How Basic Healthcare Became Big Business in America ‹ Literary Hub

The Great War was a short one for the United States. But in sixteen months of fighting alongside the Entente powers, 116,000 American soldiers were killed. Contemporaries grasped that a break had occurred, forming two distinct periods in the political and cultural life of the country. The defining novel of the prewar decade was Upton Sinclair’s The Jungle, a work of social protest and journalism that captured the tone and preoccupations of the Progressive Era. Sinclair’s depiction of the Chicago meatpacking industry will forever be paired with the Pure Food and Drug Act of 1906, signed by Teddy Roosevelt six months after the novel’s publication.

In the postwar decade, the shrunken public imagination and concerns of the Harding Era were indelibly recorded by the other Sinclair of American literature. Sinclair Lewis’s 1922 novel Babbitt depicted America’s stultifying embrace of the idea, expressed with pith by Calvin Coolidge in 1925, that the country’s natural concern is not civic duty or social improvement, but “the business of business.”

The celebration of commerce and its values colored the drug patent debate when it resumed shortly after the war. But the main theater of this debate shifted from the drug companies to the American university, where a collision of science and commerce spurred development of institutions and mores to manage and rationalize the new business of “ethical” academic patenting. Together, the worlds of academic science, organized medicine, and drug companies initiated the process of revising and shaking off the honor codes that had long buffered them from the crass commercialism of other industries and their own worst natures.

The celebration of commerce and its values colored the drug patent debate when it resumed shortly after the war.

The context for this shift was the maturation of scientific medicine. New research fields were extending the vistas of medical science in every direction, but conducting this research cost money and required expertise. This reality drew academic researchers, medical gatekeepers, and drug companies closer together by necessity. The only guidebooks on hand for ordering these new relationships, however, amounted to a long list of restrictions and negative commandments dating to Hippocrates. The process of formulating and establishing new rules and codes would occur in fits and starts during the interwar decades, eventually supplanting the “ethical” system that had provided medicine and drug making with identity and purpose since Benjamin Rush collected leeches in the swamps outside Philadelphia.

As drug companies took their place alongside other modern research-based industries, they turned cautiously to long-taboo arguments about the uses of intellectual property. On the academic side, scientists in search of funding streams wondered if patenting and licensing models might be devised that retained the old idealism and did not open the door to unscientific avarice. Both sides settled on a similar two-pronged justification for exploring “ethical” patenting: First, holding exclusive rights on inventions could help pay for more re-search and hire more scientists; second, by limiting production to trustworthy manufacturers, drug companies could wield patent monopolies in the name of public safety.

The ensuing battle over the legitimization of ethical patenting was wrapped in an irony. The academic hardliners most opposed to patenting and industry partnerships remained under the influence of a romantic vision of pure research associated with the great German universities. Yet it was the products of these same universities who arrived in America like visitors from the future to demonstrate how medical inventions could be harnessed to the pursuit of maximum profit and market power.

The monopolies established by doctorates from Heidelberg and Munich during the late 19th century would shape the U.S. drug patent debate in life and death. By smashing the German intellectual property piñata during the war and seeding U.S. companies with the contents, the government cleared entire research areas of ingeniously complex German patent thickets and facilitated the very industry-academic partnerships that proved to be the graveyards of the patent taboo. Following the wartime seizure and broad licensing of the German patents, writes the historian Nicolas Rasmussen, industry “collaborations with university life scientists became more common [and] drug companies were forced to rely heavily upon their links with universities both for new drug discovery and for clinical trials.”

In response to Steenbock’s vitamin D patent, the British Medical Association adopted a resolution condemning any researcher who used “discovery and invention for his personal advantage.”

What followed was a coevolution of institutional cultures, with modernizing drug companies leading an awkward dance of legitimacy with academic research partners. Once again it was Sinclair Lewis who processed this as art in real time. His 1925 novel Arrowsmith chronicles the disillusionment of a young academic scientist who rejects the hybridization of business and medical science and flees to pursue knowledge on his own terms in a laboratory shack, deep in the Vermont woods.

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Flying a kite in the rain one night in 1752, Ben Franklin demonstrated that lightning could be directed. But despite the old saying that emerged from the famous experiment, he never captured anything in a bottle. It was a Wisconsin biochemist named Harry Steenbock who literalized the phrase by distilling and capping something as elemental as the thunderbolt: sunlight.

Steenbock’s discovery occurred during a 1923 investigation into the causes of rickets, a bone disease associated with vitamin D deficiency. He observed that rats deprived of sunlight and the necessary vitamins routinely developed the condition, but rats similarly deprived in one particular cage in his lab never did. While attempting to isolate the cause, Steenbock tested a coating of sawdust in the cage of the healthy rats. It turned out to be rich in vitamin D; the rats had been eating it. He then traced the source of the vitamin D to light emanating from the laboratory’s new quartz-vapor lamp: its ultraviolet rays had produced significant amounts of the “sunshine vitamin” crucial to human health.

The discovery secured Steenbock’s place in medical history, but there is every reason to believe the young professor’s mind was on other things: namely table butter and the challenge it faced from an upstart oleomargarine industry. His loyalty to butter and his determination to block the infusion of its artificial rivals with vitamin D would accelerate the emergence of a post-taboo world of academic-industry partnerships and university patenting.

Steenbock grew up on a family dairy farm in eastern Wisconsin and earned all of his degrees at the University of Wisconsin at Madison. In 1908, he was hired by the university’s department of agricultural chemistry to tackle the problems of the state dairy industry that funded most of its work. Steenbock, ever the Wisconsin farm boy, saw himself as working for the industry that raised him and provided a living for nearly everyone he knew and loved. His discovery put him in a position to keep vitamin D out of the enemy hands of the oleomargarine industry. The new butter substitutes were cheaper than real butter, but they lacked vitamins, severely limiting their appeal. The weight of responsibility to keep it this way fell heavy on Steenbock. Several years earlier, he’d developed a method for producing a concentrated form of vitamin A. When he failed to secure a process patent, the margarine industry pounced and used its enhanced product, now rich with vitamin A, to cut into butter’s nutritional and market dominance.

Even as academic patenting became common, it did not cease to be a source of embarrassment.

Vitamin D was the last line of defense, and Steenbock was determined not make the same mistake twice. Although the situation was urgent, Steenbock knew he could not patent his irradiation method himself. He believed in the ethical code that drew a clear line between research and private gain; anything that blurred that line also risked his reputation. To avoid the appearance of avarice, Steenbock convinced university officials to establish a corporation responsible for handling the legal and financial aspects of patenting and licensing. The resulting entity was named the Wisconsin Alumni Research Foundation (WARF). It remained distinct from the university while managing the patent on its behalf. This provided the thinnest of buffers separating the sacred and the profane.

The establishment of WARF in 1925 broke the ethical code of academic science, just as Stewart, Davis, and the Germans had each fractured the ethical frame around drug manufacture. Steenbock was sensitive to this, and devoted himself, like Stewart and Davis, to publicly defending his patent against criticism. In the pages of Science, he claimed it was necessary to “protect the interest of the public in the possible commercial use of these findings.”

To bolster his case, Steenbock cited the recent and equally controversial decision by the University of Toronto to partner with the Lilly company to produce a trademarked drug called Iletin, the first insulin product. The Toronto researchers likewise defended the patent on grounds first prepped by Stewart and Davis: it protected the public and funded future research. Like Steenbock, the Canadian researchers did not personally seek or accept any royalties from licensing deals.

No matter how loudly or often Steenbock proclaimed his scientific virtue, everyone knew he held a butter knife behind his back.

Steenbock licensed out his discovery to companies that introduced a number of new vitamin D–infused food products—except one. He and WARF made sure the margarine industry was denied access to a publicly financed invention of obvious medical and public health value. As Steenbock knew, those most impacted by vitamin D deficiency were poor children whose parents bought margarine because it was cheaper. The WARF monopoly served to deprive them of an important nutritional supplement. This was considered especially scandalous in Britain, where vitamin D had first been isolated and its deficiency identified as the cause of rickets, and where winters in the smokestack north are long and dark.

In response to Steenbock’s vitamin D patent, the British Medical Association adopted a resolution condemning any researcher who used “discovery and invention for his personal advantage.” Not to be outdone, Britain’s Medical Research Council and the Royal Colleges of Physicians and Surgeons proposed an international treaty banning patents on medicines. The Steenbock patent hung over the proceedings where the proposal was announced, writes historian Peter Neushul, as a Yankee symbol of “a new way of managing science which would seem to threaten the process of science itself.”

By the early 1930s, not a single major research university maintained a categorical opposition to the notion that medical monopolies could be benign, so long as the patent holder was committed to protecting knowledge only from those with ignoble designs.

Controversy also festered in Wisconsin. The university faculty and administration were split over the ethics of the WARF model of “ethical” monopoly, as were the dairy farmers on whose behalf Steenbock claimed to be acting. The veteran editor of Hoard’s Dairyman, A. J. Glover, penned an outraged letter to the university deans who approved the patent and the creation of WARF. “Why should the public devote money to discovering new truths only to permit them to be patented and their use determined by some corporations?” Glover demanded to know. “It seems to me that information discovered by the use of public money belongs to the public and it is difficult for me to understand how such discoveries can be patented and some private corporation determine how they shall be used.”

In the aftermath of the next world war, this critique would resound through the U.S. Senate during a national debate over the legitimacy of private claims on federally funded science. That it was uttered with clarity in a provincial trade publication is a testament to how Americans—even those outside the worlds of medicine and academic research—understood and intuited the implications and stakes of the debate around patents related to public health.

“The WARF was the inflection point,” says Gerald Barnett, a former patent official at the University of Washington who writes on the history of university patent policy tech transfer. “It was an influential early adopter of patents before scientists became captivated with producing dollars and IP rather than serving their professions.”

By the mid-1930s, a number of public and private research universities across the country began patenting and experimenting with variations on the WARF model. In most cases, patents on medical inventions were approved in the name of “protection without profit,” with the nitty-gritty of licensing and royalties kept at arm’s length and under the discretion of the board of regents. Columbia, MIT, and Princeton together outsourced the management of faculty patents to the Research Corporation, a private firm that invested royalties in promising nonprofit research projects around the country.

Even as academic patenting became common, it did not cease to be a source of embarrassment. In announcing its contract with the Research Corporation, Columbia’s regents felt obliged to emphasize that patenting “is not deemed within the sphere of the University’s scholarly objectives.” Those institutions with the deepest pedigrees as medical gatekeepers, notably the University of Pennsylvania and Harvard Medical Schools, made stands against the tide and banned faculty from patenting in 1934.

“Why should the public devote money to discovering new truths only to permit them to be patented and their use determined by some corporations?” Glover demanded to know.

Even these principled rejections, however, were drafted with wiggle room. By the early 1930s, not a single major research university maintained a categorical opposition to the notion that medical monopolies could be benign, so long as the patent holder was committed to protecting knowledge only from those with ignoble designs. The quandary was fixing the new boundaries into place in a way that ensured ethical behavior and noble ends in substance and appearance. Many involved in this process were haunted by the question posed in 1894 by the stern medical gatekeeper Nathan Smith Davis. Yes, ethical patenting is progress, Davis orated during an AMA meeting in response to Stewart’s controversial ideas, “but in what direction—that of science and honor, or that of mammon and dishonor?”

In 1933, the American Association for the Advancement of Science formed a committee to study the growing influence of industry and patenting on university research. The committee settled on a measured endorsement of Stewart’s old arguments: handled correctly and transparently, patents could assure quality control, deter unscrupulous actors, and help fund research.

But the report also noted causes for concern. Most worrying was evidence that the expanding industry presence in universities was contributing “very unfortunate strictures on other men who subsequently do fundamental work in the same field.” Under the pressure of private sector collaborators who were themselves edging away from the old ethical framework, academic re-searchers began to emulate the German practice of strategically patenting incremental advances, delaying publication, and otherwise impeding the flow of knowledge for commercial reasons.

Since the receding of the Populists, patent politics were all but thrown to the courts and forgotten.

Arguments over these shifting mores dominated medical and scientific conferences throughout the 1920s and 1930s. The speeches for and against were reprinted in medical journals, where responses and the counter-responses from physicians and medical school deans dominated the letters’ pages. As the country moved deeper into the Depression, the spectrum of acceptable opinion expanded. Occasionally, one could even hear defenses of personal gain—the ultimate ethical no-no—as an acceptable aspect of patenting and industry sponsorship. “Bread, or even a little butter on the bread, for a man and his family is one of the prime requisites for research, although this nutritional requirement of productive scholarship is often overlooked,” wrote a Yale physiologist named Yandell Henderson in a 1933 Science article. This allusion to monetary reward was harder to criticize during a time when actual bread lines trumped contracting research budgets as an issue. To some, the old ethical opposition to patents appeared as the rarefied obsession of another time.

The old ways did not disappear without a fight. Any attempt to justify patenting, ethical or otherwise, was sure to be met with the resistance of traditionalists at conferences and in the pages of leading journals. Ethical patenting and industry-academic partnerships, wrote New York physician Alan Gregg to Science in response to Henderson, “[are] proving dangerous. It tends to shut off unselfish exchange of ideas and information, it tends to kill a critical and impartial attitude, it tends to introduce quarrels and bitterness and to consume time and funds in lawsuits. Why should gifts intended for the general welfare play the role of capitalizing a business? And what becomes of the peculiar function of university research as contrasted with that of the shrewdly administered business enterprise?”

Serving a dual role as both participant and referee in this debate was Morris Fishbein, the imposing Chicago physician and longtime editor of the Journal of the American Medical Association. Fishbein was a reluctant re-former who accepted the rise of ethical patenting with more resignation than enthusiasm. Obligated to stand by the new bylaws of the AMA, he gave his approval to the group’s theoretical defense of ethical patenting in the public interest. But he refused to sugarcoat his views on its practice. The WARF seemed “more interested in industry than in science,” Fishbein noted in 1933, demonstrating “how remarkably remunerative a patent may be for a fund for a university. The word has gone around that the Wisconsin University has gone royalty crazy.”

At the 1937 meeting of the Chemical Society in Rochester, New York, Fishbein took further measure of the dizzying changes of the postwar years. Republished in the AMA Journal under the title “Medical Patents,” the speech is the era’s definitive statement on the post-1918 upsurge in ethical patenting. If monopoly claims and industry partnerships were to be aligned with the principles of medical ethics, Fishbein believed, order was required. He called for the creation of a “disinterested body capable of viewing the matter objectively . . . wholly altruistic in character, capable of administering medical patents for the benefit of the public, and assuring a reasonable remuneration to the investigator, the devotion of much of the profit to research, and adequate return to manufacturers willing to develop quantity production and distribution in an ethical manner.”

To some, the old ethical opposition to patents appeared as the rarefied obsession of another time.

Medical products alone required this because they were different from all other categories of invention. Paraphrasing an argument made by the immunologist Hans Zinsser, Fishbein argued that the relief of human suffering and maintenance of public health demanded rules and mores distinct from those governing “the invention of improvement in the mechanism of automobiles or of a shoe buckle.” To inhibit in any way the use or development of a discovery touching on public health was as “unjustified as cornering the wheat market.” Fishbein observed that such a “cornering” mentality was being normalized by a surge in university patenting after the WARF model. Alert to the symbolism of Steenbock’s grip on the production of vitamin D, the Chicago doctor deployed a time-honored rhetorical device to illustrate its grave implications for medical research and science itself.

“The sun in the sky should be freely available to all who wish to use it,” said Fishbein. “Yet it has been hinted that there are some concerned with patents on vitamin D who would even inhibit investigators from experimenting with the sun.”

The university patenting debate sometimes spilled beyond the professional journals. The April 1936 issue of Harper’s featured an essay by the Scottish scientist G. W. Gray in defense of keeping industry and its values at a healthy distance from the scientific enterprise. “One of its greatest glories is its intellectual integrity and independence,” wrote Gray. “But can this reputation continue unsullied in the clash of competitive sales campaigns of patented commodities, infringement suits, and other contentions of the marketplace in which the financial interest of the research institution is on one side of the dispute?” But popular articles like Gray’s were few, and the patent question was rarely treated as a front-burner matter of national consequence for the economic, political, or physical health of the country. Since the receding of the Populists, patent politics were all but thrown to the courts and forgotten.

This ceased to be true, in dramatic fashion, just as “ethical” patenting completed its conquest of the American university in the late 1930s.

The transition from an intra-professional parlor debate to something much bigger is reflected in an essay by Fishbein published in the March 1941 issue of the Journal. Its subject was price-fixing among the companies licensed by the University of Toronto to produce insulin. In another era, the companies in question might have worried about the reputational scars a Fishbein editorial could inflict. But in 1941 they had bigger problems than being reprimanded by the official organ of the AMA. They would soon plead nolo contendere in a case prosecuted by Franklin Delano Roosevelt’s Justice Department for violations of the Sherman Act. Fishbein did not title his essay “The Insulin Patent” or “The Insulin Controversy,” as he might have done a decade earlier. He used a word that had recently stormed back into America’s political vernacular, just as the umbilical cord was cut from a post-ethical pharmaceutical industry that had finally arrived, as Fishbein feared, kicking and screaming for more, more, more.

The article was titled “The Insulin Monopoly.”

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Via Counterpoint Press

Excerpted from Owning the Sun: A People’s History of Monopoly Medicine from Aspirin to COVID-19 by Alexander Zaitchik. Copyright © 2022. Reprinted by permission of Counterpoint Press. 

Alexander Zaitchik

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