The Political Economy of the Medical Biotechnology Industry in the United States
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City University of New York (CUNY) CUNY Academic Works All Dissertations, Theses, and Capstone Projects Dissertations, Theses, and Capstone Projects 2010 Doing Good by Doing Well? The Political Economy of the Medical Biotechnology Industry in the United States Volker Lehmann The Graduate Center, City University of New York How does access to this work benefit ou?y Let us know! More information about this work at: https://academicworks.cuny.edu/gc_etds/1969 Discover additional works at: https://academicworks.cuny.edu This work is made publicly available by the City University of New York (CUNY). Contact: [email protected] DOING GOOD BY DOING WELL? THE POLITICAL ECONOMY OF THE MEDICAL BIOTECHNOLOGY INDUSTRY IN THE UNITED STATES by VOLKER LEHMANN A dissertation submitted to the Graduate Faculty in Political Science in partial fulfillment of the requirements for the Degree of Doctor of Philosophy, The City University of New York 2010 ii © 2010 VOLKER LEHMANN All Rights Reserved iii This manuscript has been read and accepted for the Graduate Faculty in Political Science in satisfaction of the dissertation requirement for the degree of Doctor of Philosophy. July 6, 2010 Professor Irving Leonard Markovitz Date Chair of Examining Committee July 6, 2010 Professor Joe Rollins Date Executive Officer Professor Irving Leonard Markovitz Professor Frances Fox Piven Professor Gerald Markowitz Supervision Committee THE CITY UNIVERSITY OF NEW YORK iv Abstract DOING GOOD BY DOING WELL? THE POLITICAL ECONOMY OF THE MEDICAL BIOTECHNOLOGY INDUSTRY IN THE UNITED STATES by Volker Lehmann Adviser: Professor Irving Leonard Markovitz This study is dedicated to the political economy of the medical biotechnology industry in the United States. The study combines interviews with more than 150 biotechnology actors with a historical analysis and evidence from publicly available data bases. The ascent of this new industry took place in the United States first and foremost, because there, scientific advancements coincided with the rise of supply-side economics, a policy shift that was part of a larger, neoliberal, ideological shift. Despite free-market rhetoric, specific clusters within the United States became the world’s leading biotechnology clusters because of a history of targeted interventions to stimulate economic competitiveness. And despite much expectation about a ‘biotechnology revolution’, biotechnology became an outsourced sub-industry for research, embedded within the ‘blockbuster drug’ business model of large pharmaceutical companies. This business model benefited from America’s healthcare system, whose fragmentation and domination by private health providers proved to be global drug companies’ most profitable market. To keep the status quo, biotechnology and pharmaceutical industries have successfully engaged in political maneuvering. They have helped preventing or watering down U.S. healthcare reform efforts, not in the least the most recent ones under President Obama. v Acknowledgements This study would not have been possible were it not for the multiple people supporting me in many different ways. I am most indebted to the sponsor of my dissertation, Lenny Markovitz, whose kindness, patience, and constructive criticism were instrumental throughout the entire process. I also thank Frances Fox Piven and Gerald Markowitz, the two other members of my dissertation committee, for their time and efforts in helping me to transform this study from a proposal into a full-fledged thesis. At the CUNY Graduate Center’s Department of Political Science, much good advice and support was provided by Tom Weiss, Andy Polsky, the late Marilyn Gittell, Ruth O’Brien, Peter Liberman, and Margaret Turner. This dissertation profited from my collaboration with the University of Jena/Germany, where I am particularly thankful to Ulrich Hilpert and Dietmar Bastian. My colleagues at the New York Office of the Friedrich-Ebert-Stiftung deserve all the credits for their enormous help over the years and their patient understanding of what it took to finish up this project. Among my friends and colleagues with whom I shared my thoughts and who conversely inspired my thinking on this subject, I particularly thank Daniel Barben, Erika Feyerabend, Brian Way, Björn Thiess and Jeroen Breekveldt. My dear friends Stephan Meinberg, Jörg Beier, Sebastian Schädler, Matthias Pier and Sven Hirsch deserve respect and thanks for reinvigorating my momentum. I am deeply indebted to my family in Germany, especially to my aunts Evi and Hella, my mother Jutta and my late father Wolfgang, who passed on before, but in the awareness of, the dissertation’s successful completion. Here in New York, Garrick, Gertje, and Jane have done more than their share to usher me through these testing times. And while nobody cheered me up more than Lissy, everything would be nothing without my wife. Danielle, this one is to you. vi Table of Contents Abstract ................................................................................................................................. iv Acknowledgements ................................................................................................................ v Table of Contents .................................................................................................................. vi List of Tables ........................................................................................................................ ix List of Figures ........................................................................................................................ x Chapter 1: Biotechnology in Times of Neoliberal Ideology .................................................. 1 1.1 Introduction and Summary of Findings ....................................................................... 1 1.2 Rationale for the Study ................................................................................................ 5 1.3 Theoretical Challenges and Value Added .................................................................. 12 1.4 Biotechnology: What’s in a Word? ............................................................................ 15 1.5 History Matters, But How? ........................................................................................ 20 1.6 Research Design to Study the Political Economy of the Biotechnology Industry .... 23 1.7 The Book Ahead ........................................................................................................ 32 Chapter 2: The Co-Evolution of Pharmaceutical and Biotechnology Industry ................... 35 2.1 Introduction ................................................................................................................ 35 2.2 Pre-R&D History ....................................................................................................... 37 2.3 The ‘Golden Age’ ...................................................................................................... 38 2.4 The Age of ‘Transformations’ ................................................................................... 40 2.5 Trial and Error in Search of New Business Models .................................................. 43 2.6 The Rise and Fall of Genomics .................................................................................. 46 2.7 Geography and Destiny.............................................................................................. 48 2.8 Current State of the Pharmaceutical Industry ............................................................ 50 2.9 The Global Dominance of the U.S. Biotechnology Industry ..................................... 52 2.10 Big Pharma and Big Biotech.................................................................................... 54 2.11 Conclusions .............................................................................................................. 61 Chapter 3: Theoretical Approaches Towards Analyzing Biotechnology ............................ 62 3.1 The Limitations of Neoliberal Frameworks to Analyze Biotechnology .................... 62 3.2 Schumpeter’s Core Concepts and their Importance for Biotechnology Innovation .. 64 3.3 The Neoliberal Turn ................................................................................................... 68 3.4 The Utility of the VoC Approach for the Analysis of the Biotechnology Industry ... 79 3.4.1 VoC vis-à-vis other Approaches ......................................................................... 79 3.4.2 VoC: What is it?.................................................................................................. 80 3.4.3 VoC and Globalization ....................................................................................... 85 3.4.4 Criticism of the VoC-Approach .......................................................................... 86 3.5 Embeddedness of the Firm ......................................................................................... 89 3.6 National Innovation Systems ..................................................................................... 94 3.7 Bringing in the Demand Side ..................................................................................... 96 3.8 Conclusions and Outlook ........................................................................................... 99 Chapter 4: Creative Destruction and Institutional Support Structures ............................... 103 4.1 Introduction .............................................................................................................