Lilly and GSK Emit Smoke, But No Fire, In Massachusetts Legal Flap
Eli Lilly CEO John Lechleiter (pictured) has joined the bizarre political pantomime surrounding the new Massachusetts law requiring drug companies to detail the payments they make to doctors. He told the Boston Business Journal:
Life sciences investment will be scared away ... [the law has the potential to] subject doctors, hospitals and academic institutions to complex financial disclosure requirements about payments for clinical research. ... Such work is the backbone of research and development in biotechnology and pharmaceuticals ... And it's about to get a whole lot more difficult in this state, which almost certainly means that less of this important work will take place here in the future.Ironically, his prediction of doom for Massachusetts' economy came right before the Boston Globe reported that the state's industrial base was booming due to high-tech jobs and right before The Day of New London, Conn., reported that Pfizer would re-open parts of its Groton, Conn., campus for more R&D. So clearly some companies are investing in the area.
Let's ignore the fact that drug companies, doctors, hospitals and academic institutions are actually quite good at making "complex" financial calculations. You'll remember that GlaxoSmithKline U.S. pharma president Chris Veihbacher (now CEO of Sanofi-Aventis) made similar threats in a letter he sent to Bay State legislators in May, in which Veihbacher bemoaned the way the law would "devalue" GSK's assets in the state.
Both Lilly and GSK are talking complete nonsense. Here's why:
Lilly doesn't have any research centers of its own in Massachusetts, as the last paragraph of the BBJ story makes clear.
For its part, GSK has already signaled that it is going to outsource more and more of its R&D to other companies -- so it doesn't really care where its research gets done.
But don't take my word for it, look at GSK's actions. In April, right before GSK started huffing and puffing about the new law, the company acquired the Cambridge, Mass., labs of Sirtris, in order to gain its longevity research assets.
Then, in July, immediately after the letter, GSK gave $24 million to the Harvard Stem Cell Institute for another research project. Last time I checked, Harvard was in Massachusetts.
As for Lilly, the BBJ item also mentions that the company "employs about 175 researchers with various organizations in Massachusetts [and] funded nearly $64 million in research/clinical grants in Massachusetts in 2006." Sixty-four million is a tiny sum in R&D. Lilly is essentially threatening to withhold loose change and pocket lint from the state. Nonetheless, now that the law has passed, no doubt Lilly will be issuing a press release announcing the withdrawal of all that funding. Any ... day ... now ...