Six Reasons Why Giving Scientists Big Bonuses Won’t Fix Pharma R&D
Scientists in the biotech and pharmaceutical industry are an underappreciated bunch. They make decent salaries, but nowhere near the big bucks that go to their bosses. Even when an industry scientist discovers a new drug that helps people and makes billions, he or she almost never gets publicly recognized. They live mostly anonymous middle class lives, just trying to pay the mortgage and put the kids through college.
So when news surfaced a few weeks ago that GlaxoSmithKline plans to reward its scientists with investment-banker style bonuses—potentially worth up to $15 million—for discovering blockbuster drugs, my first reaction was that this sounds great. It has never felt right to me that people in industry who often make the biggest contributions don’t reap the rewards. It struck me as one modest step in the right direction toward fairness in a world where economic inequality keeps widening.
But after talking to a few scientists the past week, even a few who would stand to gain a lot from this new kind of bonus system, I can only conclude one thing: Well-intended as it may be, it’s just another bad idea to fix the pharmaceutical R&D crisis.
What we’re really discussing, of course, is way more than an employee bonus system. Even with all kinds of new technologies and deeper understanding of biology, the world’s pharma companies are in a desperate situation. They have boosted annual spending on R&D to $135 billion a year, and despite that massive investment, the global pharma industry is introducing fewer new drugs now than it did a decade ago, according to a report by the International Federation of Pharmaceutical Manufacturers and Associations.
Something big has clearly got to change. Pharma companies are trying all kinds of experiments with academic partnerships, biotech partnerships, internal reorganizations, open-source data sharing initiatives, venture capital investments, and more. Big bonuses for scientific achievement are just one other idea to add to the mix.
Lots of companies have incentive programs to reward employees for a job well done, but GSK’s plan appears to dwarf the others. The new plan replaces an older one that offered smaller rewards for scientists whose projects hit modest goals of progress in development, like introducing a drug candidate into clinical trials.
“These programs provide the opportunity to recognize individuals whose extra efforts or leadership enable GSK R&D to achieve its strategic goals, drive performance and ways of working,” said Melinda Stubbee, a GlaxoSmithKline spokeswoman, in an email. “Employees at all levels and phases of R&D are eligible.”
Not surprisingly, when this plan was reported, it spurred lots of chatter. John LaMattina, the former president of R&D at Pfizer, wrote a critical review on Forbes, arguing that it would be very tricky for companies to fairly hand out bonuses in the proper proportions. David Shaywitz and Derek Lowe also raised doubts that such incentives would work.
I wanted to hear from a few more people in industry who either would have benefited from such a megabucks incentive plan in the past, or stand to benefit from one today. After the series of conversations with these scientists, I came away convinced that 8-figure bonuses won’t solve the R&D productivity problem, and might even make it worse. Here are six reasons why:
Success has too many fathers: Drug development is a complex team sport, not an individual sport like golf or tennis. When a drug succeeds, it’s usually because of a complex tapestry of biology, chemistry, preclinical development, clinical development, regulatory affairs, manufacturing, marketing, and so on. No one person, or even one department in a company, can put out a successful drug by itself. So when you have a success, you often have many people who believe, with varying degrees of justification, that their contribution was integral. You could end up with dozens, or hundreds, of people raising their hands, saying they deserve a piece of the bonus pool. People who do a good job, and think they deserve a bonus, are almost surely going to be snubbed, and even more will feel snubbed. “If you neglect certain people, or recognize people less worthy in the eyes of their peers, it creates animosity,” said Peppi Prasit, the founder of San Diego-based Inception Sciences and a former medicinal chemist at Merck.
It’s too hard to fairly divvy up the loot: Even if a company decided to set aside, say, $50 million in its bonus pool for … Next Page »