eventually left for college to study German literature. He wasn’t the only one frustrated by the endless sheep experiments. Rival investigators in Chile and at the California Institute of Technology published papers showing that excess Epo showed up in urine, not blood. The sheep had led Goldwasser down a blind alley.
Depressed, thinking his life’s work amounted to nothing, Goldwasser unexpectedly received a letter in early 1973 from a Japanese scholar named Takaji Miyake. The Kumamoto University researcher had read the handful of papers that Goldwasser had generated during his long, fruitless hunt for Epo. Miyake explained that a number of patients near his university on the southern island of Kyushu suffered from aplastic anemia. The bone marrow of aplastic anemia patients does not work properly. Miyake didn’t know what caused the defect in these patients, but he suspected they would be ideal candidates for Goldwasser’s research. He offered to collect urine specimens and bring them to the United States so they could be tested in Goldwasser’s lab, which, Miyake knew, had the most experience in the world in breaking down bodily fluids and searching for the rare molecule.
Over the next two years, Miyake and his colleagues collected urine samples from the island’s aplastic anemia patients while Goldwasser sought a grant from the National Institutes of Health (NIH) to bring Miyake to the United States. The industrious Japanese scholar eventually collected 2,550 liters from his patients. The grant came through in the fall of 1975. When the two men met in the lobby of the Palmer House, the elegant neoclassical hotel in the heart of Chicago’s Loop, the Japanese scholar bowed low and held out a foot-square package that had been carefully wrapped in a brightly colored piece of fine Japanese silk. Goldwasser later learned this was a furoshiki, the ritual covering for gifts given to special friends and colleagues. Inside was the dried urine.
Goldwasser, along with his chief assistant, Charles Kung, and Miyake, immediately set about the painstaking process of chemically searching for Epo. They subjected the urine to a seven-step purification procedure that had been perfected over years of sheep experiments. A framed X-ray photograph still hangs over Goldwasser’s desk, capturing the final results of the eighteen-month experiment. “We got the fraction off that last column and put it to a test for homogeneity that we had used for the sheep material. There was only a single dark-stained band. All the previous fractions had many bands. The thought was bingo!” Years later he slapped his hand on his desk as he gleefully recalled the moment. “We did everything we could to disprove it was a single component. Then we put it in [the anemic] rats, and it worked like a charm with the highest potency we had ever seen.”
The 2,550 liters of urine were eventually reduced to eight milligrams of pure human Epo, barely enough to fill a small vial. The results of that experiment were published in the August 1977 Journal of Biological Chemistry.4 “I was walking on air,” Goldwasser remembered. “We finally had something we could work with.”
Finding someone to work with, however, proved almost as difficult as the final experiment. In the mid-1970s Goldwasser had tried to attract the interest of scientists at Parke-Davis, a medium-sized drug company based in Michigan. He wanted to show that kidney cells could be tricked into producing Epo when cultured outside the body, a process similar to the one that had been used to coax insulin from pancreas cells. Some initial efforts had shown promise. But the experiment could not be repeated, and Parke-Davis lost interest in the program. Goldwasser then traveled to Chicago’s north suburbs where he tried to cajole Abbott Laboratories, one of the Midwest’s largest pharmaceutical companies, into supporting his work. They rejected his repeated entreaties.
Desperate to interest someone in becoming his partner, Goldwasser launched a human clinical trial. He applied to the Food and Drug Administration (FDA) for permission to administer a portion of his tiny stash of Epo to three dialysis patients at the University of Chicago hospital. People with malfunctioning kidneys require constant blood transfusions because they don’t produce enough Epo, thus making them ideal candidates for Epo therapy. “If we could demonstrate an effect in a patient with anemia of chronic renal disease, funding for our future research would be assured,” he wrote.5
He also put the university on notice that he was sitting on top of a patentable invention. The disclosure was required by the Department of Energy and NIH, which had funded his research over the years. In the late 1970s, the government was increasingly concerned about the stagnant U.S. economy and the competitive threat posed by Japanese and German rivals. One cure for that disease was to get government-funded innovations out of America’s basic science labs and into the marketplace. Patent disclosure was supposed to facilitate the process.
Those policy debates never crossed Goldwasser’s mind as he filled out the paperwork. When he didn’t hear back from the university or the government, he forgot about patenting his discovery and its use in dialysis therapy. Years later, as he prepared to answer a subpoena in the endless patent litigation between Amgen and other firms that wanted to manufacture artificial Epo, he uncovered the oversight. “I was going through all my boxes of files. There were dozens of them. I found this letter that had been sent to the agency funding us, asking them to file a patent. They never responded, and I didn’t follow up. I forgot all about it. I was too busy doing science,” he said.
The clinical trial’s results were tantalizing but inconclusive. One patient showed a small increase in red blood cell count and a major increase in the formation of red blood cell precursors. But the dose was too small, and continuing the experiment would have dissipated his entire Epo supply. He dropped the trial and began searching for someone to work with. Luckily, by 1980 there were a host of new players ready to listen to his story.
The success of Eugene Goldwasser’s protracted search for Epo coincided with a turning point in medical history. In the late 1970s and early 1980s, an entrepreneurial revolution swept through the once staid world of academic medical research. Dreams of Nobel glory were gradually replaced by dreams of high-tech riches, and a number of new biotechnology firms were eager to jump on his discovery. A quick side tour reveals the origin of this new industry: The core technologies of biotechnology were themselves products of university-based scientists who used public funding in the United States and in England to foment a revolution.
Biotechnology can trace its roots to 1953, when James Watson and Francis Crick, building on years of discoveries and the unheralded work of X-ray diffraction expert Rosalind Franklin, unraveled the double-helix structure of deoxyribonucleic acid (DNA), which makes up the genetic code for all forms of life. They showed how the broad diversity and complexity of life could be transmitted from generation to generation through a biochemical code contained inside an organism’s cells. The code’s mechanism was simple. It used just two complimentary pairs of molecules called base nucleotides. The order of these base pairs along strands of DNA expressed all the genetic information that makes up life on this planet. The code also provided a language for generating new combinations, thus explaining evolution. Many observers compared Watson and Crick’s discovery to the emerging field of computer programming. If life was a computer program, why not use the information to recreate the building blocks of life, or even reprogram them?
The same year, Frederick Sanger of Cambridge University in England determined that all proteins, the workhorses of life, were made up of strings of the twenty-two different amino acids that were expressed by the genetic codes contained on DNA. He also figured out a chemical process for mapping the sequence of amino acids, and then did it for insulin.
The Nobel Prize–winning work of Watson, Crick, and Sanger began a worldwide quest to develop the tools needed to understand, manipulate, and eventually reproduce life’s genetic code and the proteins it expressed. Scientists identified chemical scalpels, known as restriction enzymes, to snip DNA and proteins into small pieces. They developed chemicals for reconstructing proteins one amino acid at a time to determine their sequence.
In 1973, Stanley Cohen of Stanford University and Herbert Boyer of the University of California at San Francisco stitched together nearly twenty years of discoveries into a fitting climax: the invention of recombinant DNA engineering. Their breakthrough—actually the last step in a long string of academic science advances—led directly to the creation of the biotechnology industry. Recombinant DNA engineering enabled scientists to use biological and chemical processes to manufacture large quantities of proteins by splicing the genetic fragments that expressed those proteins onto the DNA of fast-growing bacteria or mammalian ovary cells. Unlike previous attempts at gene splicing that required complicated chemistry and the laborious manipulation of viruses, the Cohen-Boyer method “was so simple that high school pupils could easily learn it.”6
A few venture capitalists in the San Francisco Bay Area immediately saw commercial possibilities in the new technology. So did Niels Reimers, head of Stanford’s office of technology licensing. He begged the two scientists to apply for a patent on their invention, which they did after a short but heated debate. Cohen initially opposed patenting. In those days his attitude was common among academic scientists, whose incentives had not yet been influenced by the stock market fever of the 1980s and 1990s. Most scientists were still more interested in winning intellectual competitions and disseminating knowledge broadly than in commercializing their work. Cohen was especially leery of patenting a scientific tool like recombinant engineering since it might inhibit further research. He relented after Reimers argued that licensing recombinant DNA technology to all comers would be the fastest way to deploy it broadly.7
Boyer, on the other hand, was not reticent about chasing riches, especially after meeting Robert Swanson, a twenty-seven-year-old operative at Kleiner-Perkins, the venture capital fund responsible for many of the start-ups that would soon turn the southern half of the San Francisco Bay Area into Silicon Valley. Swanson, who earned chemistry and business degrees at the Massachusetts Institute of Technology, was eager to plunge into the new world of biotechnology after reading about the recombinant engineering breakthrough in the newspapers. He immediately called Boyer and asked if he was interested in starting a company. They met in a San Francisco bar and by January 1976 had created the business plan for a firm called Genetic Engineering Technology, or Genentech, which became the technological leader of the new field. Within a few years, there were a handful of other firms, mostly around San Francisco and Boston, that were seeking to put the new technology to commercial use.
Two other events in 1980 transformed the environment for the nascent biotechnology industry. In Washington, Congress passed the Bayh-Dole Act, named after Senator Birch Bayh, a leading Democrat from Indiana, and Senator Robert Dole, a leading Republican from Kansas. The new law reflected the bipartisan concern that the U.S. economy was rapidly losing ground to its overseas rivals. The bill encouraged federally funded researchers and their university sponsors to license their patented discoveries to industry by giving them clear title to the patents. The debate behind the new law was focused on speeding innovation from the lab to the computer, auto, and steel industries. But the major beneficiaries of the bill turned out to be researchers on the frontiers of medical science.
The second major event of that year took place on Wall Street. In March, Cetus Corporation, one of the nation’s first biotech start-ups, raised $108 million through an initial public stock offering (IPO). It was the largest IPO in the history of the American stock market to that time. In the fall, Genentech issued its IPO, raising $36 million. The Boyer-Swanson venture was hot on the trail of interferon, the “miracle” cancer cure that had generated intense media coverage. The stock, which opened at $35 a share, closed that first day of trading at $71.25.8
Biotech fever soon gripped most of the nation’s leading molecular biology labs. William Bowes, an investment banker who sat on the Cetus board of directors, called Winston Salser, a highly regarded biologist and cancer researcher at the University of California at Los Angeles. Salser didn’t need much prodding. In the mid-1970s, his entrepreneurial energies had gone into real estate ventures, most of which had failed. But biotech was something he knew about. At Bowes’s urging, Salser formed Applied Molecular Genetics, later shortened to Amgen, and recruited an all-star cast from Southern California to join his scientific advisory board. The group included Leroy Hood of CalTech, whose government-funded lab had just invented the first gene sequencing machine. (The machine would later be featured in Michael Crichton’s Jurassic Park. The government’s decision to develop an advanced version to speed the completion of the Human Genome Project is the subject of chapter 3.) Hood’s machine speeded up the laborious process of identifying the chemical structure of proteins and the genes that expressed them.
Amgen began with nothing more than a letterhead and a list of possible research projects. The company was typical of the dozens of start-up companies launched in that era. Its list of commercial targets covered the biotech waterfront. Interferon was hot, so it made the list. The company also wanted to create oil-eating bacteria and genetically modified organisms that could transform oil shale into oil. One particularly alluring target was chicken growth hormone for the poultry industry. Salser, a social liberal, also listed tropical diseases such as malaria and sleeping sickness as potential targets. Artificial erythropoietin made Salser’s wish list, but only because one of his postdoctoral researchers had worked with Goldwasser and wanted it there.
Salser knew science. But he knew little about raising the money needed to hire scientists to work on his projects. His backers suggested he hire a chief executive officer who understood venture capital markets and marketing as well as science. That fall, George Rathmann, vice president of research at Abbott Labs in North Chicago, traveled to the West Coast to scout out biotech investment opportunities for his employer. Though able to understand the arcane chattering of senior scientists—he had earned his Ph.D. in physical chemistry from Princeton University—Rathmann had long since left the labs for the executive suite. After spending twenty-one years at 3M Corporation and several years with the medical systems division of Litton Industries, he had joined Abbott as vice president in charge of its research and development program.
The emerging biotech world intrigued Rathmann. But dragging the stodgy maker of pharmaceuticals and medical diagnostic kits into the modern age was proving a daunting task. Abbott manufactured a hepatitis test kit using blood factors, and contaminated blood sometimes infected the tests and its users. If the company could produce the blood factor for the diagnostic kits through genetic engineering, that danger would be eliminated and give the firm a marketing advantage over its rivals. But Abbott’s efforts to develop its biotech capabilities were going nowhere fast, largely because of fears about safety. During the first years of the gene-splicing revolution, there were widespread fears that genetically engineered microbes might escape from a lab and devastate humanity. Even Cambridge, Massachusetts, had banned gene splicing for a short while. “People were so frightened to carry out recombinant DNA engineering in Lake County, outside Chicago,” Rathmann said. “Abbott just viewed it as a potential scandal if somebody in the local community found out that we were doing something potentially dangerous.” The company built an air-lock system for handling biotech materials. Inside the lab, workers wore moon suits.9
Rathmann decided to take a sabbatical to learn more about the technology behind recombinant genetic engineering. Phil Whitcome, Abbott’s cardiovascular product manager, had trained at UCLA under Salser and mentioned his lab as a possible site. For six months, Rathmann parked himself at a desk in UCLA’s Molecular Biology Institute. And in October 1980, he joined Salser’s new company as its first chief executive. Whitcome soon followed.
Abbott’s officials, including Kirk Raab, who later became chief executive officer of Genentech, begged him to stay. They offered to spin off their biotech lab into a separate company that could sell stock. But there was a caveat. Abbott would remain the majority shareholder. “After thinking about it for three days, I realized that it didn’t have the upside,” Rathmann recalled. “The guys at Genentech were talking about becoming millionaires. People [out west] were thinking in terms of infinite upsides.”
To hedge their bets, Abbott officials offered to invest in Rathmann’s new venture. But first they wanted to know the company’s potential products. Rathmann ticked off the six or seven projects then under consideration. Last on his list was Epo. “Oh no, not Epo,” said the head of Abbott’s research division. “Gene Goldwasser has been beating us on the head about that for five years.” Abbott invested $5 million in Amgen anyway, a stake they would sell a decade later for fifty times that amount. But its value to Rathmann at the time was incalculable. It signaled to West Coast venture capitalists that this start-up should be taken seriously. Several firms offered another $12 million, and Amgen was up and running.
The firm started hiring scientists. In early 1981, Fu-Kuen Lin, a journeyman bench scientist who had wended his way through a half-dozen academic labs on two continents, answered an ad in Science magazine and became the seventh scientist to join the firm. Lin was the fifth of seven children of a Chinese herb doctor. He came to the United States in the 1960s to study plant pathology at the University of Illinois, and did his postdoctoral work at Purdue University and the University of Nebraska before returning to his native Taiwan in 1975. Two years later, he was back in the United States. He worked for a while in the nucleic acid biochemistry lab at Louisiana State University before moving on to conduct genetic engineering experiments at the Medical University of South Carolina. To the peripatetic Lin, moving to an isolated industrial park on the far outskirts of the Los Angeles metropolitan area, where Amgen had located its offices, was a welcome change from the insular South. On his first day on the job he was given Amgen’s target list and asked which project he wanted to work on. He chose Epo. The choice was easy. “We had the protein. A lot of other projects didn’t have the protein,” he said.10
Goldwasser, who held the world’s sole supply of Epo, had decided to work exclusively with Amgen. At least two other biotech start-ups had already entered the race to develop an artificial version of Epo and were desperate to get their hands on his supply. Biogen, the Swiss-American firm that was briefly run by Nobel laureate Walter Gilbert, was the first to approach Goldwasser. Gilbert, a former Harvard professor, wanted access to Epo so the firm could begin searching for its gene. Finding the gene was key to producing a genetically engineered version of the molecule, and the obvious next step if the protein was going to be produced in the bulk quantities needed for clinical trials and sale. The two men met at a scientific meeting and went to dinner to discuss a possible partnership.
The dinner got off to a rocky start. Goldwasser was not impressed by Gilbert’s invitation to join his all-star team. Biogen had loaded its scientific advisory board with virtually every scientist in the country with any connection to Epo. “He picked out just about every blockhead in the field. I said there was no way I was going to work with those people,” Goldwasser recalled. After dinner, Gilbert didn’t offer to pick up Goldwasser’s half of the check. When he got home, the threadbare academic crossed Biogen off his list.
Genetics Institute, a Cambridge-based firm that had spun out of Harvard in 1980, also wanted to get into the Epo game. But Genetics Institute thought it didn’t need the Chicago scientist. Before Goldwasser signed on to work with Amgen, he sent some of his Epo stash to Hood’s CalTech lab for sequencing to determine its amino acid structure. The work was done by Rodney Hewick, one of the co-inventors of the machine. Once he had the results, Hewick quit, and on September 1, 1981, he arrived in Cambridge to become Genetic Institute’s senior protein chemist. It was a logical strategy from a commercial standpoint, if questionable ethically. Natural Epo and its potential medical use remained unpatented since neither the government nor Goldwasser had thought to file an application in the wake of his initial discovery. Therefore, the first firm to patent its recombinant manufacture would get the gold, and for that, all one needed was the Epo sequence. Hewick had it.
There was one flaw in the strategy, though. Hewick and the CalTech team had made mistakes in transcribing the sequence, getting at least three of the protein’s 166 amino acids wrong. Moreover, Genetics Institute didn’t have any more Epo to double check the work. The errors would befuddle Genetics Institute’s gene hunters for more than two years.11
Goldwasser, meanwhile, looked west. Salser invited him to join Hood on Amgen’s scientific advisory board. He declined, choosing instead to work for Amgen as a consultant. Lin arrived on the scene just about the time Goldwasser decided to make his small Epo supply available to the firm on an exclusive basis.
In the fall of 1981, Lin and one assistant began the workmanlike task of sequencing the protein. Hood’s machine had vastly simplified the process from the 1950s and 1960s, when Fred Sanger, in his second Nobel Prize–winning effort, had chemically sequenced the fifty-one amino acids of insulin. And unlike Hewick, Lin had a supply of Epo, which allowed him to recheck his work. But having the correct code for the 166 amino acids that made up Epo did not solve Lin’s problem. How would he find the gene that expressed those amino acids along the vast expanse of human DNA? It was the equivalent of finding a single sentence in the Encyclopaedia Britannica.
It took Lin two years to figure out a process. During those two years, Goldwasser attended numerous Amgen meetings where every adviser and the other members of the scientific staff voted to kill the Epo program, even though there were only two scientists and an assistant working on it. Lin later testified he felt like a “lonesome soldier because the company felt so frustrated with the Epo project and felt it was dead; no one at the company wanted to touch it.”12 Goldwasser couldn’t understand how a private company could be so impatient. He’d spent two decades looking for the molecule. They were ready to quit in less than two years.
Daniel Vapnek, who quit his job as University of Georgia professor of molecular genetics to become Amgen’s director of research in 1981, was one of those who questioned continuing with the program. “Epo was a very difficult area to work in. It had a long history of people who worked on it and made up data.” The single-minded Chicago scientist hedged his bets with the small team Vapnek put on the Epo project. “The biggest issue we had was getting enough material from him,” Vapnek said. “He had a limited amount and he wanted to be certain we were in fact going to be able to do the microsequencing.”13 Rathmann listened carefully to the wrangling between his key outside consultant and his in-house research chief. At each meeting, he cast the deciding vote in favor of continuing the program.
Lin finally came up with an ingenious probe process for isolating the gene. The Pharmaceutical Research and Manufacturers Association (Pharma), which granted Lin its top science award in 1995, described Lin’s frustrating two years. “He did not know if he would be successful in isolating the Epo gene. . . . Lin was on a fishing expedition in the human genome, searching, as it were, for a single specific fish in a sea of hundreds of thousands.” Following Pharma’s lead, Vice President Al Gore awarded Amgen and Lin the National Medal of Technology, calling him “a true national hero.”14 Lin’s probe involved creating 128 radioactive fragments of Epo and matching them against a library of human DNA fragments. Once he had his probe, it took him only a few weeks to find the gene. It took another year to sequence and clone it using fast-growing Chinese hamster ovary cells, a technology that had recently been invented and patented by Richard Axel and two colleagues at Columbia University.15 He filed his first patent on December 13, 1983. A year later, the company filed for the key patent on the process for producing recombinant Epo, which effectively limited other firms from doing the same.
Lin may have been first, but his approach was hardly unique. Genetics Institute and Biogen scientists were also using sophisticated probes to hunt for the gene. The other companies had also picked up on this quantum leap in how to search for genes from academics who were experimenting with the technique. Their problem was they didn’t have Epo or its proper amino acid sequence. “The limiting factor in Biogen’s effort to clone the gene was not having an adequate amount of protein sequence from which to derive good probes,” said Richard Flavell, who was president of Biogen’s Cambridge facility from 1982 to 1988. “Erythropoietin was a rather rare commodity and the major person who had that material was Dr. Goldwasser.” Biogen finally succeeded in sequencing and cloning Epo in mid-1985, but it was too late. The vast riches that would flow from the molecule would go to another firm. But at least the gamble hadn’t cost that much. According to Flavell, the three-year search for the Epo gene had cost the company just $4 to $6 million.16
Once Genetics Institute scientists recognized Hewick’s mistake, they began scrambling for alternative sources of Epo. The company contacted several scientists who had received small samples of Goldwasser’s stash, but soon realized they didn’t have enough for sequencing. It next contacted Miyake, who had returned to Japan. He initially demanded a large fee for replicating his earlier work, but they turned him down. In 1983, he changed his mind and a year later Genetics Institute scientists got their first sample of purified Epo. Within a few months, they had sequenced and cloned it. On December 17, 1984, Genetics Institute scooped Amgen when their team submitted an article to Nature describing the isolation and characterization of the clones of human Epo.17 But Lin had filed for a patent on his work a year earlier. Litigation over the matter would drag out until the mid-1990s when the Supreme Court finally determined that Amgen’s Lin had won the race to the Patent and Trademark Office. In the emerging world of biotech, that was all that mattered.18
Once Amgen could make artificial Epo, the road was clear to prove it worked in curing anemia. Clinical trials, the second phase of drug research, are more costly than developing new molecules. Since 1962, when Congress reformed the nation’s drug laws in the wake of the thalidomide scare (pregnant women who took the drug gave birth to horribly deformed babies), companies have had to prove that a new drug is effective as well as safe before offering it for sale. Companies usually go through three sets of clinical trials to clear the FDA hurdle. The first-phase trials are conducted on a small number of volunteers who receive an escalating dose of the experimental drug. They are designed to ensure the drug is safe, and to find the maximum tolerable dose that leaves enough of the drug in the bloodstream to carry out its task. The second-phase clinical trials, also done on a small number of patients, are designed to show that the drug is having an impact on the disease. The third and final phase of a drug’s trials, usually conducted on hundreds or even thousands of patients, is designed to prove to regulators that the drug works on a significant number of the patients who take it. Third-phase trials are often double-blind and placebo-controlled trials, meaning neither doctor nor patients know who is getting the real deal or a fake. A drug is deemed efficacious when trial results of the drug group are significantly better than those of the placebo group.
As Epogen—the trade name for the artificial protein—neared its clinical-trial phase, Rathmann needed to raise more cash. He began selling off Epo’s potential markets. In mid-1984, the company received $24 million from Kirin Brewery Company of Japan in exchange for the rights to market the drug in Japan. A year later it signed a similar deal with Johnson and Johnson’s Ortho-Biotech division, which took European rights and all U.S. uses except dialysis. In exchange, Amgen received an immediate $6 million and the promise of future payments as the company passed milestones on the drug’s road to approval. In November 1985, Amgen filed an application with the FDA to begin testing its experimental drug in people whose kidneys had failed. To cut its development time, the company opted to do a combined first- and second-phase trial.
The first results came in a little more than a year later. They were nothing short of spectacular. Writing later in the New England Journal of Medicine, kidney specialist Joseph Eschbach and hematologist John Adamson from the University of Washington reported that all of the eighteen patients who received the drug in the trial showed a sharp increase in red blood cell counts. Two-thirds of them no longer needed blood transfusions. The energy levels and sense of well-being among the dialysis patients had increased markedly. “These results demonstrate that recombinant human erythropoietin is effective, can eliminate the need for transfusions . . . and can restore the hematocrit (red blood cell count) to normal in many patients with the anemia of end-stage renal disease.”19
The report sent the company’s stock price soaring. Amgen immediately launched a larger trial with three hundred patients, which showed similar results. In November 1987, the company applied to the FDA for final approval to market what it now called Epogen. On June 1, 1989, the agency gave its go-ahead, just three and a half years after the initial new drug application. The relatively rapid turnaround was testimony to the extraordinary efficacy of the new drug.
Many observers have called Epogen and a handful of similar drugs the low-hanging fruit of the biotechnology era. The issue is worth exploring because it helps explain why, despite the hype of the past two decades, the biotechnology revolution has produced so few significant therapies like Epo. Epo is a single hormone whose absence results in a well-defined illness, in its case, anemia. Insulin, Factor VIII (the blood-clotting factor missing in some hemophiliacs), and granulocyte colony-stimulating factor (which triggers white blood cell formation and, after its gene was licensed from Memorial Sloan-Kettering Hospital in New York, became the basis for Amgen’s second best-selling drug) are similar. If these proteins are missing, a person gets sick. If they are replaced, a patient gets better. Once researchers identified the functions of these proteins and found the genes needed to manufacture them, it became a relatively simple matter to make them in bulk to treat people who suffered from their absence. It didn’t matter whether that absence was caused by illness (kidney failure, for instance) or genetic inheritance.
Unfortunately, not many diseases have this direct cause-and-effect relationship with a missing protein. People who inherit malfunctioning genes that cause protein-deficiency diseases are in fact quite rare. Inherited disorders such as Gaucher, Tay-Sachs, and Fabry disease occur in just one in every fifty thousand to one hundred thousand births (that’s three to six thousand potential patients in a population of 300 million). Just one in ten thousand get Huntington’s disease; just one in twenty-three hundred have cystic fibrosis. Scientists in the early 1990s identified two mutant genes associated with some forms of breast cancer, but they are present in only 4 to 10 percent of cases. Discovery of the genetic code for those exceptions has proven valuable for diagnostic purposes, but it has provided nothing in the way of a cure.
And even when a genetic flaw causes disease, it doesn’t automatically mean that it can be treated by replacing the defective or missing protein with its biotechnologically created equivalent. Cystic fibrosis is the classic example. Science magazine put the face of a four-year-old patient on its September 1, 1989, cover when scientists at three institutions—one of them was University of Michigan’s Francis Collins, who later ran the government’s Human Genome Project—breathlessly announced the discovery of the malfunctioning gene that caused the disabling lung disease. Collins predicted there would be a cure within five to ten years. However, efforts to produce the missing protein and inject it into patients by university researchers and biotech companies repeatedly failed. The patients’ immune systems rejected proteins perceived as foreign. Next came years of gene therapy experiments, where physicians attempt to insert cells with a properly working version of the gene into a patient. These, too, have not borne fruit. “We’re still many years away from having a really promising result,” Collins said a dozen years after his initial discovery, and “we won’t get there without a lot of scientific creativity and ingenuity.”20
The diseases that account for most early deaths and suffering in the advanced industrial world—heart disease, cancer, stroke, Alzheimer’s, arthritis—are rarely genetically determined. Their cause has been variously attributed to everything from genetic predisposition to environmental pollution, from viruses to immune system malfunction, from diet to the process of aging itself. Scientists can be found on each side of every question. In recent years billions of dollars of basic research has focused on learning the biochemical processes of each disease and identifying the complex interplay of dozens of genes and proteins that, over time, leads to disease through either genetic mutation or malfunctioning.
But even after scientists have identified the biochemical cascade of a disease, intervention remains extremely difficult. Most proteins play multiple roles in the body; enhancing or limiting their action may have no net effect and will almost always have unintended side effects. “It is testament to the power of the idea of genetic engineering that the limits to its therapeutic potential were not appreciated earlier, but the reason is quite obvious,” James Le Fanu, a British physician, wrote in 1999 in his critical study The Rise and Fall of Modern Medicine.
Biotechnology may be a technically dazzling way of making drugs, but it is severely constrained by the fact that the only things that genes can make are proteins, so the only therapeutic use for biotechnology products are [sic] conditions where either a protein is deficient and needs replacing (such as the use of insulin in diabetes) or where it is hoped that giving a protein in large enough doses might in some way or other influence a disease, such as cancer.21
But when artificial Epo, one of the first miracle treatments of the biotechnology revolution, was approved, hopes soared among the scientists who had formed hundreds of biotech start-ups. Amgen’s windfall, it was believed, would rapidly lead to many more such successes. The only thing that stood in the way was the private capital needed to finance the search for the cures. Amgen set the price for its new product with that thought in mind. It had nothing to do with the cost of developing the drug.
When Epogen was approved by the FDA, there were just under one hundred thousand Americans on dialysis for kidney failure, and a third of them were getting regular blood transfusions. Most patients received their treatment courtesy of the federal government, whose Medicare program paid for dialysis and related drugs. After initially setting its price low, Amgen negotiated a new price with Medicare that would generate anywhere from four to eight thousand dollars per year per patient. When the results of the first clinical trials had come out in 1987, Wall Street analysts had pegged the company’s potential sales at $150 million a year.22 After it got its hefty price hike from the George H. W. Bush administration, the analysts’ estimates quickly soared toward $1 billion.
Medicare’s rapidly escalating expenditures on Epogen eventually caught the attention of watchdogs on Capitol Hill. At a House Ways and Means Committee meeting in October 1991, Rep. Pete Stark of California grilled Health and Human Services (HHS) secretary Louis Sullivan about Epogen’s price, since his department had negotiated the figure with Amgen. The liberal Democrat had gotten his hands on an internal HHS study that showed the drug had cost Amgen at most $170 million to develop. Yet the government had already paid Amgen $460 million during its first two years on the market, and manufacturing the drug exhausted just 5 percent of revenue. The number of patients on dialysis was rising rapidly: By the mid-1990s, it would double to two hundred thousand, and by the end of the century it had risen to nearly three hundred thousand, largely because of poorly treated diabetes and hypertension among overweight and out-of-shape Americans. Epogen was heading toward becoming the most expensive drug in the government’s medicine chest.
Stark, who would wage a fruitless ten-year battle to lower the cost of Epogen, read to Sullivan from his own introduction to the report. “Medicare’s coverage and payment decision for Epo could have had a serious impact on the financial markets of other companies involved in raising capital to finance research on other genetically engineered products. Because investment in drugs, especially those related to biotechnology, is a new, highly speculative business, venture capitalists expect a higher than average return on such investment.” Stark was outraged. “Is it in fact the policy of this administration to use Medicare as a form of industrial policy to help ensure the profitability of the biotech industry?” Sullivan agreed that Amgen’s return on investment was high. “I can assure you that [it] was not the intent of the administration to have an excessive return,” he said, “but we have a policy of trying to have an adequate return to encourage companies to develop such drugs.”23
A decade later, the results of that policy are in. Epogen and its successor drug accounted for more than half of Amgen’s $5 billion in revenue in 2002, and most of that came from the taxpayers. Most of the rest of the company’s sales came from Neupogen, the white blood cell factor licensed from Sloan-Kettering and approved in 1991. On paper, Sullivan’s goal of spurring Amgen to conduct research had been achieved. The company spent more than $1 billion on research in 2002. That was well short of the company’s profits, but it was a hefty sum by any measure.
What were the results of that private research drawn largely from federal payments? In the decade after Neupogen was approved in 1991, Amgen received FDA approval for four new drugs. Two were less effective versions of drugs produced by other firms, while the other two drugs approved in 2001 were new versions of the company’s first two blockbusters. They had been slightly modified to stay in the body for a longer period of time.
Amgen’s biggest laboratory success was Aranesp, which the company touted as its most significant medical advance since its first two drugs. Aranesp, like Epogen, was for anemia. But it was not a dramatic new treatment for the debilitating condition. Aranesp did exactly the same thing that Epogen had been doing since it was approved in 1989: it raised red blood cell counts by stimulating the bone marrow. What made Aranesp unique? By fiddling with some of the side chemicals on the original Epogen molecule, Amgen chemists discovered how to keep Aranesp in the blood stream three times longer than Epogen. Even if it worked as advertised, Aranesp would provide no medical benefits to the hundreds of thousands of people on dialysis. Those patients were hooked up to dialysis machines three times a week and received their erythropoietin during the sessions. Aranesp would provide no lifestyle benefits for them.
The real purpose of Amgen’s new drug was to have something to sell to cancer and AIDS patients, who needed erythropoietin because their bone marrow’s ability to produce red blood cells was suppressed by the drugs flowing through their bloodstreams to fight those diseases. Extra erythropoietin can lessen the fatigue that accompanies chemotherapy and has become a key component of cancer and AIDS therapy. But chemotherapy and AIDS patients did not take Amgen’s Epogen. They receive injections of Procrit, which was the recombinant form of erythropoietin sold by Johnson and Johnson’s Ortho-Biotech division.
Why were two companies selling identical versions of a patented product under different labels? When Amgen was a struggling start-up, it had to sign away half its market to Johnson and Johnson to raise cash. It received just a few tens of millions of dollars. Amgen has regretted that decision ever since. In 2002, Johnson and Johnson generated more than $2 billion a year from Procrit, making it a more lucrative market than the dialysis market. With FDA approval for once-a-week Aranesp under its belt, Amgen’s sales force finally had ammunition to attack Johnson and Johnson’s market.
However, Johnson and Johnson’s detailers—the drug industry’s name for its sales personnel—fought back. They spread the word among cancer physicians what some have long known. You can give Procrit once a week simply by increasing the dose. Johnson and Johnson asked Howard Grossman, an HIV/AIDS specialist on the faculty of Columbia University’s College of Physicians and Surgeons, to give the higher doses of Procrit once per week to his AIDS patients over a sixteen-week period, and compare their red blood cells counts to patients who still received the lower dose three times a week. “There was no significant difference,” Grossman said.24
The paucity of significant new therapies coming out of Amgen’s investment in research and development came as no surprise to former Amgen research director Daniel Vapnek, who left the company in 1997. He said the culture inside Amgen changed dramatically after sales of Epogen began to skyrocket. In 1990, Rathmann stepped aside and was replaced as chairman and chief executive officer by Gordon Binder, who came up through the financing side of the operation. “The company generated a tremendous amount of money, and a lot of that was spent on buying back their own stock rather than finding out how they could invest in new technology,” Vapnek said. “The management of earnings-per-share growth became very important rather than being really innovative. It never really developed a culture of taking risks, and became more interested in managing the existing products.”25
The company used its research budget to pursue an odd assortment of possible therapies during the 1990s. The company gained a measure of notoriety when it licensed the so-called fat gene. Rockefeller University scientists in New York had discovered the gene that produced leptin, a signaling protein that is involved in the body’s metabolism of fat. In early 1995, Amgen licensed the rights to the gene for $20 million and went hunting for every drug manufacturer’s dream—a pill that would get people to stop eating. Preliminary tests on mice—genetically engineered to be grossly obese—showed dramatic results. Within weeks of receiving regular doses of artificial leptin, the mice were refusing to eat and running in circles around their cages. The company’s press release triggered a flood of media coverage. Hundreds of overweight people besieged the company with requests for the experimental drug. The company’s market value soared by nearly a billion dollars.26
Almost immediately, independent researchers began throwing cold water on the idea that obesity could be affected by manipulating the level of a single protein. Doctors at Thomas Jefferson University in Philadelphia tested eight overweight people and eight lean people for their leptin levels, and found to their amazement that heavier people had significantly more. It is possible that “a small, but as yet unstudied fraction of obese humans will display a functionally significant mutation in the obesity gene,” the researchers concluded, but it was clear that obesity was a complex disorder in humans. It was “unlikely that any single gene mutation will describe the entire genetic contribution to this disease.”27
Amgen ignored the warnings. Over the next few years the company poured tens of millions of dollars into the project. By 1999, the company had come to the same conclusion. Putting artificial leptin in mice that had been genetically engineered to produce none was one thing. Putting additional leptin into overweight humans who already produced it had no effect. Moreover, many of the dozens of patients in Amgen’s test balked at getting daily injections of the bulky protein. “The great hope for leptin has not held up,” said Jules Hirsch, the obesity researcher at Rockefeller University who codiscovered the gene.28
Amgen also spent a lot of its newfound riches acquiring promising drug candidates from other biotechnology companies. In December 1994, it purchased Synergen, a Boulder, Colorado, firm that was experimenting with artificial proteins believed to play a role in Parkinson’s disease and Lou Gehrig’s disease. Neither drug panned out.
Amgen next turned to developing another Synergen molecule, which would eventually be approved as a secondary treatment for rheumatoid arthritis. But Amgen’s drug was only for patients who didn’t respond to standard therapy, and turned out to be much less effective than comparable therapies that arrived on the market around the same time. Rheumatoid arthritis, where the immune system goes awry and attacks a person’s own joints, affects more than two million middle-aged adults in the United States, with women twice as likely to get it as men. For decades, doctors have been prescribing methotrexate, a nine-hundred-dollars-a-year generic drug derived from naturally occurring cortisone. It has some success in limiting the painful swelling, especially if sufferers begin using it shortly after they get the disease. But doctors had no idea why it worked.
Throughout the 1970s and 1980s, basic science researchers worked to identify the signaling proteins in the immune system that caused inflammation after an injury. By the early 1990s, a number of biotech companies were racing to develop artificial versions of other signaling proteins that called off their action and could thus reduce swelling. Though many clinicians questioned the wisdom of tinkering with the body’s immune system, Amgen became one of three firms that won approval in 2001 for a protein drug to fight rheumatoid arthritis. It was called Kineret. But at the same time, Immunex introduced Embrel and Centocor introduced Remicade. The new drugs each cost twelve thousand dollars a year.
Amgen’s molecule was the least effective of the three. So, flush with cash from its Epogen sales, the company made a $16-billion offer to purchase Immunex, the biggest merger in biotech’s brief history.29 While the deal was highly touted on Wall Street, many physicians were openly skeptical of using these drugs as the first-line therapy for fighting the painful disease. They feared what else might happen when they inhibited the action of a naturally occurring immune-system agent. Embrel inhibits a protein called tumor necrosis factor (TNF). A number of “serious, life-threatening infections” occurred among patients in the clinical trials for Embrel (its generic name is etanercept), even though the exclusion of patients with active infections had “markedly diminished the risk,” an article warned in the New England Journal of Medicine.30 “We have to realize that TNF is not put into our biological system to cause rheumatoid arthritis,” said Doyt Conn, a professor of rheumatology at Emory University and vice president of medical affairs at the Arthritis Foundation. “What will be the problems down the road by inhibiting it completely? There will be infections, and there may be other problems. The strategy should be short-term use, not long-term use. But that’s not what the drug companies want of course.”31
Meanwhile, Amgen in-house research had begun to drift away from genetically engineered products, which was supposedly its area of expertise. It hired medicinal chemists to come up with organic compounds that might treat a disease, the province of traditional pharmaceutical firms. It even began licensing some promising drugs. In 1999 it signed a deal with Praexis Pharmaceutical Inc. to market a prostate cancer drug still under development. But two years later that deal got cancelled when the drug proved ineffective. “We thought we could uncover other drug targets that no one had done before. We had a medicinal chemistry group all of a sudden,” Vapnek said. “Amgen started to look like a pharmaceutical company. There was just a limited number of proteins that turned out to be therapeutics, like Epo . . . and that was what our technology was based on.”
Amgen’s research is not limited to looking for new drugs. It also spends millions of dollars sponsoring medical investigators who are willing to promote increased use of its biggest seller, Epogen. When the FDA first approved the drug, it suggested physicians give their patients enough Epo to raise their red blood cell counts to about 80 percent of normal. That had been the standard in the blood transfusion era. It also was the standard used in Amgen’s clinical trials. But once the drug was out in the marketplace, Amgen salesmen quickly realized that they could sell a lot more Epogen if the dialysis centers aimed for higher red blood cell counts. In fact, raising red blood cell counts to normal could double or even triple the amount sold. Amgen began funding academic researchers around the country to test patients at the higher levels for mental alertness, energy levels, and similar hard-to-quantify standards. The company simultaneously funded the National Kidney Foundation, the main patient advocacy group, to conduct a major review of all treatment standards for dialysis. It was released in 1997. The physicians on the review board, several of whom were paid consultants for Amgen or on its scientific advisory board, recommended raising the standard to about 90 percent of normal.
Amgen sales agents fanned out across the country to spread the new gospel. Medicare’s payments for Epogen soared. In 1997 the agency that oversees the program, the Health Care Finance Administration (HCFA), tried to set a maximum limit on reimbursements for the drug. Amgen hired a phalanx of top Washington lobbyists, including former Republican National Committee chairman Haley Barbour and former Senate majority leader Robert Dole, to beat back the effort. During hearings on HCFA’s budget, Senator Arlen Specter, a Republican from Pennsylvania whose state contains the operations of a number of major pharmaceutical firms, ordered the agency to rescind the limit or face a sharp cut in its budget. The Clinton administration officials who ran the agency relented, and Medicare’s Epogen payments continued their upward march.32
The company continued to pour its research dollars into scientific experiments aimed at justifying the increase in red blood cell counts for dialysis patients to normal rates, even though at least one clinical trial showed that in some cases it caused excess deaths from heart attacks and strokes. Allen Nissenson of UCLA, a past president of the Renal Physicians Association who sits on Amgen’s medical advisory board and receives substantial research funding from the firm, is a chief proponent of this point of view. “Why shouldn’t dialysis patients have the same hematocrit as everyone else?” he said. “That’s the way the body is designed. There’s a tiny bit of evidence that higher hematocrits might be beneficial.”33
When I spoke with Eugene Goldwasser in his University of Chicago office in late 2000, he was recovering from a three-day deposition in Amgen’s latest patent litigation fight, this one a suit by the biotech behemoth against a company called Transkaryotic Therapies Inc. (TKT) of Cambridge, Massachusetts, which wanted to make and sell its own version of Epo. TKT’s founders have developed a method of making proteins using human cells, not the Chinese hamster cells used by Amgen. If TKT had succeeded in court, it would have subjected all biotechnology products to technological competition. But in January 2001, the same federal judge in Boston who ruled in the Genetics Institute case declared that TKT had infringed on Amgen’s patents. One Wall Street analyst quipped that the company was “a brilliant legal department that happened to develop drugs.”34
Goldwasser didn’t want to talk about the constant courtroom squabbling that drained so much of his time. He wanted to tell me about the problems he had funding his own research. His work during the 1990s had focused on the kidney cells that produced Epo. He thought that if he could decipher the kidneys’ internal mechanisms for producing the enzyme, it might be possible to repair damaged kidneys. But like most basic research, it would take time, more time than Goldwasser probably had. Moreover, with a wildly successful therapy on the market, NIH had lost interest in his work. Amgen had donated thirty thousand dollars a year to support his lab over the years, but it was far short of the three hundred thousand dollars he needed if he was going to continue his sixth decade of work on Epo.
As he gave me a tour of his lab, he pointed to the outdated electrophoresis machines, beakers, centrifuges, and incubators that had been the tools of his great discovery. Unless he came up with a major grant, he would soon dismantle and sell them, probably to some high school, or perhaps to a developing country that could only afford technologies that are several generations old. I asked him if he had any regrets about not patenting his discovery. It would have generated millions of dollars a year in royalties. He looked at the machines wistfully. “If I had 1 percent of a billion dollars,” he said, “I could buy a new pair of shoes.”