In late 1975, after the government officials got off that TWA flight from California, laden with all of the cells they had removed from Hayflick’s lab, and delivered them to the ATCC, experts at the Rockville repository thawed and tested them for contamination. Examining the youngest ampules—those at the eighth passage—they found that the cells in all but 7 of 55 ampules were contaminated with bacteria. But the power of exponential growth meant that those 7 ampules of the youngest WI-38 cells went a long way. The cell culturists at the ATCC expanded the sterile cells inside those 7 ampules until they had doubled a handful more times, producing in the process more than 120 ampules, each one containing enough young cells—cells at the twelfth and thirteenth population-doubling levels—to make hundreds of millions of vaccine doses. The FDA soon certified these as clean and ready for vaccine making.32 They became available for purchase to vaccine firms for $30 per ampule.33 But such was the fear generated among vaccine makers by the Science article that Merck appears to be the only company that took advantage of that fact.
• • •
In 1996 Hayflick used the Freedom of Information Act to obtain an inventory of all of the vaccine-ready WI-38 cells then resident at the ATCC. It shows that the cell repository still had on hand 101 ampules of the young, sterile cells, with another 20 such ampules stored at the Coriell Institute for Medical Research, a biobank in Camden, New Jersey. (Cell banks commonly store a backup supply of cells at another location, to safeguard against losing all the cells in the event of a natural disaster or some other calamity.) These 121 ampules of twelfth- and thirteenth-generation cells were derived from 6 of the 7 original, sterile, eighth-passage ampules removed from Hayflick’s lab. But the inventory shows that there are no cells at all available from the expansion of the seventh of those ampules—ampule number 52B. It seems likely that those are the cells that went to Merck in the 1970s, to make Plotkin’s rubella vaccine.
In June 2016, another Freedom of Information Act request revealed that in the years between 1996 and 2016, the number of available ampules at the ATCC had dwindled by only eighteen. (At least some and probably all of these eighteen ampules have been set aside for Merck.) Which is to say that, not counting the score of ampules that are safely stored at the New Jersey cell bank, there are still eighty-three vaccine-ready ampules of WI-38 cells, secured by the ATCC’s twenty-four-hour surveillance cameras, alarm systems, and locks, waiting to be put to use.
CHAPTER TWENTY-FOUR
Biology, Inc.
Washington, DC, 1980
If there is some gold in the hills, and you happen to get a chunk, well, there is no point in leaving it in the ground if somebody is going to pay you for it. That’s what the biological sciences are, a tremendous hotbed of intellectual and commercial ferment, with the possibility to discover one of the mysteries of life and also get rich quick.
—William J. Rutter, former chairman of biochemistry at the University of California at San Francisco and cofounder in 1981 of the biotechnology company Chiron, speaking in 19921
Hayflick often describes the effects of his 1976 lawsuit against the U.S. government in grandiose terms. He credits it for “turning around the mind-set of almost the entire biological community” on the issue of whether academic scientists should be able to profit from their inventions.2 When they saw the government go after him for laying claim to the cells he had derived from Mrs. X’s fetus, he says, a vast swath of his colleagues became convinced that they should all have the right to make money on their inventions.
In fact, right through the 1970s many biologists remained adamantly opposed to sullying what they saw as a pure pursuit with the taint, and incentives, of commerce. One venture capitalist described Stanford’s faculty in the late 1970s as “the bastion of anti-entrepreneurial activity,” notwithstanding the university administration’s efforts to patent Cohen and Boyer’s gene-splicing technology.3 In 1980, Stanford’s new president, Donald Kennedy, a biologist by training, worried aloud that the university’s new interest in patenting could jeopardize an academic tradition that treasured free and open inquiry.4 Another venture capitalist, Brook Byers, recalled the reaction when in 1978 a professor of medicine at the University of California at San Diego named Ivor Royston founded a biotechnology company called Hybritech to produce specialized antibodies to treat cancer. “It was sort of like when Bob Dylan went electric in the sixties,” said Byers. “We were seeing [Ivor] as a pioneer, but his colleagues were seeing him as a turncoat.”5
Still, change was coming, and quickly: 1980 would be the year of a seismic shift in what was legally possible for biologists who wanted to become entrepreneurs and for the universities where they were based. The forces that converged to cause this landscape-shifting earthquake were far bigger than Hayflick and his lawsuit.
In the late 1970s the U.S. economy was on the rocks, ground down by high unemployment, alarming inflation, declining productivity, and growing international competition. Politicians were casting about for remedies. They became amenable to arguments that universities were parking lots of scientific inventions blocked in by the fusty U.S. government’s title to discoveries made on its dime—discoveries that, when they were patented, the government licensed nonexclusively, depriving companies of the commercial incentives to develop them. The numbers spoke for themselves: prior to 1980 a paltry 5 percent of government-owned patents were ever used in the private sector.6
As Elizabeth Popp Berman explains in her excellent book, Creating the Market University, most university-based inventors were funded at least in part by the government, so the impact of government title was pervasive. Those who wanted to see change—an activist group of patent attorneys and patent managers both inside the government and at universities—had run into a concrete wall in the administration of President Jimmy Carter. Carter officials believed that handing title to government grantees amounted to a giveaway of inventions that taxpayers had already paid for and should be able to use at will.7 In 1977 the new Health, Education and Welfare secretary, Joseph Califano, shut down even the waivers that had allowed inventions like Plotkin’s rubella vaccine and Koprowski’s rabies vaccine to be owned by the institutions where they were developed.8
The collision of the deteriorating economy and the Carter administration’s unyielding opposition—the shutdown of the waiver process provoked agitated calls to their congressional representatives from universities—opened the minds of two key senators to the argument that U.S. innovation was being hurt by Uncle Sam’s nearly ubiquitous title. Republican U.S. senator Robert Dole of Kansas and Democratic senator Birch Bayh of Indiana became convinced that allowing universities to claim title to inventions would speed commercialization, boosting U.S. competitiveness, creating jobs, and bringing badly needed economic growth.9
In September 1978 Bayh and Dole introduced legislation that granted universities, along with nonprofit organizations and small businesses, the right to claim title to U.S.-funded inventions, provided that they tried to patent them—and provided that the universities and nonprofits shared any resulting royalties with the individual inventor.10 Big businesses were left out of the bill, to weaken the “government giveaway” argument.*11
The first congressional hearings on the Bayh-Dole bill were held in May of 1979.
In the meantime, in a majestic, colonnaded building one hundred yards from where the senators were pushing the new bill, the U.S. Supreme Court was preparing to hear arguments in a case that was of monumental significance for what we today call the biotechnology industry—an industry that scarcely existed in 1980.12 In March of that year, the nine high-court justices heard the arguments of a microbiologist named Ananda Chakrabarty who was working for General Electric when, in 1972, he filed a patent application on a genetically engineered, oil-destroying bacterium (Pseudomonas) that he had created. Unlike its naturally occurring brethren, Chakrabarty’s microbe was able to break down the crude oil from spills into harmless components
that actually provided food for aquatic life—rapidly, efficiently, and in diverse environments. The U.S. Patent and Trademark Office in 1977 rejected his claim, on the grounds that living things were not patentable. In a five-to-four decision, the high court disagreed with the patent office, famously opining that Congress intended patent law to encompass “anything under the sun that is made by man.”13 So long as a living thing was truly man-made, in that it had been the product of human manipulations, it was patentable.
The decision in Diamond v. Chakrabarty was handed down in June 1980. It opened the floodgates that launched the biotechnology industry. Patents followed on everything from a gene that directs the production of human growth hormone to a mouse genetically engineered to be prone to cancer to the controversial human embryonic stem cells that were isolated at the turn of the twenty-first century. In just one measure of the 1980 decision’s impact, consider that in 1979, before the high court made clear to potential investors that biotech products would definitely be patentable, there were about a dozen mostly nascent U.S. biotechnology companies with virtually no revenue. In 2015, there were 394 publicly held U.S. biotech companies, with $117 billion in revenue—not counting the successful biotechs that have been bought up by big pharmaceutical firms.14Other developments in the late 1970s also fed the biotech boom that began in earnest in 1980. They included a freeing up of venture capital stimulated by a capital gains tax cut and by a relaxing of Department of Labor rules that allowed big pension funds to begin investing in venture capital. They also included Congress’s decision not to control the new gene-splicing technology with legislation.15
Encouraged in part by the Chakrabarty ruling, Genentech, the company that Herbert Boyer, the innovative UCSF scientist had launched in 1976, despite the opprobrium of his colleagues, went public. The four-year-old company had yet to produce a product—its genetically engineered insulin (the first biotech product) wouldn’t come to market until 1982—but on its first day on the market, in October 1980, Genentech soared to a value of $532 million, or $1.5 billion in 2016 dollars. By the end of 1980, Boyer was worth $65 million.16 Genentech would be the first among many biotech companies, and Boyer the most visible and successful of a new breed of entrepreneurial biologists who made the leap into business.
But even the high court’s decision could not in itself make entrepreneurs of academics. Genentech and dozens of other companies that were soon founded by business-inclined biologists, backed by venture capitalists, would have been seriously handicapped had it not been for two other critical events that transpired in the closing weeks of 1980.
The first was the issuance by the Patent and Trademark Office on December 2, 1980, of the first of several patents on Cohen and Boyer’s revolutionary gene-splicing technology—the tools that, among many other things, allowed scientists to target desirable genes with molecular “scissors” and splice them into bacteria that would then pump out the corresponding proteins in quantity. Boyer’s Genentech and scores of other mostly brand-new firms rushed to license the technology from Stanford and the University of California, both of which had negotiated agreements with the U.S. government allowing them to own the patents well before the Carter administration came to power. By the end of 1981, seventy-two companies had each paid $20,000 to license the technology from Stanford and UC.*17
Ultimately, 468 companies would license the technology.18
The second event transpired ten days later, on December 12, when a reluctant President Jimmy Carter, in his waning days in office and on the last possible day before the legislation would otherwise have died, signed into law the Bayh-Dole Act, which had been pushed through a lame-duck session of the U.S. Congress. At the stroke of his pen universities won title to any promising U.S.-funded inventions that they wanted to try to commercialize. Their only obligations were to direct a portion of the resulting royalties to the academic inventors and to put the rest of the money back into their institutions. No longer would discoveries and inventions, many of them being enabled almost daily by the new tools of molecular biology, remain parked in the academy. And no longer would academic scientists be looked at askance for collecting on their discoveries.
Universities rushed to establish technology-transfer offices. They staffed them with smart professionals deployed to hunt out and apply for patents on their scientists’ most promising-looking inventions. Everyone wanted to get in on what looked to be a lucrative new revenue stream.
For some, it was. By the time they expired, the Cohen-Boyer patents had earned Stanford and the University of California more than $250 million.19 Columbia University earned $790 million for its patents on a process for inserting foreign DNA into host cells that led to new medicines for illnesses including anemia, strokes, and multiple sclerosis.20
In the first thirty-four years after the Bayh-Dole law was enacted, the number of patents issued to U.S. universities each year grew more than sixteenfold to an all-time high in 2014 of nearly 6,400.21 (This is the most recent year for which data is available.) Most have gone to big institutions.22 And many of them—far out of proportion to the number of U.S. patents generally, and also far more than were found, proportionately, in universities’ modest patent portfolios prior to 1980—are in the medical sciences. For instance, in 2012 biotech patents comprised 1 percent of all U.S. patents but 25 percent of the patents granted to U.S. universities. Universities’ income from licensing, which had hardly amounted to chump change in 1980, exceeded $2.7 billion in 2014.
The 1980 changes marked the beginning of a shift to the acceptance within academia of biologists as businessmen, especially when venture capitalists started coming out of the woodwork to woo expert molecular biologists in the only place they could find them—the academy.
The opportunities didn’t present themselves to everyone, by any means. In a 1985 survey of biotechnology faculty at major universities, just 8 percent reported owning equity in a company based on their own work.23 And there was certainly ironic grumbling among some university scientists, on whom it was not lost that they had been asked, in scarcely the space of time needed to run one or two experiments, to do an about-face. They were no longer supposed to be motivated only by the love of science and the greater good; they were also to be advance agents with eyes ever peeled for the next commercial opportunity for their institutions—and themselves. Still, the adjustment was made, and today when academic biologists found, run, advise, or consult for companies, and become wealthy doing so, they are seen not as traitors to their calling but as paragons of success.
• • •
Hayflick watched the events of 1980 and beyond play out with a great sense of irony, first as he struggled to keep his family afloat and to find a better work situation than his insecure post in Oakland, and then as he moved in 1982 to a position as director of the Center for Gerontological Studies at the University of Florida in Gainesville.
His lawsuit against the government looked set to head to trial when, in September 1981, after numerous failed attempts, the two sides agreed to settle out of court. By this time Hayflick and his attorneys had been battling the NIH for nearly five years. The government’s willingness to come to the settlement table may have been informed, in part, by Reagan’s people taking over at the recently renamed Department of Health and Human Services, the NIH’s parent department, where under the Carter administration the anti-Hayflick animus had extended to the highest levels. Those people were now gone. Bringing Hayflick to trial was also going to be tough for the government politically, against the backdrop of the brand-new Bayh-Dole law, with its emphasis on universities commercializing their scientists’ inventions and directing some of the cash payoff to the scientists themselves.
That being said, there was also a central, if prosaic, reason that made the government willing to settle in the summer of 1981: Schriver, the NIH investigator who had pursued Hayflick so zealously, had retired in March 1980. His impending departure dismayed Vincent Terle
p, the lead Department of Justice attorney handling the case, who wrote to the NIH’s deputy director, Thomas Malone, that Schriver “has been invaluable in assisting me in the development of this case, and it is my opinion that his continued participation is essential to a successful outcome.”24 Terlep persuaded the NIH to hire the retired Schriver as a consultant. But Schriver was expensive, and paying him as the lawsuit dragged on began to look like too high a price to pay for an uncertain outcome.25
Hayflick, his company Cell Associates, and the NIH signed an out-of-court settlement on September 15, 1981. The agreement described itself as a “compromise.” Under its terms both the question of whether the NIH had violated the Privacy Act in releasing the Schriver report and the question of who owned the WI-38 cells were “in reasonable dispute,” the signatories conceded. The parties signed “without any party admitting or conceding liability.”26
Under the terms of the settlement, Hayflick was granted title to six of the original eighth-passage ampules of WI-38 and their progeny—for use, the settlement specified, in his current grant to study cellular aging. The NIH was granted title to the rest of the eighth-passage ampules in its possession.
Hayflick renounced title to any WI-38 cells of any age in the possession of anyone else, including the government—with the exception of a handful of ampules of older WI-38 cells that the government had left behind after cleaning out his Stanford freezer in the summer of 1975. These ampules he was granted title to “without restrictions on use.”
Thanks to sky-high interest rates, the money from Hayflick’s sales of the cells had grown from $67,000 to about $90,000.27 The government ceded all of it to Hayflick. He promptly signed it over to Bill Fenwick to pay for nearly six years of legal services.
The Vaccine Race Page 41