Most drug money in Indiana funds research. Is that good?

My story this weekend about the Indiana University School of Medicine looking to hire 100 new researchers and forge closer ties with industry partners is just the latest case of drug companies like Eli Lilly and Co. playing a larger role in the science conducted at universities around the country.

In 2008, the IU School of Medicine received $3 in federal research funding for every $1 it received in industry research funding. But now, as federal funding has fallen and industry funding has risen, the ratio is about $2.50 in federal funding for every $1 in industry funding.

Even before this latest push by IU, there was already more than $20 million per year in research funding flowing into Indiana from 15 drug companies that disclose their spending publicly. And those 15 companies represent less than half the overall U.S. pharma industry.

When I wrote recently about those drug company payments (as well as drug company payments to doctors to help market their drugs), more than one research-focused physician asked me to make a sharper distinction between research funding and marketing funding. Of the more than $25 million those 15 companies paid to doctors in Indiana, 80 percent of it went to research and the rest went to marketing: speaking and consulting fees, meals, travel expenses, gifts or a combination of those things.

“The funds for the stuff that we do comes out of the research budget [of drug companies]; it does not come out of the marketing budget,” said Dr. Bill Tierney, CEO of the Indianapolis-based Regenstrief Institute Inc. and a professor of medicine at the IU School of Medicine. Those two organizations, which are closely affiliated, received the largest sums from the 15 drug companies.

Drug companies pay Regenstrief to compare the effectiveness of their treatments against other treatments after they are on the market—something the federal government has required more of in recent years. Regenstrief does not conduct studies of experimental drugs in clinical trials, although the IU medical school does perform clinical trials for drug companies.

Dr. Phillip Toth, who leads clinical trials of pharmaceuticals at the Indianapolis-based Midwest Institute for Clinical Research, urged a similar distinction between research and marketing.

“Your article should differentiate the amount of money received for consulting, for speaking fees, and for conduct of a clinical trial for new drug development,” he wrote. “The lumping of all of these categories may give the reader a false impression of physicians just trying to get rich.”

Tierney and Toth make valid points. As I said before, these drug company payments for research do not just pad the physician’s income. Unlike drug company payments for speaking or consulting, which are paid directly to a physician on top of whatever other money he or she earns, payments for research fund the staff and other overhead expenses required to actually conduct research on patients or on patient information.

Tierney noted that Regenstrief’s contracts with its researchers are structured so that whatever research money a physician brings in, minus overhead expenses, is deducted from whatever his or her target salary is. So Regenstrief researchers can’t earn more than what their salaries were already set to be.

(However, Tierney acknowledged that success at bringing in research funding does contribute to promotions. So, indirectly, bringing in more research funding can lead to a higher salary.)

Yet drug company funding of medical research is hardly without controversy. Case in point: This 2012 story in the Washington Post, headlined, “As drug industry’s influence over research grows, so does the potential for bias.”

The article noted that since the mid-1980s, industry funding for drug research has exceeded what the National Institutes of Health has been spending. In 2011, drug companies spent $39 billion, while the NIH spent $31 billion.

With NIH spending down to just $22.5 billion last year and falling again, the ratio of drug money to government funding is growing even wider.

“The billions that the drug companies invest in such experiments help fund the world’s quest for cures. But their aim is not just public health,” the Post wrote. "That money is also part of a high-risk quest for profits, and over the past decade corporate interference has repeatedly muddled the nation’s drug science, sometimes with potentially lethal consequences.”

The article cited a study of the GlaxoSmithKline diabetes drug Avandia, which was lauded in a 2006 article published in the New England Journal of Medicine. A year later, Avandia was shown to have contributed to an alarming number of deaths due to its effects on patients’ hearts.

This ambivalence to drug money is deeply entrenched at the IU medical school. Four years ago, I had a fascinating chat over coffee with Dr. Nasser Hanna, an IU researcher who has done key studies of Lilly's blockbuster cancer drug Alimta, as well as work for other drug companies.

Pharma companies’ interest in cancer had been a boon to cancer-focused researchers like him, he said. But that money also limited the scope of what was studied and what was not. This year, Reuters wrote an article making the same point.

Tierney, the Regenstrief CEO, told me this month that drug funding counted less at the IU medical school when it came time for promotions and in general prestige. With federal grant funding flat and harder to get, IU is now trying to change that culture.

“We’re going to stop turning our nose up at private funding,” Tierney said.

And starting this fall, as part of one of the provisions in the Obamacare law, the federal government will start reporting all drug company payments of $10 or more. So we’ll be able to track exactly how important drug company funding becomes for researchers at IU, Regenstrief and anywhere else.