Biotech Woes…and the Culprits

<?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />America learned long ago that what's good for General Motors isn't necessarily good for the country. This axiom applies equally to the biotechnology industry, which has lobbied for—and gotten—stultifying regulation that constrains R&D, inflates prices, and deprives consumers of new food products. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

This is not a new phenomenon. Acutely aware of the potential conflict between short-term self-interest and the public interest, the patron saint of capitalism, Adam Smith, warned in the 18th century that any policy advocated by businessmen should receive “scrupulous” and “suspicious” attention. Businesses have often pressed for government interference with free markets; past examples include tariffs on steel and limits on imports of Japanese automobiles.

Scientific bodies repeatedly have examined the potential risks of biotechnology and concluded that regulatory policy should focus on the risk-related characteristics of individual products, rather than on how those products were developed.

Nevertheless, as early as the mid-1980s, long before the first gene-spliced plants were ready for commercialization, a few agrochemical and biotechnology companies led by Monsanto and Calgene approached senior government policymakers and requested a regulatory framework specific for, and that would discriminate against, the use of gene-splicing technology.

The policies recommended by the nascent agbiotech industry were far more restrictive than could be justified on scientific grounds. The goal of these policies ostensibly was to placate anti-biotech activists and provide reassurance to consumers that government regulators had vetted gene-spliced products, but at least part of the companies' motivation was to use regulation as a market-entry barrier to competitors.

The strategy has backfired. Unrealistic and unnecessary regulatory requirements have led to pseudo-crisis after pseudo-crisis—precipitated, for example, by spurious laboratory findings (“Biotech corn pollen kills Monarch butterflies,” trumpeted one headline), and by the inevitable but inconsequential transgressions of baseless rules (“Biotech corn contamination prompts widespread recall”).

Ironically, the agbiotech industry did create a Frankensteinian monster—a regulatory one. The USDA, EPA and FDA all have promulgated new policies that focus specifically on and discriminate against plants and microorganisms crafted with gene-splicing techniques. Federal bureaucrats are now squarely in the middle of virtually all field trials and food uses of gene-spliced organisms (but not conventionally modified ones), spelling disaster for small businesses and especially for academic institutions, whose researchers lack the resources to comply with burdensome, expensive, unnecessary regulation.

The big agribusiness companies have achieved their short-term agenda—the concentration of the entire agbiotech pie in a handful of firms—but discriminatory regulation also has had the predictable side-effect of pushing research, development and commercialization costs into the stratosphere. The cost of field-testing gene-spliced plants is as much as 20-fold higher than for virtually identical plants crafted with older, less precise genetic techniques.

By early 2003, four companies—Monsanto, DuPont/Pioneer, Bayer/Aventis and Dow accounted for 57 percent of research and development on gene-spliced crops, and the time and cost to develop a gene-spliced plant variety had risen almost to what is required to bring a new prescription drug to market in 6 to 12 years and $50 million to $300 million.

Does unnecessarily stringent premarket review of gene-spliced crops assuage consumers' ambivalence about these products? Does it pacify anti-technology activists' hunger for ever-greater and more debilitating regulatory oversight? Not a chance. Regulatory requirements for gene-spliced plants and foods have been ratcheted up steadily for nearly 20 years, with no apparent positive impact on consumer attitudes, and certainly none on the stridency of activists.

Experience suggests consumers view the products that are the most regulated to be the most dangerous. But even if consumers were reassured by our excessive and hugely expensive precautionary regulatory regimes, surely the responsibility of government leaders is to lead—that is, to implement policies that are based on science and common sense, and that are in the public interest, and then to defend those policies aggressively. During the past 20 years, government regulators should have spent less time regulating and more educating.

The disincentives to using a superior but “disfavored” technology are imposing. Consider, for example, the dilemma of the grape grower or papaya farmer who desperately needs new genetic varieties that can resist the predation of Pierce's Disease and the papaya ring-spot virus, respectively, but is afraid that using gene-spliced varieties will compromise his ability to produce, sell and export a superior product.

Another casualty of excessive regulation has been the long-term survivability of small, entrepreneurial companies formed to exploit the experimental research of university laboratories. The genesis of the new biotechnology was the confluence and synergy of academic and industrial research on fundamental questions in biochemistry, genetics, microbiology and analytical chemistry. Today, academic labs still are the source of most new ideas in these related fields, but the progression from innovation in the laboratory to marketed product has become uncertain, as many speculative research projects on low-profitability organisms have become prohibitively expensive. Virtually all of the agbiotech startups of the 1980's are gone.

Today, the six major agbiotech companies that remain—BASF, Bayer, Dow, DuPont, Monsanto, and Syngenta—have achieved a virtual monopoly. But due to persistent scaremongering and burdensome regulation in the United States and abroad, they have been able to generate only meager returns from nearly two decades and many billions of dollars worth of research. The major beneficiaries from the these unscientific policies are activist groups that have raked in hundreds of millions of dollars from gullible donors, the natural and organic food industries that have exploited and promulgated misinformation, and the regulators themselves. Spawning vast new bureaucracies to regulate gene-spliced organisms, the EPA, USDA and FDA have grown in size and power.

The losers? All of us who foot the bill for government and who purchase consumer products—that is, society at large. There is no conceivable end in sight for public policy that affords no incremental protection from risks, but creates huge disincentives to using a superior technology.