Did the failure of genomics doom the US economy?

By Felix Salmon
June 14, 2010
Mike Mandel has an interesting nominee for the most significant economic event of the past decade: the failure of the Human Genome Project to become the medical and financial blockbuster that everybody expected tend years ago.

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Mike Mandel has an interesting nominee for the most significant economic event of the past decade: the failure of the Human Genome Project to become the medical and financial blockbuster that everybody expected ten years ago.

If the project had met its expectations, says Mandel, we might be looking at spending much less money on treating incurable diseases like cancer and diabetes; we would have created a lot more great jobs in the pharma industry; and the US would have a trade surplus in pharmaceuticals, rather than a trade deficit of more than $30 billion.

Still, hope springs eternal, for Mandel, at least:

Here’s how I see it: The U.S, and more broadly the “advanced” countries, did what they were supposed to. They invested heavily in the cutting-edge new technology, biotech, which promised to make the biggest difference in the most important areas–health, food, energy. The research has gone great, tremendous progress has been made. Commercialization thus far has sporadic–but the gap between research and commercialization is one which has been repeatedly bridged in the past. So I’d say that the odds are good that the Human Genome Project will have a significant economic impact over the next 5-10 years.

Mandel does worry whether “a misguided patent system” is a “structural impediment in the U.S. innovation system”; I’d be interested in that too. But the big picture is that the US made a multi-billion-dollar bet on genomics, and so far that bet has failed to pay off. That doesn’t mean it was a bad decision, but it’s still worth thinking about what might have been. Maybe we were just unlucky.

Comments
13 comments so far

That’s very interesting. I wonder if this bolsters or hurts the case for big mega-projects that require enormous sums of money to get started. Certainly all the investment in internet infrastructure paid off in the long run, even after the tech bubble burst in 2000. Maybe the commercial medical revolution is another decade away.

Posted by ishmaeldaro | Report as abusive

Re: the patent thing: I found “Against Intellectual Monopoly a very interesting read (see, e.g., http://www.goodreads.com/review/show/758 31672 for a decent synopsis of the main points made by the authors).
Anyway, the US is never going to export lots of drugs (and genetic fixes) at the current prices, and the current prices are so high in part because of the low competition due to patent pools etc. All of that stifles innovation, and makes it unlikely that other countries will be willing (or able!) to buy the drugs in sufficient quantities to close the US trade balance deficit.

Posted by Foppe | Report as abusive

It probably didn’t help, at least in the United States, that research on human stem cells was curtailed for much of the last ten years. Europe also has issues, although theirs are with the use of genetically-modified organisms, not with the basic research.

Posted by KenInIL | Report as abusive

10 years is a pretty short time to expect widespread commercial returns from basic research. It can take that long to bring a treatment to market, let alone develop the treatment in the first place based on the research. Also, you can expect the pace of commercialisation to accelerate. It took ten years and millions of dollars to come up with the first draft of the human genome. Now a human genome can be sequenced in less than a day with costs that are lower by several orders of magnitude.

Posted by GingerYellow | Report as abusive

The mapping of the human genome (genes), proteome (proteins) and the interactome (interaction of proteins) are the most important breakthroughs in medical history. They are leading to a complete new wave of therapeutics, including personalized medicine, along with far superior methods for making proteins and vaccines. See: http://www.lentigen.com for a good example of this.

The issue is this will take 20-30 more years to fully bear fruit, but already there have been dramatic results. We have used gene and cell therapy to successfully treat a certain form of blindness, ALD and even Parkinson’s Disease, among others. Many more such therapies are in clinical trials, or are about to begin clinical trials for a wide range of diseases from hemophilia, to numerous cancers, HIV/AIDS, among many others. There are numerous other clinical trials for many major diseases using the knowledge derived from the discovery of genes, proteins, and their interaction, including Alzheimer’s and heart disease.

For anyone wanting to subscribe to a free email newsletter that provides biweekly summaries of these and other advancements, see: http://www.gbpcap.com

The biggest issues today are twofold:

First, we have mapped all 30,000 of our genes, but we only know what roughly one third of them do. The same ratio is true of our proteins (roughly 15,000) and their interactions (roughly 200,000). Every day new discoveries are made in each of these areas, and as they are made, they open the door wider to useful next generation therapeutics for more and more diseases. Along with better understanding these mappings, we are discovering the biomarkers that are associated with each of the diseases, so that more effective therapeutics using this new generation of natural biological approaches (v. drugs, which are unnatural) can be developed.

This is leading us all to the promise of personalized medicine, where the therapy we each receive is personalized to us based on our unique genetic makeup. Without the mapping of the “nomes”, this would not be possible. For example, each of us has an unique set of genes, other than identical twins, and as a result, our immune systems create unique T-cells to fight of diseases, such as cancer. One person’s T-cells for a given cancer will not work in another individual with a similar cancer, since both the cancer and the T-cells are unique to the individual based on their genetic makeup. Fortunately, scientists have developed a way to extract T-cells from a given human, expand them between 1000 and one million times within just six to eight days and put them back into the human through a series of injections to boost the immune system. This can give the immune system a numerical advantage against cancers and other diseases. This form of personalized medicine is still in its infancy, but it is already providing some dramatic cases of people with various forms of cancers and PML, who have failed traditional therapies, walking away with little or no sign of the diseases. Furthermore, these T-cells can even be augmented with additional proteins to make them more effective against certain diseases.

Second, there has been a challenge of how to best target the appropriate cells for these therapies. Here is perhaps where the greatest setbacks have occurred. However, scientists at the Salk Institute and Johns Hopkins over the last 22 years have laid the groundwork for the most effective “vector” for targeting cell populations that need treatment. This has lead to the development of clinical grade delivery vectors, called lentiviral vectors, which have no known off-target effects (side effects) and which can deliver the required therapeutic permanently to all cell types in one or a few doses and reach a high percentage of the target cells. These have been used safely in humans trials since July, 2003, without any side effects. This same technology has been demonstrated to manufacture proteins (an $80B industry) and vaccines without the use of chicken eggs, in a better, faster and cheaper way. These same vectors also advance the science of stem cell technology and RNA interference, two highly promising areas of therapeutics. Again, Lentigen is leading the world in the development of these approaches.

In hundreds of years from now, historians will look back upon this period as the renaissance of life sciences – the period when we evolved from the barbaric therapeutics of chemotherapy, surgery, and radiation to one of natural biologics provided by personalized medicine, all of which is driven by the mapping of the human genome, the proteome and the interactome. We just need to be patient – no pun intended.

Posted by netvet | Report as abusive

Here’s an example of my previous post of the success of gene therapy from today’s news:

Public Release: 11-Jun-2010
Journal of the Federation of American Societies for Experimental Biology
OU researchers find way to prevent blindness in research model for retinitis pigmentosa
Researchers at the University of Oklahoma Health Sciences Center have found a way to use a radical new type of gene therapy to prevent blindness caused by retinitis pigmentosa, giving hope to the estimated 100,000 Americans who suffer from this debilitating disease.
NIH/National Eye Institute, Foundation Fighting Blindness

Contact: Diane Clay
diane-clay@ouhsc.edu
405-271-2323
University of Oklahoma

Posted by netvet | Report as abusive

I nominate nanotechnology for the runner-up. We still don’t have miniature robot servants, nor has the world turned into grey goo. Instead, we have pants that don’t stain as easily.

Will there be a future prize going to green energy? If you look at the assumptions behind the predictions in that article, they’re positively grounded compared to energy research.

Posted by absinthe | Report as abusive

Ten years ago I worked in health care venture capital, and in the years years since I’ve transitioned to public equity health care investing. Given that background, a few points:

“Everybody” didn’t expect the “blockbuster” progress/return mentioned above, although the crowd certainly did. There were lots of investors, though, who were extremely cautious about the claims/forecasts being thrown around, and deployed their money accordingly. The genome hoopla was a classic investment bubble, just like those involving internet companies and telecom stocks that occurred around the same time.

Biotech as an industry is especially prone to these types of bubbles, and they happen with shocking regularity every few years. They sometimes are even tougher to pop than other bubbles since – even under the best of cases – the drug development cycle takes so many years. This means that it is easier for people to fool themselves into believing what they want for longer than in most other industries. And, I may note, spend tremendous amounts of capital along the way.

On the other hand, I would never call the effort a failure. There has been some amazing science done, which will lead to real progress across many areas of health care. It only is a failure when measured against unrealistic expectations. And, of course, it certainly feels like a failure if you were someone who invested based on unrealistic, pie-in-the-sky assumptions.

In case you’re curious, the claims/forecasts involving stem cell therapies over the past few years are just as ludicrous, if not more so, than many of the things we were hearing about the genome ten years ago. Once again, by studying stem cells we will learn things we could only have dreamed of a short time ago, and over time I’m sure actionable insights will be had. They will occur, though, many years in future, and in the meantime there will be a lot of patients and naive investors who will be left seriously disappointed.

Finally, with respect to KenInIl above, private spending on stem cell technologies wasn’t curtailed over the past ten years (only government money was), and there has been (for now, at least) plenty of risk capital available in this sector (both from investors and large cap industry firms) to investigate any avenue that showed promise. The idea that US government policies materially held stem cell progress back is often stated, but I think unsupported by the facts.

Posted by Alvarez | Report as abusive

If genomics had somehow resulted in a cure for cancer, one can imagine a short term savings but a longer term result would of more people needing extended care for dementia and other late-in-life chronic conditions. We may be running into some kind of cost frontier on this problem.

Posted by flevy | Report as abusive

I remember the arguments for and against the genome project well. I worked in a very successful academic lab doing small scale science (for the cognescenti: a two R01 lab) that was publishing in basic science but with clear applications to health care. The head of that lab was opposed to the genome project, arguing that it would lead to the loss of funds to the NIH small scale science basic research program (the R01 grant program). This was in the late 80s. (Where did this idea come from that the genome project started 10 years ago?) James Watson, among others, was instrumental in arguing against this position. And the big science proponents won the argument.

Both sides correctly predicted the future. The genome project has provided the biomedical research community with incredible tools to probe basic biology and disease. Ventner’s EST project (“stupid science” according to the critics) was a hugely important tool, but it did not itself yield health care improvements. Its hard now to remember how much time we spent gene cloning, back in the day. The EST project cut months of labor down to a few days.

But we have today an NIH that is rapidly losing the best and brightest biomedical researchers, because it can not fund them. We talk about the “lost generation”. Lots and lots of great small scale science, science that could lead to real breakthroughs and real therapies, is not getting done. There are many reasons for this, some political (NIH funding had broad bipartisan support until 10 years ago), some institutional, some economic, but the genome project has changed the way the biomedical community does science, for the better.

Its a bit hard to judge the success of the genome project. Nearly every paper written in the basic biomedical field now relies directly or indirectly on the knowledge or tools coming from the genome projects. There are therapies in development and discovery stages that owe their existence to the genome project. But it will be very hard to point to any one therapy and say: that therapy is directly from the genome project. In the end I don’t know how we will judge the success of the genome project. I am a skeptic of personalized medicine and other direct products of the genome project.

The problem is that we have fallen in love with the huge projects (the proteome, the interactome, the expressome) and, just as predicted, working on the hard stuff that yields discoveries (R01 projects) rather than “-ome” databases is neglected.

It is harder to be biomedical researcher relying on R01 funding than ever before. (Its still a good life, I can’t complain personally.) I think the skeptics of the 80s were dead right: funding goes to big projects at the expense of the little projects that solve problems.

There are many reasons for the failure of big pharma to deliver economic benefits, products, and the genome project may be a part of that story. The current problem with biomedical product development, the so-called empty pipeline, is the result of other choices big pharma was making in the 80s. An empty pipeline in 10 years may well be the fault of the genome project, but now is not the time to judge that outcome. A comment for a different post, that.

Posted by ppm | Report as abusive

I’m not sure I agree with your assessment. The payoffs of the HGP are just beginning to bear fruit economically and have a huge potential for growth. My little startup (www.dynemobiosystems.com) would not be anywhere without the HGP. The fundamental building block of our tool is the sequences generated by the HGP. Without that investment we would not be in the position we our company is in. We are poised to be able to predict patient response to therapy and have already been able to demonstrate prediction of breast, colorectal and prostate cancer outcome. The growth in personalized medicine and directed therapies (both fields we aim to entrench within) will be momentous over the coming years. I think it is far too soon to judge the HGP as waste of money.

Posted by IanWT | Report as abusive

Re Internet: most of the infrastructure was put in by private companies after the original military-operated Internet was sold and privatized. It paid off because it was done privately, where investors have incentives to ask hard questions about future payoff. Government projects have ZERO incentive for this since they have unlimited access to the public till.

I love how those who claim the HGP was a great success never have concrete successes of their own to show for it; they always use the future tense: “we are poised to do this and that” or “In about 10 years’ time, we are quite certain that we will be able to do this and that.” Obviously, this sort of vague hand-waving about “being posed for results” or the Great Expectations 10 years hence would scare private venture capitalists away.

Re patents and exports: doesn’t prove much since most of the world has socialized healthcare, whose governments will never purchase a pricey new drug…even if a patient pulls out wads of cash from his wallet and wants desperately to buy it. (E.g., Avastin is unavailable in the UK NHS. If a cancer patient believes it will help him, he’ll have to come to the U.S. to get it, or get onto private healthcare in the UK.). Re cost in general: End the bogus and burdensome oversight of a captured regulatory agency like the FDA and you’ll have lots more competition, better products, and lower prices (the usual results of increased competition).

Re stem cell research: private investors found little impressive in embryonic stem cell research, but lots of interesting things in other kinds of stem cell research. This got little attention in the press; in fact, whenever research somewhere even hinted that a rat was able to navigate a maze a bit more easily because of some embryonic stem cell drug, it made the front pages of the NYTimes. But if diabetics were actually getting real benefits from a therapy derived from non-embryonic stem cells, it was buried on page B-12. For a certain group, it’s clear that non-embryonic stem cell research is the “wrong kind” of stem cell research (despite the fact that other kinds of stem cells demonstrate the same sort of pluripotency as embryonic ones are presumed to have).

Big Government funding for Big Science does nothing but politicize scientific research, both “pure” and “for profit.” The root problem with the HGP was its standard dogma of genetics: 1 gene “determines” 1 protein. Expecting to find about 100,000 genes, researchers found only 34,000. Obviously, the dogma was simply that: dogma. And that is the problem with all science funded by government grants: money is handed out to a committee that has to decide what to do with it, and it will always go to those researchers whose views most closely align with those of the grant committee. Big Government + Big Funding + Big Science = Big Mediocrity (if not outright failure).

To keep the funding going in the absence of concrete, usable, commercial results, various spokespersons are necessary to make Big Claims regarding all those great cures, and therapies, and Golden Age of Medicine Goodies, that we’re all going to get if we simply pay up, shut up, and wait.

Posted by EconomicFreedom | Report as abusive

Re socialized healthcare and its unwillingness to allow treatments with pricey new drugs: Washington Post today (16 August 2010) states that the FDA may rescind its approval of Avastin (a cutting-edge anti-cancer drug) for patients with breast cancer since it exceeds the cost-effectiveness threshold that will be set under Obamacare. Assuming the states and the Supreme Court don’t shoot down Obamacare as just plain unconstitutional, this means that no matter how much cash you willingly pull out of your wallet to get yourself or a loved one treated with this new drug, the healthcare system will not allow it to be made available for you. You will be told to “make your final arrangements”. (However, wanna bet that any member of congress who gets breast cancer will be able to obtain all the Avastin she wants?)

Posted by EconomicFreedom | Report as abusive
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