November 1, 2016

Alum, Pharmaceuticals CEO Explains Balancing Costs, Rewards of Drug Discovery

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George Scangos ’70 discussed how pharmaceutical companies must juggle the financial interests of their investors with the risky process of developing live-saving drugs at a lecture Thursday.

Scangos, Cornell’s 34th Robert S. Hatfield Fellow in Economic Education, currently serves as the CEO of biotechnology company, Biogen, and chairs the Board of Directors of Pharmaceutical Research and Manufacturers of America.

Biogen said he focuses on neurodegenerative, hematologic and autoimmune diseases. Neurodegenerative conditions are particularly difficult to develop treatments for, according to Scangos.

“We don’t understand, really, the biology of the diseases very well. There are not good biomarkers to know when we put the drug into people whether or not it’s actually working,” he said. “In some cases diagnosis is difficult to make.”

For a biotechnology company, failures are not necessarily losses, Scangos pointed out. For example, he described a Biogen experimental drug that failed trial but still provided researchers with a better understanding of its mechanism of action.

“We were able to identify a subset of patients for whom the drug seemed to work, we know what dose to give those patients and we know how to measure whether or not the drug works,” he said of the experiment.

Research and development of pharmaceuticals often takes decades and billions of dollars, an investment that can make shareholders uneasy, according to Scangos. He said that a large portion of his job is ensuring that investors understand how and why Biogen products work.

“They ignore the fact that for many of those failures, we’ve learned,” he said.

Scangos also emphasized that the corporation’s purpose is not to “maximize shareholder value.”

“We exist to bring drugs to patients,” he said.

He concluded his talk by showing a video of a young boy with spinal muscular atrophy struggling to move. The boy would have lost muscle function until his death, but he was able to crawl after receiving treatment developed by Biogen, Scangos said.

“These are dying babies … and we’ve been able to help them get better,” he said. “That’s what’s at stake. This is what it’s all about.”