Why is the Cystic Fibrosis Foundation under attack for funding the drug of the year?

By Joseph Allen
January 26, 2015

Little girl in mask of oxygen.If Stop Subsidizing Big Pharma by Llewellyn Hinkes-Jones in The New York Times was intended to derail a pending White House announcement it failed spectacularly. Two weeks later President Obama unveiled “The Precision Medicine Initiative” in his State of the Union address.

However, the article did exploit a prominent platform to promote the idea that the only fair drug development system is one that the government controls to regulate prices. It must come as a shock for the Cystic Fibrosis Foundation to find itself attacked for funding a breakthrough drug promising to cure, not just treat the disease with its own money.

Cystic fibrosis is one of the most common genetic disorders in Caucasian children in the United States and Canada, with nearly 1 in 29 Caucasian Americans carrying the gene. Symptoms typically develop before the age of two. Cystic fibrosis creates a thick, sticky mucus that builds up in the airways, causing infections, and making it difficult to breathe. Chronic pain is a common problem for patients, which increases dramatically during the last 6 months of life. Those fortunate enough to survive childhood can only expect to live to be 37 years old.

With all this in mind, Hinkes-Jones advances an interesting thesis: only the government has the moral standing to decide where medical research dollars are spent and seeking cures for orphan diseases may not be in the public interest. He writes:

One argument in favor of venture philanthropy is that it creates a way to sustain small foundations that study rare diseases that, from a for-profit point of view, aren’t worth investigating.

But while Big Pharma might be faulted for funneling billions of dollars into erectile-dysfunction drugs and off-label drug marketing, researching extremely rare diseases may also represent a misuse of public and private funds. Efforts to cure, rather than treat or prevent, obscure diseases can be expensive, diverting investment from more common afflictions. The high costs of focusing on rare diseases are then eventually pushed onto the health care system by way of egregiously high drug prices. Such a choice involves an incredibly complex moral calculus, one that is best processed by democratic public institutions.

And there’s more to his theory:

To make medical advancements truly philanthropic, the profit motive needs to be removed from the equation. If the intent is to cure rare diseases, then we should be increasing the budget for the National Institutes of Health and other research initiatives. Instead of gala balls and donor drives, higher taxes on the same rich benefactors could be used to fund the research that isn’t already being supported. Biotech patents developed through venture philanthropy should not have exclusive rights attached to them.

This would allow generic versions of drugs onto the market, which would go a long way toward keeping health care costs down and not driving the uninsured into debt.

Of course, this approach would be a catastrophe for patients. While that’s bad enough, Hinkes-Jones doesn’t stop there. Despite broad bi-partisan support that public/private R&D partnerships are vital to the nation, he charges that working with industry corrupts academia:

The idea of a public-private research transfer is not without precedent. In 1980, Congress passed the Bayh-Dole Act, which allowed publicly funded universities to sell off exclusive licenses on their research to private industry. The act was intended to drive funding for academic research and innovation.

But the resulting race for private funding has created perverse incentives to research blockbuster drugs, even if they are not the most imperative from a public policy standpoint. The impetus to produce more and more profitable research has also driven down the quality of academic work, promoting ghostwritten papers, sloppy peer review and the burying of unfavorable clinical-trial results. Venture philanthropy builds off the model created by Bayh-Dole, but with tax exemptions and a sheen of generosity on top of the lucrative payoff.

Hinkes-Jones full charges against Bayh-Dole are spelled out in a previous story Bad Science. Appropriately, this ran in Jacobin magazine, named for those wonderful folks who created the French Revolution’s Reign of Terror. Anyone even suspected of opposing the Jacobins went straight to the guillotine. While the quote: “You can’t make an omelet without breaking some eggs” is often attributed to Lenin or Stalin, it was borrowed from Robespierre, leader of the Jacobin party. A Soviet dissident lamented: “I have seen the broken eggs, but no one I know has ever tasted the omelet.” The recipe promoted by Hinkes-Jones is equally unpalatable.

We’ve previously discussed the significant contributions of Bayh-Dole and the patent system to the development of drugs and the growth of the U.S. economy. However, before considering the magnitude of what the Cystic Fibrosis Foundation accomplished and why it resonated with the White House, here’s some interesting data on the status of U.S. science after 35 years of Bayh-Dole:

  • Citations to refereed journal articles are an oft-used indicator of the quality and impact of research output. Researchers based in the United States continue to set the bar with respect to the production of influential research results.
  • Overall, U.S.-authored articles represented 48% of the world’s top 1% of cited articles during this time period.
  • US. articles are highly cited across all broad scientific fields.
  • In 2012, articles with U.S. authors were among the top 1% most-cited articles about 74% more often than expected, based on the U.S. share of all articles, compared with 85% in 2002.
  • Citations to the S&E literature on the cover pages of issued patents are one indicator of the contribution of research to the development of inventions…According to this indicator, research links to invention increased sharply in the late 1980s and early 1990s (Narin, Hamilton, and Olivastro 1997). At the same time, patenting activity by academic institutions was increasing rapidly, as were patent citations to S&E literature produced across all sectors (NSB 2008:5-49–5-54).

This doesn’t sound like the output of a corrupted system. The leap in patent citations to science and engineering literature happened after Bayh-Dole’s full impact kicked in allowing universities and federal labs to license their inventions to industry. It also unleashed a new era of academic-industry jointly authored papers.

Now back to the Cystic Fibrosis Foundation. Two articles put them in quite a different light than that cast by Hinkes-Jones. Deal by Cystic Fibrosis Foundation Raises Cash and Concerns summarizes the story. Fifteen years ago the Foundation undertook a bold gamble in its fight against the disease– aiming beyond just treating symptoms it gave Vertex Pharmaceuticals, a small biotech company, $150M to seek a cure.


The result was the development of Kalydeco, the “first drug that treats the underlying cause” of Cystic Fibrosis in some patients. The controversy arises from the high initial cost of the drug– $300,000 a year. The Foundation said it had no control over the price; its objective was to make new treatments available for suffering patients. It sold its royalty rights to an investment company for $3.3 billion, money that will used to support its mission.

The article quotes prominent supporters on what this all means for patients:

“This is a transformational day for people with cystic fibrosis and their families. It gives us an amazing opportunity to accelerate the research we’ve already started.” (Cystic Fibrosis Foundation CEO Robert J. Beall)

“If we wanted to get therapies to patients faster, we needed to be partnering with the industry that actually brings those drugs to patients,” said Louis J. DeGennaro, chief executive of the Leukemia & Lymphoma Society.”

“This was a dramatic example of risk-taking that has paid off in a remarkable way,” said Dr. Francis S. Collins, the director of the National Institutes of Health, who co-discovered the gene behind cystic fibrosis in 1989 while at the University of Michigan.”

It seems that President Obama shares their view. Here’s what he told the nation in the State of the Union:

21st century businesses will rely on American science and technology, research and development. I want the country that eliminated polio and mapped the human genome to lead a new era of medicine: one that delivers the right treatment at the right time. (Applause.)

In some patients with cystic fibrosis, this approach has reversed a disease once thought unstoppable. Tonight, I’m launching a new Precision Medicine Initiative to bring us closer to curing diseases like cancer and diabetes and to give all of us access to the personalized information we need to keep ourselves and our families healthier. We can do this. (Applause.)

Obama’s Precision Medicine Initiative: Paying for Precision Drugs is the Challenge in Forbes magazine illustrates the promise of precision medicines– and the importance of the Cystic Fibrosis Foundation’s achievement:

The precision comes from advances in genetics and protein biochemistry that allow diseases to be identified and then broken down into subsets based on precise defects that cause the disease. But the other side of precision medicine is knowing how to develop drugs that work in these cases of precise defects.

Let’s take cystic fibrosis, for example. Sitting tonight with the First Lady was Stanford University graduate and Wright State University medical student, Bill Elder. The 27-year-old doctor-to-be was born with a disease we call cystic fibrosis. The disease results when a protein pump controlling chloride in organs like the lungs, pancreas, and intestines, doesn’t perform up to snuff…

While cystic fibrosis is considered one disease, many molecular paths exist to get there. Bill Elder has one of those paths shared by 4% or 5% of the 70,000 cystic fibrosis patients worldwide. Scientists were able to identify the molecular change in the chloride pump that causes it to malfunction, then start working on drugs that could restore its normal function.

Vertex Pharmaceuticals developed one drug that dramatically improved the function of the chloride pump in this small percentage of patients with this group that inherited these molecular changes. The drug, Kalydeco (ivacaftor), was deservedly called by Forbes Senior Editor Matthew Herper, “The Most Important Drug of 2012.” (emphasis added)

Herper pointed out that not only was this drug a triumph of genomic medicine, but it was targeting the gene identified by the current NIH director, Francis Collins, 25 years ago.

While the challenges of developing precision medicines are monumental on their own, the real-life challenges come down to economics. Kalydeco is priced at around $300,000 per patient per year. As medicine becomes more precise in classifying diseases into their discrete, genetic subtypes, the patient populations benefitting from a given drug are reduced.

The result is that we are developing more effective drugs with dramatically greater effectiveness, but for a market of a few thousand or even hundreds of patients.

And even with this cost, Herper pointed out that Kalydeco probably wouldn’t have been developed at all if not for the investment in Vertex by the Cystic Fibrosis Foundation. Developing drugs for rare diseases or for populations with small subsets of common diseases is a truly risky business. Even with the tax breaks provided by orphan drug status (drugs intended for diseases suffered by 200,000 Americans or less) and a seven-year period of marketing exclusivity, stockholders don’t give many companies the luxury of bringing such drugs to market.

Note that the “most important drug” of the year almost died in the lab. Vertex had acquired the underlying technology, but wasn’t targeting cystic fibrosis and would have pulled the plug without the Foundation’s support.

Forbes puts the costs v. benefits of such medical breakthroughs in perspective:

We as a society must come to terms with the fact that prices in the tens of thousands of dollars per year will become the norm, with certain drugs commanding six figures per year. These prices, while seemingly out of step with the $4 generic drugs you can get at a big box pharmacy, are in many cases quite reasonable when one considers the value that they provide to patients and the health care system. The debate over the prices of $84,000 drugs for hepatitis C often overlooks the value provided in simply abrogating the need for a liver transplant that runs upwards of $500,000 (not to mention the suffering that’s alleviated).

So how do we answer the claim that eliminating the private sector’s role in drug development, research funding from patient foundations, exclusive licensing, Bayh-Dole, and university/industry alliances in favor of absolute government control would be a social good? Perhaps with this comment posted after the Hinkes-Jones article:

As the parent of a daughter with Cystic Fibrosis, I absolutely take umbrage at the line of reasoning in this article. Hinkes-Jones seems to believe that there are ‘good’ medical breakthroughs funded by government research, and ‘bad’ medical breakthroughs funded by venture philanthropy. A much more pragmatic mindset appears when your own kid has a life-threatening illness: whatever works.

The Cystic Fibrosis Foundation investment in Vertex Pharmaceutical used philanthropic donations to jump start clinical trials and advance research that would otherwise have been left sitting on the shelf. Companies simply cannot invest millions in the wildly complex drug development process for diseases that have relatively small populations, because the risk-reward possibilities simply don’t make for rational investment. This is exactly why venture philanthropy is such a good idea.

Hinkes-Jones opines that “there is nothing to stop pharmaceutical companies from creating their own philanthropies,” and that’s true enough, but so what? Any donation to such philanthropy would have to be made by a donor who chose to give in order to advance medical research, ease suffering and move towards a cure. Why on earth would that be a bad thing?

Robert Beall at the CF Foundation is a hero for advancing new treatment, against great odds, and succeeding magnificently. My daughter is in the clinical trial, doing better than she ever has before, and our whole family is full of hope and optimism. (emphasis added)

The Cystic Fibrosis Foundation and Vertex deserve the thanks of a grateful nation.

Modern Jacobins from their lofty theoretical perch find it easy to condemn those doing the hard work of drug development. They’d better pray if they or their loved ones ever contract an orphan disease that the cold, clinical formula of Mr. Hinkes-Jones for determining who will be treated and who will be left to suffer never takes hold. While it would be ironical, we wouldn’t wish that on anyone.


ARTICLE UPDATED at 2:00pm ET on Monday, January 26, 2015, to more correctly state that 1 in 29 are carriers of the CF gene.

The Author

Joseph Allen

Joseph Allen is a Featured Contributor on IPWatchdog.com, and a 30-year veteran of national efforts to foster public/private sector commercialization partnerships, and author of numerous articles on technology management for national publications.

Joe served as a Professional Staff Member on the U.S. Senate Judiciary Committee with former Senator Birch Bayh (D-IN), and was instrumental in working behind the scenes to ensure passage of the historic Bayh-Dole Act. He is our resident Bayh-Dole expert, and will write frequently about Bayh-Dole and issues surrounding the commercialization of university research.

In 2008, Joe founded Allen & Associates, through which he offers consulting services assisting clients in technology transfer issues, including developing effective communication strategies with national policy makers.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 8 Comments comments.

  1. Simon J Elliott January 26, 2015 1:02 pm

    1/29 Caucasians are CARRIERS of CF, in which it is (effectively) silent.

  2. Harlan Freilicher January 26, 2015 10:07 pm

    Two corrections:
    1. The median life expectancy of kids born with CF is now 42, not 37, thanks in large part to the Cystic Fibrosis Foundation.
    2. Neither Kalydeco nor any of the related drugs that Vertex is currently testing are cures for CF. Corrector drugs like Kalydeco are a quantum leap forward in treatment, but they are not a cure. They have been likened to the development of synthetic insulin for diabetics; a game-changer, but not a game-ender.

  3. EG January 27, 2015 7:35 am

    Hey Joe,

    Hinkes-Jones, as do others, believes R&D for drugs, like money, grows on trees. It doesn’t. Also, expecting government to develop and market drugs is nonsensical. Even the military has to rely on the private sector to provide its hardware. The same would be true of government getting into th drug business, only now decisions would be controlled by bureaucrats and politicians. After witnessing the “melt-down” of healthcare.gov web site, I want no part of government run health care or drug development.

  4. Gene Quinn January 27, 2015 9:58 am


    Thanks for the comment. I received a similar comment from the Cystic Fibrosis Foundation but have decided not to change the article. CFF told me that they will soon release a study that shows that the average live expectancy is now 41 years old. Since that is not yet published and we cannot link to the news I have opted to stay for now with the 37 year life expectancy provided by NIH.

  5. Anon2 January 27, 2015 12:46 pm

    Everyone who gave to the Cystic Fibrosis Foundation voluntarily and freely voted with their wallet. Any treatments that resulted from such a funding, far from “misuse of public and private funds” was its exact opposite; moral, valid, and correct “use” of funds, not in-spite of its being comprised of freely, individually, and voluntarily given donations but precisely BECAUSE of the funds being so comprised.

  6. Erwin Thompson III January 28, 2015 11:34 am


    Thank you for the article. My brother has lived with CF for 32 years and thanks to the Cystic Fibrosis Foundation and an excellent team of research-driven doctors, is in spectacular health. My family struggled and prayed for years that a cure would be found. I will not forget the day he called me and said, “Kalydeco works.”

    The valiant efforts of the CF foundation and its supporters in securing the funding and fostering the development of Kalydeco (and other cutting-edge treatments) are a testament to the need for private and independent pharmaceutical research.

    The research and development that brought about Kalydeco sprang forth from human imagination and ingenuity aimed at attaining a very specific goal. The Hinkes-Jones theory hinges upon a utopian/soviet ideology, which in reality pigeon holes the creative thought process and leads to failure. Hinkes-Jones becomes even more ludicrous when faced with the massive inefficiencies of the federal government.

    Our future success in developing life changing drugs such as Kalydeco depends upon the continued efforts of private research and keeping absolute governmental control over pharmaceutical R&D at bay. Thanks Again.

  7. Joe Allen January 29, 2015 11:36 am

    Erwin: I was coming back from a trip feeling worn down when I read your comment and it brightened my day. So many times the human impact of these policy debates gets lost. Thanks for reminding us what’s really at stake here.

  8. Simon J Elliott January 29, 2015 12:56 pm

    The common thread in these attacks on bio/pharma patents is that the people making the complaints rarely have any idea of the difficulties in scientific research, let alone getting a drug or diagnostic to market. [Its insanely hard]. In that world, we have SCOTUS (smart people, but without scientific experience) equating isolating BRCA DNA to simply snipping it out of the chromosome, like copy and pasting.

    The problems of insufficient rewards for pharma research is shown in antibiotics and vaccines. People believe that these should be free or cheap, and do not want to company to share in the economic benefit of the therapy (e.g. howls of protest at the cost of solvadi (against HepC), but not the cost of a liver transplant which solvadi prevents). Unsurprisingly, pharma focuses on erectile dysfunction and blood pressure. The result: growing antibiotic resistance and problems with vaccines.

    A great illustration: in the recent Ebola outbreak, people were asking “where is the vaccine, where is the treatment.” We have known about Ebola for decades, and there has been concern about global spread, but there was no money for a vaccine or antiviral therapy, and so nothing much was done.