Monday, May 04, 2009

Bio-Tech U

The San Francisco Chronicle just reported that a new Chancellor has been nominated for the University of California - San Francisco (UCSF). UCSF is functionally a health sciences university, and its Chancellor functions as its president. The UCSF medical school is generally considered one of the elite US academic medical institutions.

Genentech executive Susan Desmond-Hellmann has been nominated to be the next chancellor of UCSF, making her the first woman or biotech leader ever asked to run the research campus and hospital system that is San Francisco's second-largest employer.

Desmond-Hellmann has served most recently as president of drug development at Genentech, the South San Francisco biotech firm that was recently acquired by Swiss drugmaker Roche. She was trained as a physician, did her internship at UCSF and has taught there recently as an adjunct associate professor while working at Genentech.

Although prior UCSF chancellors have come from more academic or scientific backgrounds, [Dr Holly] Smith said Desmond-Hellmann's biotech connections would be an advantage as the university tries to translate scientific discoveries into medical treatments.

Dr Desmond-Hellmann is, in my humble opinion, a very unusual candidate to be Chancellor of one of the country's premier academic medical institutions. According to her official Genentech bio (taken off the Genentech server, but transiently available in the Google cache here), and a biography in Nature Drug Discovery, Dr Desmond-Hellmann, after getting both an MD and an MPH, spent two years doing AIDS research in Uganda as a UCSF junior faculty member, and then spent a few years in private practice hematology-oncology. She published few articles (5, according to Medline, last in 1995), and by 1993 went to work in industry, first for Bristol-Myers-Squibb. She started at Genentech in 1995, and worked her way up to her current position, "president, Product Development. In this role, Hellmann is responsible for Genentech's Development, Process Research & Development, Business Development, Product Portfolio Management, Alliance Management and Pipeline Planning Support functions. Hellmann is a member of Genentech's executive committee." Before her nomination to be Chancellor, Dr Desmond-Hellmann was "affiliated" faculty of the Department of Epidemiology and Biostatistics at UCSF, apparently with the rank of adjunct associate professor. In that capacity, she apparently gave a single seminar in 2007, and lectured in the Designing Clinical Research course in 2003.

So, on one hand, Dr Desmond-Hellmann, to be charitable, does not have much of an academic track record, at best approximating that of a very junior medical faculty member. She also certainly has no experience in academic administration. In general, people who lead academic medicine often have substantial track records in academics and in academic administration. So, in some sense, Dr Desmond-Hellmann's appointment seems to based on the theory of the generic manager. That is, the popular notion in the business world managers can manage anything, any organization, with any mission, in any context. Managing in the complex health care context, especially managing large, complex academic medical institutions, may not be easy for those used to managing elsewhere, even in the health care corporate world.

Furthermore, the complex mission of academic medicine, which includes providing excellent care of individual patients, while discovering and disseminating the truth in a spirit of free enquiry, is very different from the mission of a for-profit biotechnology company. How well someone used to the bottom-line mentality of the corporate world would uphold the academic mission is not clear.

Dr Desmond-Hellmann came from a company known for charging very high prices for the drugs it marketed, and Dr Desmond-Hellmann was on record personally defending this practice. Quoting from a news article in the Journal of the National Cancer Institute [McNeil C. Sticker shock sharpens focus on biologics. JNCI 2007; 99: 910-914.]

Never mind their novel targets and mechanisms. It's the cost of new biologic agents that's creating a buzz these days. At thousands of dollars a month, which can mean many tens of thousands for some regimens, sticker shock has generated recent, prominent articles in both the national and trade press.

On one level, the argument is about macroeconomics. Neal Meropol, M.D., of Fox Chase Cancer Center in Philadelphia, pointed out that cancer drugs account for 40% of all Medicare drug expenditures. That makes them a major contributor to the country's high health care costs, now about 17% of our gross domestic product (GDP) and growing. That percentage is much higher than in other developed countries with higher life expectancies, he said at a forum on cancer care costs at the American Association of Cancer Research annual meeting.

On the other side of the macroeconomic debate, experts point out that the U.S. has a high GDP to begin with and so can afford to spend more on health. And cancer biologics, though among the most costly drugs, are still only a tiny fraction of total GDP, said Genentech's Susan Desmond-Hellmann, president for product development, at AACR.

Hellmann and others argue that with these drugs’ potential to alleviate the huge societal burden of cancer, biologics are worth the cost.

The industry has responded to concerns about costs by putting more resources into patient assistance programs. When Genentech received U.S. Food and Drug Administration approval for bevacizumab in lung cancer last October, it also announced a cap on expenditures for the drug for patients with family incomes less than $100,000 a year. In 2005, the median household income was $46,326.

Originally announced as $55,000, the cap actually doesn't kick in until after a patient has received 10,000 mg. At the wholesale acquisition cost, 10,000 mg is about $55,000, said Genentech spokesperson Edward Lang.

What the companies have not done so far is reduce prices. The reason, industry representatives say, is the need to recoup massive research and development costs, including high manufacturing costs for biologics. These costs have long kept biotech companies from making much of a profit overall, Hellmann said. She noted that profit levels of publicly held biotech firms have "hovered close to zero" throughout the life of the industry.

But, while Dr Desmond-Hellmann was defending pricing drugs that at more than $55,000 a year, and complaining about low industry profits, she was pocketing lavish rewards. According to Genentech's 2008 proxy statement, (the last available, since the company has been bought out by Roche), her total compensation was $8,361,348 in 2007 and $7,820,142 in 2006. In 2007, her total compensation was equal to 0.3% of the firm's total net income, and the top five company executives' total compensation was equal to about 1.5% of the firm's total revenues. In 2007, the firm's stock price declined from 91.30 on 6 January 2007 to 66.38 on 4 January, 2008, or 27%, according to Google Finance. In 2007, she held 1,616,383 shares of stock, or stock options exercisable within 60 days of January 31, 2008. In 2007 she exercised 170,000 stock options, realizing $11,556,663. So perhaps those high drug prices were needed not only to pay for research, but to make top executives, including Dr Desmond-Hellmann, very rich.

This raises further questions about her inclination to uphold the university's mission in the future.

University of California, San Francisco is a leading university dedicated to defining health worldwide through advanced biomedical research, graduate-level education in the life sciences and health professions, and excellence in patient care.

In any case, hiring a lavishly compensated top executive from a biotech firm known for its high drug prices to run a public health sciences university does considerably blur the line between academic medicine and the health care industry. In the Chronicle article, Dr Desmond-Hellmann declared, "I began my career at UCSF and my heart has never left it." If she does become Chancellor, let us hope that her heart will speak louder than all those millions she used to make by, among other means, charging more than $55,000 a year for bevacizumab.


Anonymous said...

This is not the first person with a business or drug background to move to academia. When we look at the official bio of the Dean of The Ohio State University Business School we find a person well steeped in business and the business of pharma.

Christine A. PoonDean, Fisher College of Business

The Fisher College of Business at The Ohio State University is pleased to announce the appointment of Christine A. Poon as dean of Fisher College of Business effective April 2009. Poon comes to Fisher after an eight-year tenure at Johnson & Johnson in Princeton, N.J., most recently as vice chairman of the Board of Directors and worldwide chairman of the Pharmaceuticals Group. She served as a member of the company’s Board of Directors and the Executive Committee and was responsible for managing the pharmaceutical businesses of the company. Her areas of expertise include domestic and international business operations and sales and marketing.

Poon began her career at Johnson & Johnson in 2000 as company group chairman of Pharmaceuticals and was appointed worldwide chairman of Pharmaceuticals in 2001. She was appointed worldwide chairman of Medicines & Nutritionals in 2003 and was named a vice chairman of the Board of Directors in 2005. In 2007, Poon assumed responsibility for the Johnson & Johnson Development Corporation, the Corporate Office of Science and Technology, the Corporate Office of Information Management, Worldwide Procurement and Worldwide Operations.

Prior to joining Johnson & Johnson, Poon spent 15 years at Bristol-Myers Squibb, where her most recent position was president of International Medicines. Her career at Bristol-Myers Squibb included marketing and strategic-planning positions, including stints as president of Medical Devices and senior vice president for Canada and Latin America Pharmaceutical Operations.

Poon is on the Board of Directors of Prudential Financial, Inc., in Newark, N.J., and the Fox Chase Cancer Center in Philadelphia, Pa. In 2004, she was named Woman of the Year by the Healthcare Businesswomen’s Association and named Business Leader of the Future by CNBC/Wall Street Journal in 2005.

Poon received a BA in Biology from Northwestern University, an MA in Biology/Biochemistry from St. Louis University and an MBA in Finance from Boston University.

One does not have to look hard to find where pharma gets its hard edge.

Steve Lucas

Anonymous said...

hi all,
Whoever become the Chancellor of University of California - San Francisco is not important but the chancellor knows his duty or not its important.

Dave Cragg said...

Roy, Sue's qualifications have little to do with the cost of new novel therapies for serious medical conditions. Nor does her lack of publications speak to the wealth of knowledge she has about drug discovery and translational medicine. As someone who has worked with Sue in the past, UCSF is very fortunate to have someone with her passion and leadership skills returning to the fold.

Roy M. Poses MD said...

Dave Cragg, - but one of my main concerns was how Dr Desmond-Hellmann would adapt to an organization with a mission, values and "corporate culture" very different from those of an entrepreneurial biotech company. It is unlikely that Dr Desmond-Hellmann, one of the top five executives of Genentech, was unconnected with decisions about drug pricing. Furthermore, as I noted above, she publicly defended those decisions. So the specific question remains whether someone who was quite comfortable pricing Avastatin in the stratosphere will be comfortable running a health care university whose mission includes serving poor patients.

Also, I am certainly not questioning Dr Desmond-Hellmann's experience in drug discovery. But doing drug discovery in a corporate setting may be different from research in a university setting in which publication and presentation are considered important. Finally, while drug discovery is an important part of health care, the mission of a health care university like UCSF goes far beyond drug discovery.

By the way, are you this "Dave Cragg," that is, Vice President of Human Resources at Cytokinetics, and former holder of a "leadership role" with Genentech?

Dave Cragg said...


As I stated in my first post I did work with Sue (for four years, 96-2000) and therefore have first hand experience with her leadership, people and technical skills. Do you have first hand experience interacting with her?

Avastin (not Avastatin) is priced competitively with other cancer drugs that prolong life. We could debate drug pricing forever and likely not agree, there are arguments on both sides. But to just attack pricing and not look at the business model, cost of drug discovery and development and the huge failure rate is a one-sided argument.

Do some research about Genentech's publication and presentation record, it would easily challenge almost any academic institution. Unlike most biotech's the commitment to basic research is incredibly strong.

You are correct that running an academic institution and a for profit biotech are very different challenges. My comments, based on personal experience, were that Sue is a tremendous talent and someone I believe will very successfully transition to the new role. Sometimes too much inbreeding is not a good thing; there is a place and need for both dedicated academics and translationally focused scientists. Let’s look back in 4 years and see how Sue does. My bet is UCSF will prosper well under her leadership.

Roy M. Poses MD said...

David Cragg,

I do not know Dr Desmond-Hellmann. All I have written is based on the public record, none on private knowledge.

I share your hope that UCSF will do well under her chancellorship.

But again, health care universities are about much more than basic research and drug development.