Lee Kun-hee, the long-time chairman of Samsung Group who transformed the conglomerate into one of the world’s largest business empires, died today at the age of 78, according to reports from South Korean leading news agency Yonhap.
The story of Samsung is deeply intertwined with the history of its home country, which is sometimes dubbed “The Republic of Samsung.” Lee, the son of Samsung founder Lee Byung-chul, came to power in the late 1980s just as South Korea transitioned from dictatorship to democracy with the political handover from military strongman Chun Doo-hwan to Roh Tae-woo. Under his management, Samsung spearheaded initiatives across a number of areas in electronics, including semiconductors, memory chips, displays, and other components that are the backbone of today’s digital devices.
Lee navigated the challenging economic troubles of the 1990s, including the 1998 Asian financial crisis, which saw a near collapse of the economies of South Korea and several other so-called Asian Tigers, as well as the Dot-Com bubble, which saw the collapse of internet stocks globally.
Coming out of those challenging years, Lee invested in and is probably most famous today for building up the conglomerate’s Galaxy consumer smartphone line, which evolved Samsung from an industrial powerhouse to a worldwide consumer brand. Samsung Electronics, which is just one of a spider web of Samsung companies, is today worth approximately $350 billion, making it among the most valuable companies in the world.
While his business acumen and strategic insights handling Samsung were lauded, he faced troubles in recent years. He was convicted of tax evasion in the late 2000s, but was ultimately pardoned by the country’s then president Lee Myung-bak (no relation).
Samsung has also been under fire from groups including Elliott Management over chairman Lee’s attempts to secure the financial future of Samsung for his son, Lee Jae-yong, who took over effective leadership of the conglomerate following the elder Lee’s heart attack in 2014. Lee Jae-yong has suffered his own run-ins with the law, having been found guilty of bribery and sentenced to five years in prison, which was ultimately suspended by a judge.
After his heart attack, Lee Kun-hee remained hospitalized in stable condition according to Yonhap. Rumors of his condition have percolated in the six years since.
According to Bloomberg, Lee leaves behind roughly $20 billion in wealth, and he is the wealthiest South Korean citizen. He is survived by his wife as well as four children.
Welcome back to Human Capital! As many of you know, Human Capital is a weekly newsletter where I break down the latest in labor, as well as diversity and inclusion in tech. It’s officially available as a newsletter, so if you want this content when it comes in hot Fridays at 1 p.m. PT, subscribe here.
Since the election is coming up, this edition focuses heavily on California ballot measure Proposition 22. The TL;DR is that gig companies like Uber, Lyft and DoorDash really want to keep classifying their drivers and delivery folks as independent contractors, so they put millions of dollars into this ballot measure. This week, we saw Prop 22-related complaints and lawsuits filed, and an appeals court judge decide Uber and Lyft must reclassify their drivers. We also heard directly from gig workers on both sides about why they do or do not want to be independent contractors.
But we’ll also look at SoftBank’s first investment from its D&I fund, Pinterest’s addition of a new Black board member and more. Let’s jump in.
Labor Struggles
Uber and Lyft must classify drivers as employees, court rules
But. And this is a big but. Uber and Lyft will likely appeal this decision and it’s also possible this decision won’t matter depending on how Prop 22 goes. We’re just a couple of weeks out from Election Day and this decision has a thirty day hold on it once the remittitur goes into effect. And that remittitur has not yet been issued.
Throughout the case, Uber and Lyft have argued that reclassifying their drivers as employees would cause irreparable harm to the companies. In the ruling today, the judge said neither company would suffer any “grave or irreparable harm by being prohibited from violating the law” and that their respective financial burdens “do not rise to the level of irreparable harm.”
Additionally, there is nothing in the preliminary injunction, according to the judge, that would prevent Uber and Lyft from offering flexibility and independence to their drivers. Lastly, the judge said Uber and Lyft have had plenty of time to transition their drivers from independent contractors to employees, given that the key case in passing AB 5, the gig worker bill that spurred this lawsuit, was decided in 2018.
Amazon workers protest for time off to vote
Ahead of Election Day, Amazon employees protested at the company’s headquarters in Seattle for paid time off to vote. In a statement to GeekWire, Amazon said employees that don’t have enough time off can request additional, excused time off.
“The number of hours and pay provided to employees varies by state in line with local laws,” the spokesperson said.
According to GeekWire, Amazon notified managers that they should approve PTO requests for voting.
Tech companies that are giving employees paid time off for Election Day include Salesforce, Apple (hourly employees get four hours), Facebook, Twitter, Uber and others.
No on Prop 22 camp files complaint with USPS against Yes on 22
Opponents of California’s Proposition 22 filed a complaint this week with the United States Postal Service. The No on 22 campaign alleges the Yes side is not eligible for a nonprofit postal status and is asking USPS to revoke its permit.
It’s much cheaper to send campaign mailers as a nonprofit organization. For example, sending between 1 – 200,000 small mailers to every door normally costs $0.302 per piece. As a nonprofit, that costs $0.226 per piece, according to USPS. To be clear, the Yes on 22 campaign confirmed it was formed as a nonprofit organization under IRS section 501(c)(4), which pertains to social welfare organizations. But the No on 22 side says USPS erred in approving the Yes on 22 campaign.
In a statement to TC, Yes on 22 spokesperson Geoff Vetter said, “As a 501(c)(4) organization, Yes on 22 is eligible for the appropriate nonprofit postage rates with the USPS, which we applied for and were granted by the U.S. Postmaster.”
Uber faces class-action lawsuit over Prop 22
Uber is facing a class-action lawsuit over Proposition 22 that alleges the company is illegally coercing its drivers to support the ballot measure that seeks to keep workers classified as independent contractors. The suit was brought forth by two Uber drivers, Benjamin Valdez and Hector Castellanos, as well as two California nonprofit organizations, Worksafe and Chinese Progressive Association.
In the suit, the plaintiffs argue Uber has encouraged its drivers and delivery workers to support Prop 22 via the company’s driver-scheduling app.
“This is an absurd lawsuit, without merit, filed solely for press attention and without regard for the facts,” Uber spokesperson Matt Kallman said in a statement to TechCrunch. “It can’t distract from the truth: that the vast majority of drivers support Prop 22, and have for months, because they know it will improve their lives and protect the way they prefer to work.”
Shipt workers protest outside Target and Shipt headquarters
Shipt shoppers followed through with their protest plans this week when they staged actions at Target’s headquarters in Minneapolis and Shipt’s headquarters in Birmingham, Ala.
Ahead of the protests, Shipt shopper and organizer with Gig Workers Collective told me his goal was to bring attention to the new pay structure Shipt began rolling out and how shoppers “are getting paid less for more effort.”
Gig workers speak for and against Prop 22
TC relaunched the Mixtape podcast and as part of that, Henry Pickavet and I chatted with Vanessa Bain, an Instacart shopper who opposes Prop 22 and Doug Mead, a gig worker who supports Prop 22. The whole episode is worth listening to, but here are some key nuggets from them. First up, Bain:
“If all it takes is putting the hiring process and the bossing into an app on your phone to rewrite labor laws, every company on the planet is going to be doing that. There’s so much more, unfortunately, at stake here than just Uber and Lyft and ride share and grocery delivery and how you’re going to get your DoorDash orders. Literally the future of labor is at stake.”
Next up, Mead:
“It’s really the government — their intent to remove a person’s control over how they want to be compensated. And that to me just makes no sense whatsoever,” Mead told us. “I should be in control of how I want to be compensated and by who.”
You can check out the full episode here.
Stay Woke
SoftBank invests in Vitable Health as part of D&I fund
SoftBank’s $100 million Opportunity Fund, which it formed in June to invest in founders of color, made its first bet on Vitable Health. The company focuses on providing health insurance to underserved and low-income communities.
SoftBank’s Opportunity Fund led the $1.6 million round, which included participation from Y Combinator, DNA Capital, Commerce Ventures, MSA Capital, Coughdrop Capital and a handful of angel investors.
Pinterest brings on another Black board member
Pinterest brought on its second Black female board member, Salaam Coleman Smith. Smith’s appointment comes a couple of months after Pinterest appointed its first Black board member, Andrea Wishom.
Smith is the former EVP of Programming and Strategy at Disney’s ABC Family and Freeform, as well as former president of Comcast NBCUniversal’s Style Media.
Here’s an updated look at Black board member representation at major tech companies.
Netflix is launching a tech bootcamp for HBCU students
Netflix announced a virtual HBCU Boot Camp for students from Norfolk State University, a historically black university in Virginia. Specifically, it’s open for current students and alumni from the classes of 2019 and 2020.
In partnership with online education platform 2U, the boot camp will teach 130 students Java engineering, UX/UI design and data science over the course of 16 weeks beginning in January. A bonus is that members of Netflix’s data science, engineering and design teams will serve as mentors to the students.
This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.
Back in August during Y Combinator’s two-day demo extravaganza, TechCrunch noted a number of startups from India that stood out from the batch. Names like Bikayi (e-commerce tools), Decentro (consumer banking APIs), Farmako Healthcare (digital health records) and MedPiper Technologies (helping hire health professionals) joined our list of favorites from the batch.
Seeing so many India-focused startups in the mix wasn’t a fluke. Data shows that India’s venture capital scene has grown sharply in recent years. 2019 was the country’s biggest ever in terms of venture dollars invested, with Bain counting $10 billion during the year.
In 2020, the third quarter brought the country’s venture capital scene back to form. After a somewhat average start to the year, Indian startups saw their venture capital investment fall to just $1.5 billion in Q2, the lowest quarterly tally since 2016. But data via KPMG and PitchBook make it plain that Q3 was a rebound, with $3.6 billion invested into Indian startups during the three-month period.
That figure was not a historical record, mind; the Q3 total looks to be only the fourth-biggest VC quarter in India’s startup history since at least 2013 and, perhaps, ever. But it was a good bounce-back during a crippling pandemic all the same. The country’s VC deal count also rebounded a bit in the third quarter, with some of that money landing in big chunks, including a $500 million investment into Byju’s this September.
Smaller startups are also seeing strong results. Bikayi is one such startup. TechCrunch caught up with the company via email, digging into its post-Demo Day results. Its monthly recurring revenue (MRR) grew 60% in August from its July results, it said. And in late August the company told TechCrunch that it was on track to reach $1 million annual recurring revenue (ARR) by the end of the year.
Bikayi said more recently that it recorded 100% growth in the number of merchants it supports, and 100% revenue growth in September. So the WhatsApp-focused Shopify-for-India is racing ahead. October results, Bikayi CEO Sonakshi Nathani added, are looking “promising” as well.
To get a better handle on the Indian startup market more broadly, The Exchange got ahold of Accel investors Arun Mathew (based in the United States), and Prayank Swaroop (based in India), for a bit of digging.
Historically, falling bandwidth and smartphone costs along with improved Internet reliability helped lay the foundation for the recent Indian startup wave, according to Swaroop. Mathew added that some high-profile successes like Flipkart made startups a more attractive option, with the ecommerce company’s success helping to “change the tenor” of the conversation around founding tech firms in recent years.
It also helps, Swaroop added, that seasoned folks from existing Indian tech companies are branching out and starting companies of their own, recycling knowledge into new, smaller companies. This is a key method by which Silicon Valley has managed to create an outsized number of hits over time; a concentration of operators who have built big startups are key grist in the unicorn mill. And there’s more money being raised to help power new Indian tech companies.
All told, 2019 was a huge year for the Indian startup market in venture capital terms, and 2020’s recovery is underway. Let’s see what gets built.
Market Notes
The Exchange spent a lot of this week digging into venture capital data and trends, something that we love to do. If you need to catch up, here’s our look at the U.S. venture capital scene in Q3, and here are our notes on the more global picture. And we touched on India above. What more could there be?
Well, some data on healthcare-focused companies is just what we need. Per a new report from CB Insights, there are 41 healthcare-focused unicorns today. More importantly, startups focused on health-related matters (telemedicine, mental health, AI, etc.) just had a record quarter. Even for a pandemic, $21.8 billion went into the space across 1,539 global rounds in the third quarter. That’s far more activity than I would have guessed.
- Moving on, The Exchange compiled a look at how quickly a few dozen startups grew in Q3, which was very good fun.
- The Equity crew also covered a number of media-and-housing-related startup rounds here if that is your jam. There were also some jokes.
- Datto went public this week, giving the market a look at what slower, more profitable software companies are worth in revenue-multiple terms. The news was mostly good.
- On the insurtech beat, New Front announced that it has raised $100 million, most recently at a $500 million valuation. And we noted in our growth-rate piece that Next Insurance raised $250 million last month, which has missed our attention. Oh, and Chicago-based Clearcover has news out this week, which we care about given the impending Root Insurance IPO (notes on its valuation here). The two companies both insure drivers.
And with that, we’re cutting Market Notes short this week for some important TechCrunch news:
Hey y’all. It’s Megan Rose Dickey busting into Alex’s newsletter for a couple of quick news items. First, I officially launched my newsletter, Human Capital! It covers labor and diversity and inclusion in tech. Also, I relaunched the Mixtape podcast with my colleague Henry Pickavet. You can check out our first episode of Season 3 about California’s gig worker ballot measure Prop 22 here.
Megan is amazing and you should check out her pod and newsletter.
Various and Sundry
As always, there was more good stuff to share here than I can possibly fit, so let’s get right into the data, takes, links and other delicacies.
- Data collected on by a Midwest-focused group concerning its region makes the case for VCs to look more closely at the center of the United States. Why? It’s cheaper to build there, which, combined with lower startup prices, means investors get a bigger bang for their buck. And return multiples for VCs (MOICs, if you care) look strong in Chicago.
- Everyone is burned out.
- Netflix and Intel took stick after their earnings failed to excite investors, in what could be a small warning sign ahead of next week’s earnings-palooza.
- The SPAC boom is precisely as ludicrous as you imagined it to be.
- And while there are loads of late-stage money, first financings are worth an ever-smaller fraction of the VC pie.
- What are the youngest VCs in the world focused on? Well, according to a survey of Gen Z VCs, their top three focuses are the creator economy, edtech and social gaming.
- How Yext evolved on its path to going public, and beyond.
Wrapping, a survey from Salesforce shows that enterprise cloud CEOs are reporting better-than-anticipated revenue growth and lower-than-anticipated churn, when compared to their March estimates. That is probably why earnings haven’t been a disaster and so many unicorns were able to go public in Q3.
That and valuations in the public sphere are higher than what private investors are dishing up, inverting the market’s last few years.
See you Monday,
Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.
Startup failure is easy to hold up as a type of martyrdom for progress, especially if the founders are starting out scrappy in the first place and trying to save the world. But heroic narrative gets complicated when the startup failure involves the biggest names in entertainment, dubious product decisions, and well over $1 billion in losses in an already very competitive consumer tech subcategory.
I was going to skip any mention of Quibi because, like me, you have heard more than enough already. But this week its shutdown announcement turned into a debate on Twitter about the nature of startup failure and whether this was still the right kind. Many in the startup world said it was still good, basically because most any ambitious startup effort leads to progress. Danny Crichton, in turn, argues that the negativity was fully justified in this case.
Let’s be honest: Most startups fail. Most ideas turn out wrong. Most entrepreneurs are never going to make it. That doesn’t mean no one should build a startup, or pursue their passions and dreams. When success happens, we like to talk about it, report on it and try to explain why it happens — because ultimately, more entrepreneurial success is good for all of us and helps to drive progress in our world.
But let’s also be clear that there are bad ideas, and then there are flagrantly bad ideas with billions in funding from smart people who otherwise should know better. Quibi wasn’t the spark of the proverbial college dropout with a passion for entertainment trying to invent a new format for mobile phones with ramen money from friends and family. Quibi was run by two of the most powerful and influential executives in the United States today, who raised more money for their project than other female founders have raised collectively this year.
Ouch. However, I think this still misses the bigger dynamic happening.
Quibi was so easy to criticize that it created an opportunity to plausibly defend for anyone who wants to show that they are here for the startups no matter how crazy. When you defend Quibi, you’re defending your own process, and making it clear to the next generation of startups that you’re personally not scared off from other people with crazy ideas and have the will to try even if the result is a big mess. Which is who founders want to hire in the early days, and who investors want to bet on.
I support both sides of this mass-signaling game. Analysts and journalists have provided a broad range of valuable insights about how Quibi was doing it wrong, that are no doubt being internalized by founders of all types. Meanwhile, Quibi defenders are no doubt sorting through their inbound admirers for great new deals. All in all, Quibi and the debate around it might ultimately make future companies a little better. Which is what we all wanted in the first place, right?
Root Insurance plans pricing as Datto goes public
The IPO market has not shut down (yet) for election turmoil and whatnot. First up, managed service provider Datto went out on Wednesday and has inched up since then — a strong outcome for the company and its private equity owner, even if third parties did not benefit from an additional pop. A few more notes from Alex Wilhelm:
Datto’s CEO Tim Weller told TechCrunch in a call that the company will still be well-capitalized after the public offering, saying that it will have a very strong cash position.
The company should have places to deploy its remaining cash. In its S-1 filings, Datto highlighted a COVID-19 tailwind stemming from companies accelerating their digital transformation efforts. TechCrunch asked the company’s CEO whether there was an international component to that story, and whether digital transformation efforts are accelerating globally and not merely domestically. In a good omen for startups not based in the United States, the executive said that they were.
Next to market, Root Insurance released its stock pricing set this week, raising the goal to a valuation above $6 billion. It’s definitely on track to be Ohio’s biggest tech IPO to date. Here’s Alex again, with a comparison against Lemonade, another recently IPOed insurance tech provider for Extra Crunch:
[I]t appears that Root at around $6 billion is cheap compared to Lemonade’s pricing today. So, if you’d like to anticipate that Root raises its IPO price range to bring it closer to the multiples that Lemonade enjoys, feel free as you are probably not wrong. Are we saying that Root will double its valuation to match Lemonade’s current metrics? No. But closing the gap a bit? Sure.
For insurtech startups, even Root’s current pricing is strong. Recall that Root was worth $3.65 billion just last August. At $6.34 billion, the company has appreciated massively in just the last year and change. A small repricing could boost Root’s valuation differential to a flat 100% rather easily.
So, for MetroMile and ClearCover and the rest of the related players, do enjoy these good times as long as they last….
AR/VR is coming (sooner than expected)
A year ago, the market looked quite young. But now, the pandemic has made the value of augmented and virtual reality clearer to the world. Lucas Matney, who has been covering the topic here for years, just conducted a survey of seven top investors in the space. While they mostly continue to see the vertical as a bit early, they see it getting relevant fast. Here’s one key response, from Brianne Kimmel of Work Life Ventures, on Extra Crunch:
Most investors I chat with seem to be long-term bullish on AR, but are reticent to invest in an explicitly AR-focused startup today. What do you want to see before you make a play here?
I think it all comes down to a unique insight and a competitive advantage when it comes to distribution. And so, I’ll use these new [Zoom] apps as an example, I think that they’re a great example where there are certain aspects of roles and certain highly specialized skills where teaching educating and doing your daily job on Zoom won’t actually cut it. I do foresee AR applications becoming an integral part of certain types of work. I also think that now that as a lot of the larger platforms such as Zoom are more open, people will start building on the platforms and there will be AR-specific use cases that can help industries where, you know, a traditional video conferencing experience doesn’t quite cut it.
Zurich startup scene loaded with talent
In other survey news, Mike Butcher continues his (sadly virtual) tour across European startup hubs for EC, this week checking in with investors in Zurich, Switzerland. Here’s a tidy explanation of the city and country’s deep technical experience, from Michael Blank of investiere:
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Switzerland has always been at the forefront of technological innovation in areas such as precision engineering or life sciences. We strongly believe that Switzerland will also thrive in the long run in those areas. Thinking for example about additive manufacturing startups such as 9T Labs or Scrona, drone companies such as Verity or Wingtra or health tech startups such as Aktiia or Versantis.
Brussels investors, Mike is headed your way next. You can reach him here.
Around TechCrunch
Announcing the agenda for TC Sessions: Space 2020
Rocket Lab’s Peter Beck is coming to TC Sessions: Space 2020
Extra Crunch Partner Perk: Get 6 months free of Zendesk Support and Sales CRM
Across the week
TechCrunch
Equity Monday: Three neat venture rounds, and Alibaba’s latest
The smart speaker market is expected to grow 21% next year
Financial institutions can support COVID-19 crowdfunding campaigns
Ready Set Raise, an accelerator for women built by women, announces third class
Extra Crunch
Here’s how fast a few dozen startups grew in Q3 2020
Late-stage deals made Q3 2020 a standout VC quarter for US-based startups
Founders don’t need to be full-time to start raising venture capital
Three views on the future of media startups
Dear Sophie: What visa options exist for a grad co-founding a startup?
#EquityPod
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.
Myself, along with Danny and Natasha had a lot to get through, and more to say than expected. A big thanks to Chris for cutting the show down to size.
Now, what did we get to? Aside from a little of everything, we ran through:
- The fall of Quibi, and who lost money in the mix. TechCrunch has a bit more on the video service’s downfall here.
- The Netflix quarter, and why its shares lost ground after its report. The Quibi-Netflix stories show that it’s not smooth sailing in the market for online video.
- If Netflix stumbled, Snap soared with stronger-than-expected growth. The company still loses lots of money, but it’s getting closer to reasonable results, and has lots of cash.
- Then we turned to a few media startups that raised, including $4 million for Stir and $2.5 million for Quake. Quake the podcasting company, mind, not the excellent FPS.
- Next was a handful of housing rounds, including the very neat Abodu and the somewhat controversial RVshare, which split the three of us about whether or not it was going to work out.
- Then we had some great reporting from Natasha to parse through, including her piece on startup hacker houses, and her report on a new women-focused accelerator class.
Whew! It was a lot, but also very good fun. Look for clips on YouTube if you’d like, and we’ll chat you all next Monday.
SpaceX has launched another batch of 60 Starlink satellites, the primary ingredient for its forthcoming global broadband internet service. The launch took place at 11:31 AM EDT, with a liftoff from Cape Canaveral Air Force Station in Florida. This is the fifteenth Starlink launch thus far, and SpaceX has now launched nearly 900 of the small, low Earth orbit satellites to date.
This launch used a Falcon 9 first stage booster that twice previously, both times earlier this year, including just in September for the delivery of a prior batch of Starlink satellites. The booster was also recovered successfully with a landing at sea aboard SpaceX’s ‘Just Read the Instructions’ floating autonomous landing ship in the Atlantic Ocean.
Earlier this week, Ector County Independent School District in Texas announced itself as a new pilot partner for SpaceX’s Starlink network. Next year, that district will gain connectivity to low latency broadband via Starlink’s network, connecting up to 45 households at first, with plans to expand it to 90 total household customers as more of the constellation is launched and brought online.
SpaceX’s goal with Starlink is to provide broadband service globally at speeds and with latency previously unavailable in hard-to-reach and rural areas. Its large constellation, which will aim to grow to tens of thousands of satellites before it achieves its max target coverage, offers big advantages in terms of latency and reliability vs. large geosynchronous satellites that provide most current satellite-based internet available commercially.
In the past month, US President Donald Trump and former New Jersey governor Chris Christie were diagnosed with covid-19 and spent time in the hospital, just like tens of thousands of other Americans nearly every day since the pandemic began.
But Trump and Christie were special cases. They received experimental covid-19 treatments that are not readily available to the general public. They have both since recovered and publicly acknowledged that US companies granted them access to drugs still off-limits to the vast majority of Americans with the disease.
Their treatment has generated a lot of conversation about the perception that the rich and famous have priority access to health care. What has received much less attention is whether these two men circumvented the rules to get access to experimental drugs outside clinical trials, and if so, how their actions could affect drug development.
Seriously ill patients with no other options are permitted by law to receive drugs in development before the drugs have been approved by the US Food and Drug Administration. Regulations governing this access are necessarily strict, to protect not just the parties involved but the clinical development process itself.
Allowing people to skirt these regulations could delay or derail that process. Even the perception that rules are being bent this way could raise public doubts about participating in clinical trials. This is problematic in any case, but especially so when the drugs in question are being developed to help stem a pandemic.
What is expanded access?
For decades, drug companies have granted some patients access to investigational products outside clinical trials via a pathway known as expanded access. Historically referred to as “compassionate use,” expanded access permits a patient with a serious or life-threatening condition to try such products as a last-ditch move.
Patients must meet several criteria to qualify for expanded access. There must be no FDA-approved therapies available to the patient; the request for access must be made by a physician, who has determined that the possible benefits outweigh potential risks; the patient must be unable to enroll in a clinical trial; and the company must believe that granting access will not interfere with clinical trials of the product.
Those last two requirements are especially important because the FDA evaluates safety and efficacy data collected during clinical trials to determine whether to approve new treatments, thus making them available to many more patients. It’s already difficult to get enough people to participate in clinical trials. If patients can access experimental drugs without enrolling in one, it will become even harder to collect that critical data. Flouting the letter or spirit of the expanded-access law could seriously harm not only the drug development system, but the public’s trust in it and the public’s health at large.
Trump tested positive for covid-19 on or around September 30. After being discharged from the hospital, he boasted repeatedly that he’d gotten “Regeneron”—that is, he received Regeneron Pharmaceuticals’ investigational antibody cocktail called REGN-COV2 via expanded access. He even said that it cured him.
Christie more recently received an Eli Lilly covid-19 drug via expanded access. It too was a monoclonal antibody cocktail.
We haven’t seen either man’s private medical information, and Trump’s physician has been accused of obfuscating the details of his patient’s covid-19 experience. However, based on what we do know, we doubt that one or both fully met the criteria for expanded access.
We acknowledge that covid-19 was a serious diagnosis for Trump and Christie; as older, obese men, they are among the population for whom the infection has been most lethal. And we presume that the men’s physicians believed the potential benefits of the investigational drugs outweighed the risks for their patients.
We’ll also grant there were no suitable alternative treatments. Dexamethasone, a commonly available steroid, has been shown to lessen some symptoms of the virus, but it’s not a cure-all for covid-19. And despite Trump’s claim earlier this year that hydroxychloroquine, an older drug used to treat malaria, lupus, and rheumatoid arthritis, was a miracle cure, clinical trials have not borne this out.
Of course, there are some clear differences between these two covid-19 patients. Trump is a sitting president while Christie, the former governor of New Jersey, does not currently hold political office, though remains active in politics (Christie helped Trump prepare for the recent presidential debates). However, both VIPs appear to have sidestepped the FDA’s clinical trial requirements. This point bears closer scrutiny than it has received.
Special treatment
Many patients cannot participate in clinical trials for many different reasons. They may not meet a trial’s inclusion criteria—they may be too old or too young, or have comorbidities such as high blood pressure that make them ineligible. Or they may be unable to travel to the trial site.
Trump was treated at Walter Reed National Military Medical Center, which is not listed as a trial site for REGN-COV2. That would have rendered him ineligible for a clinical trial and therefore a suitable candidate for expanded access, as he also met the criterion of having no approved treatment option. Without transparency into his medical condition, we can’t know if he met the Regeneron trial’s criteria regarding illness and hospitalization status.
Christie’s case is much more concerning. He was in a hospital that was participating in the Regeneron trial. According to a report by the trade publication BioCentury that cited an anonymous source, Regeneron, in accordance with FDA regulations, declined Christie’s request for expanded access to REGN-COV2, the product used by Trump, and instead offered Christie a spot in the randomized controlled trial. BioCentury reports that Christie did not want to participate for fear that he might receive a placebo treatment.
Christie certainly was under no obligation to join the trial. But if he was eligible for a trial of an investigational drug, he should not have been able to obtain that drug via expanded access. Regeneron, to its credit, appears to have appropriately refused this.
When Ajay Nirula, VP of Immunology for Eli Lilly, was asked earlier this week at the EmTech MIT conference about how Christie gained access to his own company’s medicine, he said Lilly’s expanded-access program was “generally the path that was pursued here,” but he did not provide further details.
Christie’s fears of receiving a placebo reflect a common but mistaken belief: that trial participants who receive placebos are worse off than patients who get the investigational product. If a trial has a placebo arm, it’s because the safety and efficacy of the drug being tested are unknown. The vast majority of investigational medical products are rejected for FDA approval because they either don’t work or are unsafe. Patients in placebo arms receive the standard medical care for their disease. In a trial testing a drug against a placebo, then, it may be safer for a participant not to receive the drug, which could in fact cause harm.
Christie’s actions as they have been reported imply that anyone who can avoid clinical trials—particularly trials involving a placebo—should do so, and should try to get the investigational drug through expanded access. Such actions stoke public distrust of drug development at a time when clinical trials are crucial to mounting an effective pandemic response. They could also lead to a spike in the number of requests for expanded access, thus increasing the burden on physicians, drug companies, the FDA, and hospitals—all of which may be equipped to handle such requests occasionally but not in volume.
This is about more than just powerful politicians receiving unapproved drugs that are not available to others. It’s also about whether rich, famous people may have worked around a system that exists both to help patients in devastating circumstances and to preserve the system’s ability to help future patients.
Our colleagues have warned about the dangers of “pandemic research exceptionalism” in the context of clinical trials for covid-19 agents. They argue that during desperate times, scientists and regulators shouldn’t relax regulations governing trials but should follow them all the more closely, because trustworthy data is especially important when no treatments are available and there’s intense pressure to develop one. For the same reason, there should be no expanded-access exceptionalism. Regulations should be applied consistently and fairly, no matter who the patient is.
Lisa Kearns is a senior researcher in the Division of Medical Ethics at the NY Grossman School of Medicine and a member of the division’s Working Group on Compassionate Use and Preapproval Access (CUPA). Alison Bateman-House is an assistant professor at the division and a cochair of CUPA.
He doesn’t seem to think China is that far ahead of the USA when it comes to blockchain development — at least for now.