January 25, 2001
By KURT EICHENWALD, GINA KOLATA and MELODY PETERSEN
The following article was reported by Kurt Eichenwald, Gina Kolata and Melody Petersen and was written by Mr. Eichenwald.
In late 1986, four executives of the Monsanto Company, the leader in agricultural biotechnology, paid a visit to Vice President George Bush at the White House to make an unusual pitch.
Although the Reagan administration had been championing deregulation across multiple industries, Monsanto had a different idea: the company wanted its new technology, genetically modified food, to be governed by rules issued in Washington and wanted the White House to champion the idea.
"There were no products at the time," Leonard Guarraia, a former Monsanto executive who attended the Bush meeting, recalled in a recent interview. "But we bugged him for regulation. We told him that we have to be regulated."
Government guidelines, the executives reasoned, would reassure a public that was growing skittish about the safety of this radical new science. Without such controls, they feared, consumers might become so wary they could doom the multibillion-dollar gamble that the industry was taking in its efforts to redesign plants using genes from other organisms including other species.
In the weeks and months that followed, the White House complied, working behind the scenes to help Monsanto long a political power with deep connections in Washington get the regulations that it wanted. dthree administrations. What Monsanto wished for from Washington, Monsanto and, by extension, the biotechnology industry got. If the company's strategy demanded regulations, rules favored by the industry were adopted. And when the company abruptly decided that it needed to throw off the regulations and speed its foods to market, the White House quickly ushered through an unusually generous policy of self-policing.
Even longtime Washington hands said that the control this nascent industry exerted over its own regulatory destiny through the Environmental Protection Agency, the Agriculture Department and ultimately the Food and Drug Administration was astonishing.
"In this area, the U.S. government agencies have done exactly what big agribusiness has asked them to do and told them to do," said Dr. Henry Miller, a senior research fellow at the Hoover Institution, who was responsible for biotechnology issues at the Food and Drug Administration from 1979 to 1994.
The outcome, at least according to some fans of the technology? "Food biotech is dead," Dr. Miller said. "The potential now is an infinitesimal fraction of what most observers had hoped it would be."
While the verdict is surely premature, the industry is in crisis. Genetically modified ingredients may be in more than half of America's grocery products. But worldwide protest has been galvanized. The European markets have banned the products and some American food producers are backing away. A recent discovery that certain taco shells manufactured by Kraft contained Starlink, a modified corn classified as unfit for human consumption, prompted a sweeping recall and did grave harm to the idea that self-regulation was sufficient. The mighty Monsanto has merged with a pharmaceutical company.
How could an industry so successful in controlling its own regulations end up in such disarray?
The answer pieced together from confidential industry records, court documents and government filings, as well as interviews with current and former officials of industry, government and organizations opposing the use of bioengineering in food provides a stunning example of how management, with a few miscalculations, can steer an industry headlong into disaster.
For many years, senior executives at Monsanto, the industry's undisputed leader, believed that they faced enormous obstacles from environmental and consumer groups opposed to the new technology. Rather than fight them, the original Monsanto strategy was to bring in opponents as consultants, hoping their participation would ease the foods' passage from the laboratory to the shopping cart.
"We thought it was at least a decade-long job, to take our efforts and present them to environmental groups and the general public, and gradually win support for this," said Earle Harbison Jr., the president and chief operating officer at Monsanto during the late 1980's.
But come the early 1990's, the strategy changed. A new management team took over at Monsanto, one confident that worries about the new technology had been thoroughly disproved by science. The go- slow approach was shelved in favor of a strategy to erase regulatory barriers and shove past the naysayers. The switch invigorated the opponents of biotechnology and ultimately dismayed the industry's allies the farmers, agricultural universities and food companies.
"Somewhere along the line, Monsanto specifically and the industry in general lost the recipe of how we presented our story," said Will Carpenter, the head of the company's biotechnology strategy group until 1991. "When you put together arrogance and incompetence, you've got an unbeatable combination. You can get blown up in any direction. And they were."
Biology Debate New Microbes Bring New Fears
In the summer of 1970, Janet E. Mertz was working at Cold Spring Harbor Laboratory, picking up tips on animal viruses from Dr. Robert Pollack, a professor at the private research center on Long Island and a master in the field. One day she began to explain to Dr. Pollack the experiment she was planning when she returned to her graduate studies in the fall at Stanford University with her adviser, Dr. Paul Berg. They were preparing to take genes from a monkey virus and put them into a commonly used strain of bacteria, E. coli, as part of an effort to figure out the purposes of different parts of a gene.
Dr. Pollack was horrified. The virus she planned to use contained genes that could cause cancer in rodents, he reminded her. Strains of E. coli live in human intestines. What if the viral genes created a cancer- causing microbe that could be spread from person to person the way unmodified E. coli can. Dr. Pollack wanted Ms. Mertz's project halted immediately. .
"I said to Janet, `There's a human experiment I don't want to be part of,' " Dr. Pollack said in a recent interview.
The resulting transcontinental shouting match between Dr. Pollack and Dr. Berg set off a debate among biologists around the world as they contemplated questions that seemed lifted from science fiction. Were genetically modified bacteria superbugs? Would they be more powerful than naturally occurring bacteria? Would scientists who wanted to study them have to move their research to the sort of secure labs used to study diseases like the black plague?
"The notion of being able to move genes between species was an alarming thought," said Alexander Capron, a professor of law and medicine at the University of Southern California in Los Angeles. "People talked about there being species barriers you're reorganizing nature in some way."
As researchers joined in the debate, they came to the conclusion that strict controls were needed on such experiments until scientists understood the implications. In 1975, the elite of the field gathered at the Asilomar conference center in Pacific Grove, Calif. There, they recommended that all molecular biologists refrain from doing certain research and abide by stringent regulations for other experiments. To monitor themselves, they set up a committee at the National Institutes of Health to review and approve all research projects.
It took just a few years and hundreds of experiments before the most urgent questions had their answers. Over and over again, scientists created bacteria with all manner of added or deleted genes and then mixed them with naturally occurring bacteria.
But rather than creating superbugs, the scientists found themselves struggling to keep the engineered bacteria from dying as the more robust naturally occurring bacteria crowded them out.
It turned out that adding almost any gene to bacteria cells only weakened them. They needed coddling in the laboratory to survive. And the E. coli that Ms. Mertz had wanted to use were among the feeblest of all.
By the mid-1980's, the Institutes of Health lifted its restrictions. Even scientists like Dr. Pollack, who sounded the initial alarm, were satisfied that the experiments were safe.
"The answer came out very clearly," he said. "Putting new genes into bacteria did not have the unintended consequence of making the bacteria dangerous."
That decision echoed through industry like the sound of a starter's pistol. First out of the gate were the pharmaceutical companies, with a rapid series of experiments on how the new science could be used in medicines. Hundreds of drugs went into development, including human insulin for diabetes, Activase for the treatment of heart attacks, Epogen for renal disease and the hepatitis B vaccine.
"It's been huge," said Dr. David Golde, physician in chief at Memorial Sloan-Kettering Cancer Center in New York. "It has changed human health."
The success that modifying living organisms would bring the pharmaceutical industry quickly attracted attention from some of the nation's largest agricultural companies, eager to extend their staid businesses into an arena that Wall Street had endowed with such glamour.
Reaching Out Monsanto Takes a Soft Approach
In June 1986, Mr. Harbison took control of Monsanto's push into biotechnology, a project snared in mystery and infighting. A 19-year veteran of Monsanto who had recently become its president and chief operating officer, he formed a committee to lead the charge.
"There is little more important than this task in our corporation at this time," Mr. Harbison wrote to the 13 executives selected for the assignment.
"We recognized early on," Mr. Harbison said in a recent interview, "that while developing lifesaving drugs might be greeted with fanfare, monkeying around with plants and food would be greeted with skepticism." And so Mr. Harbison drafted a plan to reach out to affected groups from environmentalists to farmers to win their support.
That same month, the company's lobbying effort for regulation began to show its first signs of success. The Environmental Protection Agency, the Department of Agriculture and the Food and Drug Administration were given authority over different aspects of the business, from field testing of new ideas to the review of new foods.
In an administration committed to deregulation, the heads of some agencies had been opposed to new rules. At an early meeting, William Ruckelshaus, then the head of the E.P.A., expressed skepticism that his agency should play any role in regulating field testing, according to people who attended. That was overcome only when Monsanto executives raised the specter of Congressional hearings about the use of biotechnology to create crops that contain their own pesticides, these people said.
By fall, Monsanto's strategy committee was developing a plan for introducing biotechnology to the public. A copy of a working draft, dated Oct. 13, 1986, listed what the committee considered the major challenges: organized opposition among environmental groups, political opportunism by elected officials and lack of knowledge among reporters about biotechnology.
It also highlighted more complex issues, including ethical questions about "tinkering with the human gene pool" and the lack of economic incentives to transfer the technology to the third world, where it would probably do the most good.
To solve political problems, the document suggested engaging elected officials and regulators around the world, "creating support for biotechnology at the highest U.S. policy levels," and working to gain endorsements for the technology in the presidential platforms of both the Republican and Democratic Parties in the 1988 election.
To deal with opponents, the document said, "Active outreach will encourage public interest, consumer and environmental groups to develop supportive positions on biotechnology, and serve as regular advisers to Monsanto."
Former Monsanto executives said that while they felt confident of the new food's overall safety, they also recognized that bioengineering raised concerns about possible allergens, unknown toxins or environmental effects. Beyond that, there was a reasonable philosophical anxiety about human manipulation of nature.
"If this business was going to work, one of the things we had to do was engage in a dialogue with all of the stakeholders, including the consumer groups and the more rational environmental organizations," said Mr. Carpenter, who headed the biotechnology strategy group. "It wasn't Nobel Prize thinking."
A Blunder Decision on Milk Causes a Furor
Even as Monsanto was assembling its outreach strategy, other documents show that it was making strides toward what former executives now acknowledge was a major strategic blunder. The company was preparing to introduce to farmers the first product from its biotechnology program: a growth hormone produced in genetically altered bacteria. Some on the strategy committee pushed for marketing a porcine hormone that would produce leaner and bigger hogs.
But, simply because the product was further along in development, the company decided to go forward with a bovine growth hormone, which improves milk production in cows despite vociferous objections of executives who feared that tinkering with a product consumed by children would ignite a national outcry.
"It was not a wise choice to go out with that product first," Mr. Harbison acknowledged. "It was a mistake."
Scientists who watched the events remain stunned by Monsanto's decisions.
"I don't think they really thought through the whole darn thing," Dr. Virginia Walbot, a professor of biological sciences at Stanford University, said of Monsanto's decision to market products that benefited farmers rather than general consumers. "The way Thomas Edison demonstrated how great electricity was was by providing lights for the first nighttime baseball game. People were in awe. What if he had decided to demonstrate the electric chair instead? And what if his second product had been the electric cattle prod? Would we have electricity today?"
The decision touched off a furor. Jeremy Rifkin, director of the Foundation on Economic Trends, an opponent of biotechnology, joined with family-farm groups worried about price declines and other organizations in a national campaign to keep the Monsanto hormone out of the marketplace. Some supermarket chains shunned the idea; several dairy states moved to ban it. The first step toward the shopping cart brought only bad news.
One year later, in 1987, the E.P.A. agreed to allow another company, Advanced Genetic Sciences, to test bioengineered bacteria meant to make plants resistant to frost. But under the agency's guidelines, it had to declare the so-called ice-minus bacteria a new pesticide classifying frost as the pest.
On April 28 and May 28, strawberry and potato plants were sprayed in two California cities. Photographs of scientists in regulation protective gear spacesuits with respirators were broadcast around the world, generating widespread alarm.
"It was surreal," said Dr. Steven Lindow, a professor at the University of California at Berkeley, who helped develop the bacteria.
For the executives at Monsanto, these troubling experiences reinforced their commitment to the strategy of inclusion and persuasion.
The most complex challenge came in Europe, where there was deep distrust of the new foods, particularly among politically powerful farmers. Faced with such resistance, Mr. Harbison said Monsanto began subtly shifting its attention from the lucrative European market to Asia and Africa. The hope was that the economic realities of a global agricultural marketplace would eventually push Europe toward a more conciliatory attitude.
But by the early 1990's, company executives said, everything would change. Mr. Harbison retired. Soon, Monsanto's strategy for biotechnology was being overseen by Robert Shapiro, the former head of Monsanto's Nutrasweet unit, who in 1990 had been named head of the agricultural division.
In no time, former executives said, the strategy inside the company began to change. Mr. Shapiro demonstrated a devout sense of mission about his new responsibilities, these executives said. He repeatedly expressed his belief that Monsanto could help change the world by championing bioengineered agriculture, while simultaneously turning in stellar financial results.
Eager to get going, he shelved the go-slow strategy of consultation and review. Monsanto would now use its influence in Washington to push through a new approach.
Mr. Carpenter, the former head of the company's biotechnology strategy group, recalled going to a meeting with Mr. Shapiro, and cautioning that it seemed risky to tamper with a strategic approach that had worked well for the company in the past. But, he said, Mr. Shapiro dismissed his concerns.
"Shapiro ignored the stakeholders and almost insulted them and proceeded to spend all of his political coin trying to deal directly with the government on a political basis rather than an open basis," Mr. Carpenter said.
Mr. Shapiro, now the nonexecutive chairman of the Pharmacia Corporation, which Monsanto merged with last year, declined to comment. But in an essay published earlier this year by Washington University in St. Louis, he acknowledged that Monsanto had suffered from some of the very faults cited now by critics. `We've learned that there is often a very fine line between scientific confidence on the one hand and corporate arrogance on the other," he wrote. "It was natural for us to see this as a scientific issue. We didn't listen very well to people who insisted that there were relevant ethical, religious, cultural, social and economic issues as well."
Turning Point Objections by Scientists
On May 26, 1992, the vice president, Dan Quayle, proclaimed the Bush administration's new policy on bioengineered food.
"The reforms we announce today will speed up and simplify the process of bringing better agricultural products, developed through biotech, to consumers, food processors and farmers," Mr. Quayle told a crowd of executives and reporters in the Indian Treaty Room of the Old Executive Office Building. "We will ensure that biotech products will receive the same oversight as other products, instead of being hampered by unnecessary regulation."
With dozens of new grocery products waiting in the wings, the new policy strictly limited the regulatory reach of the F.D.A, which had oversight responsibility for foods headed to market.
The announcement a salvo in the Bush administration's "regulatory relief" program was in lock step with the new position of industry that science had proved safety concerns to be baseless.
"We will not compromise safety one bit," Mr. Quayle told his audience.
In the F.D.A.'s nearby offices, not everyone was so sure.
Among them was Dr. Louis J. Pribyl, one of 17 government scientists working on a policy for genetically engineered food. Dr. Pribyl knew from studies that toxins could be unintentionally created when new genes were introduced into a plant's cells. But under the new edict, the government was dismissing that risk and any other possible risk as no different from those of conventionally derived food. That meant biotechnology companies would not need government approval to sell the foods they were developing.
"This is the industry's pet idea, namely that there are no unintended effects that will raise the F.D.A.'s level of concern," Dr. Pribyl wrote in a fiery memo to the F.D.A. scientist overseeing the policy's development. "But time and time again, there is no data to back up their contention."
Dr. Pribyl, a microbiologist, was not alone at the agency. Dr. Gerald Guest, director of the center of veterinary medicine, wrote that he and other scientists at the center had concluded there was "ample scientific justification" to require tests and a government review of each genetically engineered food before it was sold.
Three toxicologists wrote, "The possibility of unexpected, accidental changes in genetically engineered plants justifies a limited traditional toxicological study."
The scientists were displaying precisely the concerns that Monsanto executives from the 1980's had anticipated and indeed had considered reasonable. But now, rather than trying to address those concerns, Monsanto, the industry and official Washington were dismissing them as the insignificant worries of the uninformed. Under the final F.D.A. policy that the White House helped usher in, the new foods would be tested only if companies did it. Labeling was ruled out as potentially misleading to the consumer, since it might suggest that there was reason for concern.
"Monsanto forgot who their client was," said Thomas N. Urban, retired chairman and chief executive of Pioneer Hi-Bred International, a seed company. "If they had realized their client was the final consumer they should have embraced labeling. They should have said, `We're for it.' They should have said, `We insist that food be labeled.' They should have said, `I'm the consumer's friend here.' There was some risk. But the risk was a hell of a lot less."
Even some who presumably benefited directly from the new policy remain surprised that it was adopted. "How could you argue against labeling?" said Roger Salquist, the former chief executive of Calgene, whose Flavr Savr tomato, engineered for slower spoilage, was the first fruit of biotechnology to reach the grocery store. "The public trust has not been nurtured," he added.
In fact, the F.D.A. policy was just what the small band of activists opposed to biotechnology needed to rally powerful global support to their cause.
"That was the turning point," said Jeremy Rifkin, the author and activist who in 1992 had already spent more than a decade trying to stop biotechnology experiments. Immediately after Vice President Quayle announced the F.D.A.'s new policy, Mr. Rifkin began calling for a global moratorium on biotechnology as part of an effort that he and others named the "pure food campaign."
He quickly began spreading the word to small activist groups around the world that the United States had decided to let the biotechnology industry put the foods on store shelves without tests or labels. Mr. Rifkin said that he got support from dozens of small farming, consumer and animal rights groups in more than 30 countries. In Europe, these small groups helped turn the public against genetically altered foods, tearing up farm fields and holding protests before television cameras.
If the F.D.A. had required tests and labels, Mr. Rifkin said, "it would have been more difficult for us to mobilize the opposition."
Today, the handful of nonprofit groups that joined Mr. Rifkin's in lobbying the F.D.A. for stronger regulation in 1992 have multiplied to 54. Those groups, including the Sierra Club, Friends of the Earth, the Natural Resources Defense Council, Public Citizen and the Humane Society of the United States, signed a petition this spring demanding that the government take genetically engineered foods off the market until they are tested and labeled.
"There is absolutely no question that the voluntary nature of the policy was unacceptable to many," said Andrew Kimbrell, one of the early activists to oppose biotechnology and now the executive director of the Center for Food Safety, which filed the petition.
The F.D.A. policy has also helped organizations like Mr. Kimbrell's raise money. In late 1998 groups opposed to biotechnology approached the hundreds of foundations that give regularly to environmental causes and told them about the government's decision to let the companies regulate themselves. Since then, the foundations have given the groups several million dollars out of concern over the policy, said Christina Desser, a lawyer in San Francisco involved in the fund-raising effort.
There was also an about-face in the approach to dealing with overseas markets. As the Clinton administration came to Washington, Monsanto maintained its close ties to policy makers particularly to trade negotiators. For example, Mr. Shapiro was friends with Mickey Kantor, the United States trade negotiator who would eventually be named a Monsanto director.
Confrontation in trade negotiations became the order of the day. Senior administration officials publicly disparaged the concerns of European consumers as the products of conservative minds unfamiliar with the science.
"You can't put a gun to their head," Mr. Harbison said of the toughened trade strategy with Europe. "It just won't sell."
And it didn't. Protests erupted in Europe, and genetically modified foods became the rallying point of a vast political opposition. Exports of the foods slowed to a stop. With a vocal and powerful opposition growing in both Europe and America, the perceived promise of biotechnology foods began to slip away.
By the end of the decade, the magnitude of Monsanto's error in abandoning its slow, velvet-glove strategy of the 1980's was apparent. Mr. Shapiro himself acknowledged as much. In the fall of 1999, he appeared at a conference sponsored by Greenpeace, the environmental group and major biotechnology critic.
There, while declaring his faith in biotechnology, Mr. Shapiro acknowledged that his company was guilty of "condescension or indeed arrogance" in its efforts to promote the new foods. But it was too late for a recovery. Soon after that speech, with the company's stock price in the doldrums because of its struggles with agricultural biotechnology, Monsanto itself ended its existence as an independent company. It was taken over by Pharmacia, a New Jersey drug company.
In recent months, biotechnology has been struggling with the consequences of its blunders. Leading food companies like Frito-Lay and Gerber have said they will avoid certain bioengineered food. And grain companies like Archer Daniels Midland and Cargill have asked farmers to separate their genetically modified foods from their traditional ones. That, in turn, creates complex, costly and as the Starlink fiasco shows at times flawed logistical requirements for farmers.
Efforts have been made by industry and government to assuage public concerns although critics of the technology maintain that the attempts do not go far enough. Last week, the F.D.A. announced proposed rule changes requiring the submission of certain information that used to be provided voluntarily. But even supporters of the rule change say that it will make little practical difference in the way the business works, since companies have universally submitted all such information in the past, even under the voluntary standard.
And the industry itself has started down a new path, with a multimillion-dollar advertising campaign promoting genetically engineered foods as safe products that provide enormous benefits to populations around the world an effort that some food industry officials say has come 10 years too late.
"For the price of what it would have cost to market a new breakfast cereal, the biotech industry probably could have saved itself a lot of the struggle that it is going through today," said Gene Grabowski, a spokesman with the Grocery Manufacturers of America, a trade group.
And in recent weeks, Monsanto itself has announced plans to chart a new course one with striking similarity to the course abandoned in 1992 reviving its outside consultations with environmental, consumer and other groups with concerns or interest in the technology.
For the corporate veterans who set the original strategy, this is scant solace. A dream they had worked so hard to achieve had, at the very least, been set back by years.
"You can't imagine how I have bled over this," said Mr. Carpenter, the former head of biotechnology strategy for Monsanto. "They lost the battle for the public trust.":
