Gay Men's Health Crisis: Treatment Issues, Volume 8 no. 2 - April, 1994

TREATMENT ISSUES (TI): There is concern Merck's commitment to AIDS research is to a large extent dependent on Roy Vagelos heading the company. How do you address that concern?

VAGELOS: There was no question that I was anxious that Merck become involved, because of our capability and because we had succeeded using the approach that essentially everyone is using now - targeting specific proteins. We have done things for humanity in the past, never quite of this urgency. I was confident that within five years we would have something - at least a product candidate that we would be confident in. And that was more than five years ago.

TI: Nobody in the community questions Merck's commitment to AIDS research. The results haven't been good, though progress has been made. But you are scheduled to retire in November. What commitment is there at the board level, or with the person who may replace you, in terms of going forward in AIDS research?

VAGELOS: Our company is dedicated to it. It doesn't matter who succeeds me, and it is not known who will succeed me at this time. But we have a research group that is absolutely dedicated to doing it, and a research leader, Ed Skolnick, who is a molecular virologist. And so, I would be very confident that it would go on. Most of the projects that I have been involved in at one time or another have succeeded. We don't like to quit just because things aren't going well. It has been the largest project that we have ever invested in over the years [costing] several hundreds of millions of dollars.

What concerns me the most is that the Clinton health care reform proposal really puts our kind of work in great jeopardy. What they essentially would like to do is to have us invest and then at the end tell us what the price should be [and] determine what is reasonable. I just cannot see companies investing that kind of resources for that kind of time [with] the government at the end. It is very disturbing to me personally because of the investments we have made. During the time I have been in research, we have spent many billions. And we have contributed enormously to health in the world; this will be in jeopardy if there is an overhang of government that is going to decide what is appropriate in pricing.

TI: Given the size of the commitment you are suggesting to the AIDS program, is there board oversight of these research investments?

VAGELOS: Our board, of course, has oversight and approves everything [but] they have never been involved in selection of basic research projects. I established that when I came to Merck in 1975. I am committed to the basic research group. In a sense, it is their commitment and their investment of their lives to the projects that they take on. As AIDS progressed, we were very concerned that the companies were not in a position to share information. So we sort of nucleated that little get-together, which is the fifteen companies [the Inter-Company Collaboration for AIDS Drug Development].

TI: The activists were advocating that for many, many years as well.

VAGELOS: The activists have their concern which I appreciate. But I also saw it from the point of view of an enormous global effort. Information should be shared early enough to help steer the projects. That is how science should be done. As time passed, we were losing humans, and we were losing opportunities to share information, to share drugs for combination studies. If we could share early negative information on an approach, we could stop futile directions. That was what stimulated us getting together.

TI: Was this something that government should have taken the lead on?

VAGELOS: No. In fact, government, as you know, has gotten involved in trying to bring together all the groups including the AIDS community, the NIH, and the FDA, academic groups, and industry. And while I have no problem with that, I think government involvement to me is always negative. For a private corporation that makes big bets, and often wins, you know, we like to do that on our own.

I will tell you that I like the [NIH] people. I know Tony Fauci, and you know, I have spent ten years of my life at NIH.

TI: On that note, as a scientist, and as someone who has put together what most people would consider to be a top-flight research effort, how do you see the government's role? What could they be doing better to encourage AIDS drug development?

VAGELOS: My opinion is that the cure, the real cure of any disease will come from an observation that may be totally unrelated to a focused applied program. And so the best thing that the government could do is to continue to stimulate the off-the-wall types of research that come from people who are not told what to do. And people who develop real insight into following their own leads and their own hunches and are allowed to dream.

A lot of the work that led to the cholesterol work that we have done here actually started at NIH with me in the basic research laboratory, where I worked with bacteria and then on lipids. I was coming at it from a totally unapplicable background and heavy off-the-wall ideas. With AIDS, I am convinced that with persistence and probably a combination of drugs aimed at the enzymes that are now known we will be able to put together something that will control the infection.

TI: If someone came to you and said, Dr. Vagelos, here is a billion and a half dollars to spend on AIDS research - and it is public money - how would you set up that program, and what type of individual would you look to put in charge?

VAGELOS: That is a tough question. I'd first want to be satisfied that all of the targets that are today visible are being adequately attacked, because the off-the-wall observations can take a long time. So the first thing I would do is make sure that all the proteins that have been identified, enzymatic activity, are receiving an adequate effort. I would then be sure that all the immunologists who look at it from an entirely different science than I do are adequately funded. And once that has been done, I would get the money to the brightest people who have excellent backgrounds, who are obviously the doers, the people who are two-three years out of their Ph.D. That is where the ideas are going to come from, that could actually turn things around. The ultimate home run is going to come from something like that, almost surely.

TI: What type of individual would you put in charge of overseeing or managing a research effort?

VAGELOS: Well, clearly, it is someone with great experience, and a person who knows the science, who knows individual scientists. You know, I dislike the term "manager." I don't like to be thought of as a manager. I would prefer to have someone who is a leader, and who is accepted on the basis of his accomplishments and knowledge and ability to bring people together. That is a leader. And a person who is willing to take wild risks. That is my style.

TI: In your position at Merck, you are going to be judged primarily on the bottom line. How do we judge the performance of people who oversee public research efforts? How do we know if we have the best person and if they are attracting good people?

VAGELOS: Actually, I think scientists know. There are certain people, and I think our new director of NIH, Harold Varmus, is going to be one of those. I think Tony Fauci is an extraordinary person, whose dedication and knowledge of his field ...

TI: Do you really think Dr. Fauci has put together a good team? One of the most important qualities of a leader is attracting good researchers, which is one of the legacies that you seem to be leaving at Merck. How does government attract top-flight researchers?

VAGELOS: It is difficult. I happen to be on a group that is fulfilling a congressional mandate to review the intramural program of the NIH. We see the intramural program and the NIH program as being a wonderful thing that can be improved. One of the problems they have had is that they perhaps have not had adequate access to the best of the young people coming through now. And that is because perhaps the leadership hasn't been appropriate for keeping the place stimulated. And so it needs to be turned up, and perhaps people have to be judged with greater stress and priority on quality, because there are some people in the intramural program now who are not as good as they should be. And that has to be put at the feet of the leadership. I am very confident, having met with Harold Varmus several times that he is absolutely dedicated to the selection, development, promotion, and nurturing of the kinds of scientists that I am talking about. Because he was one of them.

TI: You pointed out that the great breakthrough may come from researchers two or three years out of Ph.D. programs. Is there a place for that type of research in the pharmaceutical industry itself?

VAGELOS: It is very tough. Because there is a separation of responsibilities in developing drugs. That is, you have to have basic information, insight - that comes from just anywhere. And when that insight occurs, you have to have someone who is willing to seize it and take it on and try to make a drug. Now, there is enormous investment at the pure basic research side from the government, and they are very good at that. They don't have the interdisciplinary teams for applied research that is characteristic of Merck or other pharmaceutical companies. And we on the other hand have limited resources because of all the things we want to do, we want to be competitive, and we want to be attractive for stockholders too. And so we do the applied side of it. TI: What about funding of joint ventures or collaborations with the start-up companies where you are putting some capital. Why isn't that a direction for Merck as opposed to the Medco direction? [Merck recently acquired the Medco drug distribution company.]

VAGELOS: The Medco direction is to give us life in the future. The health care environment is changing radically in the direction of managed care. And managed care means that there are large buyers for pharmaceutical products and prescription drugs. Medco is an organization that is oriented towards providing all the drugs and getting access to these large buyers. Merck and the other pharmaceutical companies are ultimately going to have to go through them and we would have been controlled by the various pharmacy benefits management groups. We have vertically integrated so that we have everything now from the small molecule basic research right up to the patient, and we feed back that information from the patient. So if we are going to survive as a company and be able to invest in the kind of research that we are good at, we need to be part of the action. We have taken one step --other companies will do other steps - to try to grapple with this enormous change in the environment.

TI: There are so many of these fledgling companies that are engaged in important, but risky AIDS research. Why doesn't Merck invest in these companies?

VAGELOS: We do that. And we are doing more of it.

TI: In the AIDS area?

VAGELOS: In the AIDS area. Specifically an AIDS vaccine, [and] we've invested in the "naked DNA" research.

TI: There is some concern, though that most of the big companies in HIV related research are focused primarily on antivirals, leaving the small companies to develop the perhaps more riskier possibilities such as gene therapies. Why is that?

VAGELOS: I think you work along the lines of your strength. Merck was built on the discoveries that were made based on targeting of proteins and modifying them chemically. That started with me in 1975. And it has been incredibly successful, including things that you will hear about over the next couple of years that are in the research pipeline now that are just off the wall. That is not to say that these other approaches are not worthy. But you follow your strengths. And if someone were to come to us with something that looked pretty good and could convince Ed Skolnick that it was worth getting together on...

TI: Why shouldn't someone like Ed Skolnick or Roy Vagelos, be given responsibility over biomedical research programs to use their experience, credibility, and leadership?

VAGELOS: You know, we have a wonderful new director of NIH, Harold Varmus. I think he will be able to attract absolutely top people. We didn't have that kind of leadership at NIH before. Far from it. So I think Harold Varmus will be able to attract very strong people from anywhere, real scientists who are really dedicated to doing what has to be done. My experience is that the best leaders in science are people who are almost contemporary with the scientists.

TI: How long can a company like Merck keep sustaining big investments in HIV research without a return? And what do we do at that point?

VAGELOS: I think that there will be some returns pretty soon. I think that with the work that is on-going that I know about, and you probably know about, that there will be drugs, improvements that will become useful and onto the market in the next couple of years.

TI: What are you basing that on?

VAGELOS: I think the protease inhibitors that Merck has - and that's the only data I have seen - can do unusually good things initially. Unfortunately it is not a permanent thing. And so I think the combination of protease inhibitors which have essentially no side effects with AZT or the other nucleosides would be intermediate and would keep the interest in the laboratory and in the companies. But the most important thing is for the laboratory not to get discouraged. For a scientist to have a failure is normal. Especially in our industry - most of things we do fail, after all. And so the important thing now is for the scientist to say, well, we have optimized what can be done with reverse transcriptase, what can be done with protease? And there are the integrase and other proteins out there. I don't think the Merck group is going to throw in the towel.

TI: Are you starting to target other HIV proteins such as integrase? [Integrase is an HIV enzyme essential to combining HIV's genes with a cell's normal DNA.]

VAGELOS: Absolutely. [But] we are not at a place where we can start chemistry. Integrase is an interesting protein.

TI: How do you prepare for the possibility that shareholders may say ultimately enough money has gone into AIDS research?

VAGELOS: They don't know what we are doing in basic research. We never discuss it with anybody. I am the person at Merck who needs to what is going on in basic research. And I made sure that the marketing people were going to stay out of my hair when I first came here.

TI: I think it's much more of a concern in the long term, in terms of your successor. Let's assume your successor comes out of Medco. Maybe his direction is going to be to take the company in a much more of a marketing direction as opposed to research.

VAGELOS: I think our board is dedicated to our company the way it is. We have contributed so much to health in the world, and our board is so dedicated to that, that I don't think they would select someone who is not going to at least encourage it and nourish it.

TI: You make a passionate case against the regulation of prices. Yet, a company that Merck is partners with in some ventures - Astra, created an uproar in pricing Foscavir [an anti-CMV drug], at the equivalent of $30,000 a year. People had requested Merck step in. Yet the price is still there. How do you respond to concerns like that?

VAGELOS: Well, first of all, I can't say anything about Astra because they are obviously a partner, although this was totally outside of our joint venture. I was asked by Henry Waxman [chairman of the House Subcommittee on Health and the Environment] about two weeks ago, what should we do about the drug that is vital and then comes out at an exorbitant price, how can we tolerate that. My only response really was that if a product is really profitable, it will have competition within due time. If it is a really profit-making drug, you will have competition. And for the number of products that are out there that are really expensive, to set up any kind of bureaucracy to oversee pricing would be an overkill and destructive. I don't like to see people not getting drugs, or feeling that pharmaceutical prices are too high. I mean, it gives a bad image to an industry which I have dedicated my life to.

TI: What is Roy Vagelos going to do after he retires from Merck in November?

VAGELOS: Well, there is still a great deal to do here at Merck before I leave. An interesting opportunity came up a while ago, but the timing just wasn't right.

TI: We wish you well and hope you continue to advocate for AIDS research in industry and government.

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