Drug companies have always been bad at collaboration. That’s changing.

On Tuesday, the National Institutes of Health announced a partnership of breathtaking scope. Ten drug companies had agreed to collaborate on curing four of the world's most devastating diseases, which will affect millions of people in the coming years and have proven largely resistant to cures: Alzheimer's, Type 2 diabetes, lupus and rheumatoid arthritis.

It took NIH Director Francis Collins more than two years to wrangle the industry into cooperating. They brought in consultants to structure the $230 million project, which will be jointly funded by companies and the government; several companies and one mental disorder -- schizophrenia -- fell by the wayside in the process. It ended up being a remarkable arrangement for a sector that's long been fiercely competitive, jealously guarding its intellectual property against would-be copycats: All the results they come up with will be open source. At the end of the project, which should lock in a basic understanding of how the diseases work, they'll race to bring new drugs to market as fast as possible.

If it works, it'll be a major achievement for Collins. At the same time, however, the industry was already changing in ways that made the effort possible.

1. Drug companies are now more used to talking about what they're up to

Historically, drug development has been top secret.

"Unlike many other industries, the pharmaceuticals industry has been extremely insular. They didn't share anything with anybody else," says Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development.

About 15 years ago, though, small biotech companies started popping up. Under federal rules, they have to disclose anything that might have a material impact on their operations. Since interruptions to research processes affect small companies more than big companies, they ended up disclosing more of it. "I think that was the major reason why investors started looking at the large companies and saying, 'how come we don't know what you're doing?'" Kaitin says. "Now, you not only know what's going on with the products, but you have a pretty good idea about clinical trials."

That also makes it easier to collaborate. And this consortium isn't the first: Others, like Boston-based Enlight Biosciences and TransCelerate Biopharma, have also popped up in recent years. They don't always generate great results, but they at least signify a willingness to try.

2. The industry has gotten poorer 

With the expiration of a bunch of blockbuster drugs, the pharmaceutical industry's fat profits have slimmed, leaving less money to pour into research and development -- especially when most drug trials ultimately fail, wasting millions of dollars and years of time.

The new consortium is meant to unravel the biological roots of the disease, so companies know how to make drugs to attack them, and there's no way any one company could do that by itself.

BCG's Sarah Cairns-Smith, who helped set up the partnership, compares this "pre-competitive" of the drug discovery process to a giant archaeological dig. "Some people believed that it was okay just to send in the artisans, and the artisans would find the pieces of the pot," she says. "You needed a more systematic approach." Companies put in a comparatively small amount of money for the chance to develop a successful drug at all, knowing that there's no way they can do it without competition.

Big Pharma: Not doing so hot lately. (McKinsey)
Big Pharma: Not doing so hot lately. (McKinsey)

3. There's less public money for basic science research

Sad graph. (American Association for the Advancement of Science)
Sad graph. (American Association for the Advancement of Science)

Compare the funding environment today with the one in which scientists started combating another set of huge diseases: cancer. Resources have been pouring into cancer research for decades; the federal government has a whole Cancer Institute. These days, though, budgets for basic research are slimmer.

"What's happened is, there hasn't been that much money spent on understanding the mechanisms of these other diseases," Kaitin says. "Companies are saying, we're not going to wait for NIH to provide the funding."

So, congratulations to Collins and the participating companies. You probably couldn't have done it ten years ago.

Lydia DePillis is a reporter focusing on business policy, including lobbying, government contracting, and international trade, with a bit of urban affairs and infrastructure on the side.
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