ERMA infanticide

Is the cost of regulation killing the biotech industry in its cradle? Lynette Hartley investigates a potential crime

Monday, May 26 2003 || BY Lynette Hartley

We have heard the rhetoric: the government wants to promote a vibrant and world-class biotechnology sector to help drag New Zealand to the top half of the OECD. So how come our baby biotech industry is suffocating under one of the toughest regulatory regimes in the world? Researchers say the HSNO (Hazardous Substances and New Organisms) legislation is stifling innovation, destroying competitiveness and sending the wrong message to the biotech industry.

The government chooses to differ, as we’ll see below. But take one of the older players in field. For the last 30 years researchers in labs such as the Otago University Gene Structure and Function laboratory at the Christchurch School of Medicine have been doing low-risk, lab-based experiments without incident. Senior research fellow Dr Martin Kennedy says many of the organisms his researchers use cannot survive outside the lab. Yet these days permission is needed from the government’s regulator, the Environmental Risk Management Authority or an ERMA-approved IBSC (institutional biological safely committee) for every single new organism used. What’s the problem? “It’s the spontaneity,” he says. “If you wake up in the middle of the night and you have an idea, you can forget about acting on it if it involves importation or development of a new organism. It may take several months and could cost several thousand dollars to get approval.”

What about research that does not fall in the low-risk category? AgResearch, a Crown Research Institute, recently applied to ERMA for work with genetically modified cows. The cost? Over $940,000 ($154,000 in fees to ERMA, $296,500 in legal fees and $490,600 in staff time and other expenses). Dr William Rolleston, chairman of the Life Sciences Network and owner of a small biotech company, says only big players with deep pockets can come up with that sort of money. What would it cost to get approval for similar research in Australia? Absolutely nothing (see chart). With the bulk of biotech companies employing fewer than 20 people, this baby biotech industry is looking seriously handicapped.

The outcome is lost opportunities. Dr Vicky Cameron, from the cardioendocrine research group at the Christchurch School of Medicine, says her lab lost the opportunity to collaborate with an overseas company after a five-month wait for ERMA approval. Another researcher on an Auckland Uniservices project recently spent eight weeks full-time on a relatively routine ERMA application. He got approval but the research is now held up awaiting MAF approval — and is in jeopardy due to lost time. “While we are sitting in our offices filling in forms other researchers [worldwide] are getting on with research,” Kennedy says

So who’s trying to kill this wonder child? Not the government, protests Pete Hodgson, Minister for Research, Science and Technology. In response to industry complaints, the government is moving to reduce the efforts required for low-risk applications. Legislation currently before the house will streamline applications for low-risk new organisms in line with recommendations made by the Royal Commission on Genetic Modification in its July 2001 report. ERMA is also undergoing an administrative review that, it is hoped, will lead to streamlining and a reduction in costs to applicants.

Anyway, says Hodgson, the ERMA process is very open and consistent with New Zealand’s strong environmental legislation including the Resource Management Act. New Zealanders demand high environmental standards, Hodgson says.

But Bill Falconer, chairman of Biotenz and co-chairman of the Biotechnology taskforce, says while the industry supports the idea of a quality regulatory authority, this ain’t it. At present, the public hearing process for field trials and releases is inefficient and costly. For example, applicants pay an hourly fee to ERMA for processing an application plus hearing fees. The more submissions at a hearing, the greater the fee. Moreover, objectors can raise “problems” regardless of relevance and are not required to focus on the application under consideration. All the applicants cost. A better approach would be to operate as quasi-judicial inquiry, with submissions restricted to the specifics of each application. Hearings would still include community and cultural concerns but only those relevant to the specific case, he says.

The Aussies do it differently. ERMA’s counterpart, the Office of Gene Technology Regulator (OGTR), invites comment after the OGTR has made an interim decision. And the applicant doesn’t pay.

Hodgson argues the New Zealand approach has merit. The AgResearch application, for example, while costly, meant that AgResearch and the Maori objectors were forced to reach an understanding and establish better ways of communicating. AgResearch is operating at the frontier and, as a pioneer, it has payed dearly, he says. “I think the science they have is so important and world class they really had no option but to proceed with the application,” he says.

That’s offset too , he says by the low costs of doing research in New Zealand. Other aspects of New Zealand’s compliance regime are among the most cost effective in the OECD counties.

Researchers meanwhile are bracing themselves for another round of HSNO requirements (see the debate articles on page 14), adding another layer of form filling and delay. “I don’t think the public really cares how tough the regulatory environment is; it doesn’t make them feel any less concerned,” Kennedy says. “It’s not that we don’t want to comply. We always do, it’s just a real burden. I tell people they don’t have to worry about mad scientists doing what they like because they haven’t got a show in hell,” he says.