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FDA's economist in chief

Mark McClellan's views on healthcare make him popular with the drug industry

By Christopher Rowland
Globe Staff / January 18, 2004

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ROCKVILLE, Md. -- Foes and friends of Mark McClellan agree on at least one point: The Food and Drug Administration commissioner is very popular with the drug industry he regulates.

He shares industry's view that profits should be protected to provide money and incentives to keep the United States at the forefront of new drug development. He is demanding speedier drug approvals from the FDA, echoing long-standing pleas from industry that the agency move faster and more predictably. He is lined up with the pharmaceutical industry in warning about potential health dangers of importing low-cost Canadian drugs. Instead of calling for lower US drug prices, he says, Canada and Western Europe should raise their prices on brand-name drugs to match.

"He's really been a disaster, possibly the worst commissioner I've seen," said Dr. Sydney Wolfe, director of health research at consumer group Public Citizen in Washington. "He is more well-liked by the pharmaceutical industry than any other commissioner I can remember."

Drug industry executives readily agree with the second notion. "Mark McClellan is absolutely a pleasure, a breath of fresh air," said Una Ryan, chief executive at biotech firm AVANT Immunotherapeutics Inc. in Needham and vice chairwoman of the Massachusetts Biotech Council. "He understands the cost of wasting time."

A scion of a politically active Texas family with close ties to President Bush (his brother Scott is White House press secretary), McClellan, a youthful-looking 40, is the first economist to lead the FDA since its founding in 1907. Now a year into the job, he said his policies are steeped in economic principle, not politics.

McClellan has straddled two worlds -- mixing a bit of Texas grit with a prestigious education. He was pegged as especially bright growing up in Austin. He enrolled in a program for accelerated students at the University of Texas but was thought to be "superficial" by some of his peers and failed to gain admittance to some honor societies, said a family friend and former administrator at the university, Ira Iscoe.

"I don't think he got the academic honors he deserved," Iscoe said. "I always thought of Mark more as beer-drinker than a sherry-drinker. He's one of the boys."

The honors rolled in later, and McClellan's native Texas twang was all but buried during years of advanced education in Cambridge. He holds a medical degree from the Harvard University-Massachusetts Institute of Technology Program in Health Sciences and Technology and a doctorate in economics from MIT.

'Analytical, not political'

Lawrence H. Summers, a former US treasury secretary under President Clinton and now Harvard president, was so impressed with McClellan's credentials that he recruited him out of a teaching post at Stanford University to work on healthcare as a deputy assistant treasury secretary.

"He was analytical, not political, and very thoughtful," Summers said.

Now the economist-turned-regulator is mapping an activist path for the FDA, attempting to use his office to shape the healthcare economy. Typical is his stance on illegal prescription drug imports from Canada.

Foreign price controls are keeping costs down in Canada and Western Europe, the FDA commissioner told his staff last fall at a closed-door meeting, unfairly pushing up drug prices in the United States and driving Americans to search the Internet for illicit bargains overseas. The FDA, he said, must demand that foreign nations raise their brand-name drug prices and remove the inequities. They could pay less for generics to make up the difference, he said.

His assembled aides initially reacted with skepticism. Badgering foreign governments over drug prices is outside the FDA's traditional scope. But McClellan was undeterred, according to an FDA official who kept notes of the meeting.

"This is not a sustainable situation," McClellan told the group. "It's not fair, and it's not good for keeping drugs safe."

No nation has signed onto McClellan's proposal since he publicly rolled out the idea in Cancun and Ottawa last fall. McClellan plans to press on. "The facts are behind us on this," he said in an interview.

Representative Gil Gutknecht, a Republican from Minnesota and sponsor of a House bill last year to authorize Canadian drug importation, said that if McClellan is serious about equalizing the cost of drugs between the United States and other Western nations, he should focus on ways to cut costs domestically, starting with the industry's enormous consumer advertising budgets, pricing tactics that have drawn state and federal investigations, and executive salaries.

"If I'm Mark McClellan, I'd want to burrow down to the question of why drugs are so expensive," Gutknecht said. "Just to browbeat other countries to get them to raise prices would be at the end of my agenda, not the beginning."

Economically driven

David Cutler, a Harvard economist who helped develop the failed Clinton healthcare plan in the 1990s and has coauthored academic studies with McClellan, said he understands the economic principles behind McClellan's stance. Cutler said McClellan doesn't automatically side with the drug industry on everything.

"He believes in markets," said Cutler. "He has a way of thinking about the world that is economically driven, with costs and incentives and individual choice."

Cutler said McClellan's initiative to increase FDA approvals of generic drugs, which offer low-cost competition for big brand-name pharmaceuticals, is evidence that he is "not in the pocket of anybody."

Defending himself against charges that he is too close to the drug industry, McClellan also cited his support of generic drug approvals. "I don't think that was on the top of the list" of the drug industry lobby, he said.

"One of the things that I've noticed since coming into this job at FDA is no matter what I do, I'm going to be criticized," said McClellan. "That frees me up to focus on what I think is right."

During his youth in Austin, McClellan was an ace student, played on his high school tennis team, and had high-profile relatives.

His mother is Republican Carole Keeton Strayhorn, the comptroller of Texas (a statewide, elected position) and Bush ally whose first elected position was on the Austin school board. His grandfather, Strayhorn's father, was W. Page Keeton, who became longtime dean of the University of Texas law school. Strayhorn, a divorced mother rearing four boys, won three mayoral elections in Austin as a Democrat, then switched to the GOP in the 1980s in a failed bid for Congress.

Veteran campaigner

Election years were busy for Mark and his brothers, Scott, the youngest, and two middle brothers, twins Bradley and Dudley, when they were growing up. All four boys licked envelopes at their mother's campaign headquarters and dropped fliers around Austin's suburban neighborhoods. Conversation around the dinner table was a stew of political gossip.

"They all have worked on their mother's campaigns since they were in swaddling clothes," said Lowell H. Lebermann Jr., a Democrat in Austin who is a family friend.

Family and friends say McClellan was little influenced by his father, O. Barr McClellan, a one-time Austin and Houston lawyer who was divorced from Strayhorn in 1978. Barr McClellan resigned from the Texas bar in 1982 after being convicted of forgery and sentenced to 10 years' probation, according to the Texas Bar Association. Barr McClellan said the conviction was dismissed on appeal in 1994. He has since moved to Mississippi, where he recently wrote a Kennedy assassination conspiracy theory book, "Blood, Money & Power, how LBJ Killed JFK."

Barr McClellan said he attended Scott McClellan's wedding last year, but otherwise has had infrequent contact with the family.

Mark McClellan bears a certain resemblance to a TV idol, William Shatner, who played Captain Kirk on Star Trek. McClellan made his own Star Trek movies as a youth. In a telephone interview, Scott McClellan remembers his brother's fascination with the show. "He used to be able to name each episode within the first 10 seconds of it starting," Scott McClellan said.

In his junior year of high school, McClellan enrolled in a special program for advanced students at the University of Texas. By the time he reached senior year, still attending classes at UT, another student's family filed an (ultimately unsuccessful) lawsuit to block him from becoming class valedictorian. McClellan proudly remembers holding his ground. A local television news crew showed up at the school to interview him over the flap. Wearing a T-shirt and blue jeans, he delivered a masterful sound bite.

"I still felt a connection to my class," he said. "These were people I had known since I was born. That's what I said."

Theory vs. reality

Law and politics were always the family's preoccupation. McClellan chose healthcare and economics, saying he "wanted to branch out on my own." At Harvard, MIT, and Stanford, he published influential work on the effects of capping medical malpractice awards (they cut down on "defensive medicine" costs) and the benefits of technology for heart patients.

Along the way, his Texas accent faded. "Med school in Boston probably toned it down," McClellan said in an e-mail message. "It's harder to get a patient history let alone patient trust from a senior from Southie with too many y'alls and fixin-tos.' "

Relatives were not surprised when McClellan eventually followed his mother and brother back into government. He returned to Stanford after working two years in the Clinton treasury department. With his brother Scott McClellan a key player in Bush's election bid, it was easy to stay in touch with the campaign. After the 2000 election, the president plucked McClellan from Stanford University, where he was a professor in the medical school, to serve as chief White House economic adviser for healthcare. The president moved him to the FDA post the next year.

While doing battle with Canadian imports and defending drug industry profits, McClellan has launched initiatives to speed obesity and diabetes drugs to market. He is studying the idea of requiring chain restaurants to include fat content on menus and is making public calls for more drugs to be sold without a prescription.

A major challenge will be his ability to reconcile his academic theories with the realities of running an enormous bureaucracy, one that is closely scrutinized by Congress. McClellan said he is determined.

"People always ask me if drugs should be approved faster with more risk, or should they be approved more slowly, potentially forgoing some of the immediate benefits," he said. "I disagree. I want to have both. That shouldn't be something that's off the table."

Christopher Rowland can be reached at crowland@globe.com.