Biotechnology

Shedding Biotech’s Bad Name

Alex Khan

Feb 1999
This article first appeared on the Lancaster Buildings website

Mergers are not always what they seem. Speculation of commercial marriages provides net gains and losses (depending on your perspective) for those brave (or foolish) enough to invest in shares that could jump in value at the mere hint that two large commercial concerns are about to get hitched, or that are at least on the way to a no-holds-barred engagement party. Such second guessing also provides hazards for the would-be pundit. It goes without saying that the Glaxo Wellcome-SmithKline Beecham affair faltered at the pre-nuptial stage. A similar fate has befallen the much-vaunted link-up between US Agrochemical/ Biotechnology giant Monsanto and Healthcare group American Home Products that has been widely reported. Following on from its failed relationship with SB (prior to the flirtation with GW), AHP would be forgiven for seeking counselling to overcome its serial break-ups. Besides fractious match-making, one of the main problems that the pharmaceutical industry, particular the biotechnology sector, is likely to face in future is its public image. Medical and pharmaceutical advances have naturally raced far ahead of consensual morality, and the disputes into what is to be done with the latest scientific wonders to be unveiled to a mesmerised world will keep governments, regulators and lawyers busy for years to come, not to mention PR companies.

Ex Parte Watson
While mixed messages continue to be voiced in the press across Europe, it is hardly surprising that the likes of Monsanto are becoming greatly frustrated by what it may view as nebulous legal decisions based on legislation that can become out-paced by the technology it strives to control. In the Court of Appeal decision in R v Secretary of State for the Environment Transport and the Regions and Another, Ex parte Watson; Sharpes International Seeds Ltd and Another, Interveners (The Times 31 Aug 1998) on 21 July 19983, their Lordships held that the Ministry of Agriculture, Fisheries and Food ("MAFF") had acted unlawfully by permitting seed trials of a genetically modified maize plant to be conducted without first obtaining submissions relating to previous replicated trial data, which should have been conducted for at least two years (the "Reg 11 (3) test") (see .Council Directive 70/457EEC, the requirement to establish a national catalogue of plant varieties, UK requirements being contained in the Seeds (National Lists of Varieties) Regulations (SI 1982 No 844), Schedule 2).  The action was brought by an organic farmer in Devon who concerned that the maize plants in his neighbouring fields would become contaminated with the GM pollen. However, in his leading judgment, Lord Justice Simon Brown held that there was no legislative power to destroy the GM seeds under s. 111 (10) of the Environment Protection Act 1990, as the latter power could only be used with regard to considerations of health and safety and the protection of the environment, and then the competent authority in the UK would be the Department of the Environment, Transport and the Regions.

Legality of GM Plant Testing in UK

The surprising aspect of the case was that the Minister for Agriculture, Fisheries and Food admitted, in the form of an answer to a parliamentary question, that the requirements of the Reg 11(3) test had been abandoned in 1995. This means that 163 of the 300 or so field trials of GM plants in the UK, which are conducted by the National Institute for Agricultural Botany ("NIAB"), based in Cambridge under an arrangement made by MAFF through the British Society of Plant Breeders ("BSPB"), do not have the correct approvals. Hence, MAFF officials are "seeking urgent legal advice" and hoping to amend the legislation. It is difficult to know where this leaves the Plant Varieties Act 1997. It is doubtful that even the House of Lords could begin to clarify this legislative fudge. Anne Foster, British spokeswoman for Monsanto is, needless to say, concerned that the process of clarifying the legal status of the trials (and how the any confusion can be addressed) will inevitably lead to delays in GM plant developments programmes for both her employer and other "seed companies". Organic farmers are not expected to be unduly disappointed.

Public Reaction

The general hysteria surrounding GM food reached unprecedented levels in 1997 and it was even banned from the restaurants of the House of Commons. Ecological activists have also been attacking experimental fields of GM crops, the location of which have been made public in the spirit of openness, although not all saboteurs cause mass devastation. The Genetic Snowball movement symbolically pulls up only a few plants in GM crops as a form of protest. At a meeting of the Ecological Society of America in Baltimore, Allison Snow of Ohio State University (in Columbus) reported that a laboratory weed had been found to express the herbicide resistance of a GM crop, when the weed acquired the relevant gene from the GM plant. The laboratory weed thus became hardier than the naturally occurring counterpart of the weed, fuelling concern that genes conferring herbicide resistance could spread to weeds in the wild. In this climate of public concern, Monsanto appears to have asserted itself as the voice of the Agro-biotech industry, and in this vein has considered issuing proceedings against Granada Television over its World in Action documentary, in which the company is mentioned. In the programme, one of the senior scientists at the Rowett Research Institute in Aberdeen, Scotland, claimed that when laboratory rats had been fed with GM potatoes containing a gene (from the South American jack bean) that produces a toxin, concanavalin A, they had stunted growth and weakened immune systems. However, two days after the Granada programme, it was discovered that ordinary potatoes had been used, which were merely spiked with the toxin. The scientist involved (being 65 years old) was thus put out to pasture by a somewhat embarrassed Rowett Institute, hopefully though not left to feed on GM grass.

Current Research

Monsanto has spent millions of dollars on developing GM soya crops resistant to the herbicide glycophosphate ("Roundup") and plans to sell both the GM soya and Roundup to farmers. The company was confident of a huge commercial success as Touchdown was the only herbicide approved by the Environment Protection Agency ("EPA") for use on soya crops. Unfortunately for the company, UK rival Zeneca has obtained the soya from Hi-Bred of Des Moines, Iowa, and has been testing its own pesticide, sulfosate ("Touchdown"), on the GM beans. Monsanto have thus began proceedings in the US against Pioneer Hi-Bred for a breach of its licence agreement and Zeneca has responded with a suit claiming both the invalidity of Monsanto’s patent (relating to the beans) and unfair competition. Monsanto has inadvertently been successful in curbing another form of criticism. The publishers of the Ecologist, the campaigning UK publication of the green movement for the last 30 years had its last edition pulped by its printers without notice for the first time in its history. The issue in question was a biotechnology special, in which Monsanto was naturally (if not favourably) going to take a starring role. Its UK spokesman, Daniel Verakis, denied that the action was taken at the behest of Monsanto and indeed had previously discussed the issue (in outline) with Zac Goldsmith, the magazine’s co-editor and benefactor (and, of course, son of the late Sir Jimmy). The printers seemed to have been independently unwilling to publish the issue that contained an open letter to Monsanto chief executive Robert Shapiro, accusations that Monsanto undermines sustainable agricultural practices (i.e. saving seeds for the next crop), and examines the recent injunctions obtained against Genetic Snowball. The Ecologist has been seeking a new printer.
Criticism of Global Agencies
Global agencies are not immune from criticism in the current agricultural debate. Both the UN’s development and agricultural agencies and the Rockefeller Foundation have been accused by Hans Herren (director of the International Centre of Insect Physiology and Ecology, in Nairobi, Kenya) of concentrating on the latest advances in biotechnology while ignoring more traditional forms of pest control. Herren’s institute is affiliated to the World Bank-backed Consultative Group on International Agricultural Research, which has 16 research centres around the world. He shot to fame a decade ago when he helped to save Africa from famine by introducing to the continent a Paraguayan parasitic wasp that kills a South American mealy bug that was, at the time, devastating the cassava crop. A similar success story seems to be the making in Cambodia. Following the Khmer Rouge’s rise to destructive power in the mid-1970s, Cambodian scientists sent samples from their national seed bank to the International Rice Research Institute ("IRRI") in Los Banos, the Philipines. Now that three varieties have been reintroduced, they have been found to produce higher yields than modern varieties, according to Edwin Javier (an IRRI plant breeder), as revealed in the current newsletter of the Consultative Group on International Agricultural Research. National authorities are also beginning to feel uncomfortable in the white heat of the AgroBiotech age. The US Department of Agriculture (USDA) appears to have decided to have research into "terminator technology" vetted by senior managers. The technology involves inserting a promoter gene that triggers a terminator gene when the seed grows into an adult plant so that any seeds then produced are sterilised. In a leaked e-mail of 14 Sep 1998, the USDA’s researchers were warned that terminator technology is a "sensitive issue" but that an extra level of review would "help them (the researchers) void potential political and legal pitfalls". The Indian government has already banned terminator seeds for fear of endangering traditional crop seeds, whilst the Rural Advancement Foundation International, based in Canada, has headed a global anti-terminator campaign launched at the beginning of October.

EU Position

The European Union has also begun to express doubts about some aspects of AgroBiotech products. The European Commission’s scientific advisers, in the form of the Scientific Committee on Plants, have recommended that a GM potato that has been developed by Dutch company Avebe (and provides extra starch and resist to the antibiotic amikacin) should not be licensed for sale in the EU as they were unable to assess the risk of the gene spreading. Similarly, the French Supreme Court has also concluded that GM maize produced by Swiss pharmaceutical company Novartis, containing a gene conferring antibiotic resistance, cannot be sold in France due to the risk to public health. In the UK, the environment minister Michael Meacher is considering a three year moratorium on the marketing of transgenic crops for commercial use. Involved in the discussions are environmentalists and the Supply Chain Initiative on Modified Agricultural Crops ("SCIMAC"), the latter being a lobby group representing the national Farmers’ Union and seed and agrochemical companies.

Political Reaction in UK

Meanwhile, organic farmer Guy Watson does not have appeared to have ploughed his lonely furrow in vain as the Court of Appeal decision criticising MAFF has sparked a debate in the House of Commons. It was left to the MAFF’s deputy minister, Jeff Rooker, to explain that the Reg 11(3) tests for the submission of preparatory trails data had only been introduced, initially in 1979, not to aid the decision making process relating to inclusion in the National List of accepted seed varieties, but to limit the number of varieties entering trials. He accepted the Court of Appeal’s thinking that the environmental and safety aspects of GM seeds, considered in the Environmental Protection Act, were separate and unrelated to the powers relating to the Reg 11(3) tests, the latter provision obviously being now redundant and something that Parliament will hence endeavour to remove. This appears to be a strange reaction, given that a voluminous amount of plant varieties legislation only came into force on 8 May 1998. Reg 13 (1) and (2) of The Plant Breeders’ Rights Regulations 199818 is as follows:

"Reports of tests and trials
13. – (1) Subject to paragraph (2), any report received by the Controller of the result of any tests or trials which have been carried out in respect of a plant variety which is the subject of an application for a grant of plant breeders’ rights and which may be relevant to his decision shall be available for inspection by any member of the public at the Office.
(2) The details of the hereditary sources of a hybrid shall not be available for inspection unless the holder of rights has consented."

Hence, the public has no right to inspect the results of trials although it would appear to be implicit that trials have taken place, data has been produced and that MAFF has seen it. Yet, in the Watson case, Lord Justice Simon Brown found that no replicated results were submitted. Mr Rooker’s response was that "experience has shown that this information is of little value in assessing national list applications and the department has not required applicants to comply with these provisions since 1995"3. Unfortunately for MAFF, their Lordships found that such an approach was contrary to law. The question that remains is whether the amended legislation will have any retrospective effect on seed varieties that have been included on the National List but which have not submitted any test data to MAFF. Organic farmers such as Mr Watson may discover that they have already lost the anti-contamination war before the first battle has hardly begun.

Commercial Repercussions

"The company’s public relations position is at an all-time low and its share price is a disaster," said one investor at 1998’s annual meeting for shareholders of troubled drug discovery group British Biotech. The company’s problems arise from the sacking of Dr Andrew Millar, its head of clinical studies, for informing leading shareholders that it had been over-optimistic about two of its main development drugs, Marimastat (a cancer treatment) and Zacutex (for pancreatitis). It is in this regard that British Biotech is currently being investigated in the US by both the Securities and Exchange Commission ("SEC") and the Food and Drug Administration ("FDA"), and in London by the Stock Exchange, the House of Commons select committee for science and technology, and the European Medicines Evaluation Agency ("EMEA"). During the summer, Dr Millar was absolved of any responsibility for the company’s problems by the House of Commons select committee. The company, meanwhile, now seems to be less keen to continue its action against Dr Millar for breaches of contract and confidentiality now that a new chairman and chief executive have both been installed. In particular, Dr Millar has been accused of "unblinding" drug trials, that he maintains was for safety reasons after he began to believe that Marimastat would not work on its own and that Zacutex would not work at all. In return, Dr Millar has begun his own action against British Biotech alleging libel and wrongful dismissal. For reasons best known to themselves, Times Newspapers have underwritten Dr Millar legal costs. The UK’s leading bi-weekly pharmaceutical publication, Scrip, has concluded (after consulting with experts) that unblinding data before the end of clinical trials does not necessarily invalidate the results. British Biotech maintains that Dr Millar’s unblinding was systematic and against established procedures, particularly as safety concerns had not been raised by the relevant regulatory bodies20. However, the SEC continues to investigate the company.

Drug Companies’ Response

The risky business that is drug discovery has forced other companies to reassess their core activities. Xenova, the biopharmaceutical group, has recently withdrawn its discovery division in an effort to concentrate resources on its therapeutics business21. This includes a review of Xenova’s £2 million collaborative project with the Biotechnology and Biological Sciences Research Council ("BBSRC") through its Institute of Grassland and Environmental Research in Aberystwyth. At the same time, Zeneca is providing £50 million over ten years for a long-term research alliance with the John Innes Centre and the Sainsbury Laboratory in Norwich. Zeneca is also spending almost £20 million on additions to its Alderly Park site in Cheshire. There is thus little sign of confidence flagging in the pharmaceutical industry although the uncertainties of potential mergers continue to abound. SB chief executive Jan Leschly has thus had to continue to deny rumours of a merger with GW1, forcing him to state that "I am not retiring. Period"22. Mr Leschly has had to make another tough stand in the face of global economic chaos. He has had to insist on cash payments before shipments are sent to Russia and some South-east Asian countries. He said, "All shipments to Russia have been stopped until we are pre-paid in hard currency". That could be seen as good business practice (unless Russians start to obtain their drugs from elsewhere) if not exactly great PR. Unfortunately, the current prize for a bad public image remains safely in the hands of the biotechnology industry. Of course, public perceptions change nearly as rapidly as the technologies that stimulate them, and soon it could be the turn of another sector, with a completely different set of problems.

International Dimension: Dispute with India

Both the world’s oldest parliamentary democracy and the world’s most powerful democracy seem to be in complete disagreement with the world’s largest democracy. Hence, a recent report by the House of Lords European select committee, which stated that the possibility of "significant" environmental risks in the technology surrounding GM foods was outweighed by the substantial future economic benefits to farmers, the food industry and the consumers. Such an analysis should be no surprise given the decision of the UK (and the EU), in conjunction with the US, to block attempts to ban GM organisms on the basis that this would be a restraint of free trade. Unfortunately, developing countries are less than impressed by this philosophy. India is thus spearheading a campaign to protect traditional farming methods and the food supply of the poor that could both be affected by the patenting of seeds and the advancement of terminator technology (preventing the further germination of seed lines). In India, the issues surrounding GM crops have became a major political "hot potato". Protests have led to hundreds of thousands of peasant farmers taking to the streets and adopting a ‘Cremate Monsanto’ day last November.

Effect on Intellectual Property

Hence, although the World Trade Organisation had been pressurising the Indian government to forge ahead with its Patent Amendment Act, only a bill offering pharmaceutical companies exclusive marketing rights for new products has been agreed, and even then following a storm of protest, some of it from within the ruling party. A further attempt at introducing the modernising patent legislation is currently being made. In a recent visit, Glaxo Wellcome chairman Sir Richard Sykes stated that for India’s potential to be realised in sectors such as pharmaceuticals, then that would be "dependent upon the introduction of world class intellectual property rights". It is difficult to see how countries such as India will be able to resist such combined political and commercial pressure. In three months time, an international protocol on GM organisms is to be signed in New York. The treaty will provide justification for the banning of GM organisms only on the scientific grounds that it could be shown that traditional or local plants were likely to be wiped out or damaged by mutant intruders24. The negotiations for the treaty begin in Colombia on 14 Feb, and the likes of Glaxo will be hoping for it to be the beginning of a beautiful friendship between its emerging technologies and the bounties of Mother Nature. However, any seed resulting from such a union may soon become the subject of a very nasty paternity suit.
 

 

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