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The Development of a Key Cancer Drug: Taxol

The pharmaceutical industry promotes the idea that the market is responsible for innovations in medicine. The industry trade group, Pharmaceutical Research and Manufacturers of America (PhRMA), describes its mission as advocacy for public policies that encourage new medicines. To accomplish this, PhRMA lobbies for “1) Broad patient access to safe and effective medicines through a free market, without price controls; 2) Strong intellectual property incentives; and 3) Transparent, efficient regulation and a free flow of information to patients.” 

This statement obscures the enormous role that the federal government plays in the development of new drugs and therapies. The case of Taxol provides a compelling illustration of this pattern. Taxol is used most widely to treat ovarian and breast cancer and Kaposi’s sarcoma. It is also used to treat head and neck cancer, lung cancer and bladder cancer. 

Taxol is a complex compound found in the bark of the Pacific yew tree. The bark was first collected in 1962 and its potential for killing cells was demonstrated in 1964 as part of the National Cancer Institute (NCI)-United States Department of Agriculture (USDA) plant screening program. In 1971, chemists at the Research Triangle Institute in North Carolina, a nonprofit research organization created in 1958 by leaders in academia, business and government, first isolated the compound. The NCI selected Taxol as a development candidate in 1977 and clinical trials began in 1984. The yew bark was supplied by the Natural Products Branch of the NCI, sourced from trees located on National Forest lands. In 1989, the Johns Hopkins University Oncology Group reported that Taxol produced a very high response rate in women with ovarian cancer whose cancer had been unresponsive to other chemotherapeutic agents. 

In December 1989, the NCI chose the pharmaceutical giant Bristol-Myers Squibb as its partner in a Cooperative Research and Development Agreement (CRADA) to work on Taxol. This agreement gave Bristol-Meyers Squibb exclusive rights to develop Taxol for the commercial market and exclusive rights to all clinical data generated by the NCI from trials it had or would undertake to study the drug’s effectiveness. Bristol-Meyers Squibb also got the right of first refusal on all yew products on Federal lands as well as orphan drug status which allows firms up to 7 years exclusive marketing rights over a drug that has not been patented.

Sales of Taxol in 1992 were $50 million, and they rose to $580 million in 1995. This represented one third of Bristol-Meyer Squibb’s anti-cancer drug sales in that year. This pattern of the government doing most of the work while the pharmaceutical company reaped the rewards arose from the reluctance of firms to invest in the development of new cancer drugs. Research and development costs are enormous and the return in terms of successful drugs is particularly small. For these reasons the  government took over the direction of cancer research, including the search for new drugs.

The National Cancer Institute was established in 1937, and in 1953, the NCI, directed by Congress, initiated a national program of chemotherapy research, which led to the establishment of the Cancer Chemotherapy National Service Center (CCNSC) in 1955.  The CCNSC facilitated collaboration between pharmaceutical companies in the collection, synthesis and testing of chemical compounds for anticancer activity.  The program generated the world’s largest computerized database for experimental drugs.  “In its ‘war against cancer’ (declared by President Nixon in 1971) the US state has (since the mid-1950s) funded and also managed, not just the relevant basic research but also applied research, development, formulation, toxicity testing and clinical trials of many new drugs—that is, all the R&D necessary to take a potential drug almost to the point of full scale production and market launch—in complete contrast to the ideology of “minimum government intervention and relying on market forces to ensure the appropriate allocation of resources”(Walsh and Le Roux 2004:1312-1313).

Written by Dina Biscotti


Walsh, Vivien and Jordan Goodman. “Cancer chemotherapy, biodiversity, public and private property: the case of the anti-cancer drug Taxol.” Social Science and Medicine. 49 (1999) 1215-1225.

Walsh, Vivien and Muriel Le Roux. 2004. “Contingency in innovation and the role of national systems: Taxol and Taxotère in the USA and France” Research Policy. 33 (2004) 1307-1327.

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