March 15, 2007 (Vol. 27, No. 6)

Government Largesse Is Not Always the Best Option

During the current legislative session, the federal government and every state will, in some way, face the issue of embryonic stem cell research funding, and, in most instances, legislators will make the wrong decision.

Government funding for embryonic stem cell research is full of empty promises. The federal government first tried to fund it in 2000, when the Clinton administration gave the NIH its blessings to solicit grant proposals. When George W. Bush took office, however, he limited funding to research on existing stem lines and none of the grants Clinton authorized were distributed.

Since then, Congress has twice tried to pass a bill specifically authorizing the funding of embryonic stem cell research. In 2006, Bush vetoed the “Stem Cell Research Enhancement Act of 2005” and now he promises to veto the “Stem Cell Research Enhancement Act of 2007”, as well.

Many Democrats campaigned in the 2006 midterm elections on promises to fund embryonic stem cell research, and House Speaker Nancy Pelosi made funding it one of the top priorities for her first 100 days in office. As of this writing, the House has passed a funding bill, but the Senate has yet to weigh in. Promises or no promises, the debate will continue with few, if any, results.

A Waste of Time and Money

With federal funding uncertain, efforts to lobby states for research funds began in 2001, or earlier. To date, only five states have promised to allocate funds to embryonic stem cell research. In 2004, New Jersey passed a state budget that included $5.5 million for stem cell research, and Californians approved a $3 billion bond measure to fund research over 10 years. In 2005, Connecticut set aside $100 million, Illinois $10 million, and, in 2006, Maryland authorized $15 million.

By early 2007, few of these promised funds had actually made it to researchers. It takes time and money to establish the various government boards, panels, and institutes that will be responsible for awarding grants, and, in several cases, money has been spent on building research facilities and educational programs intended to train future stem cell researchers.

To make matters worse, in some states, like California, funding is being held up by legal challenges that will take years to resolve. Of the $3 billion authorized by voters when they passed Prop. 71 in 2004, as yet, not a penny has been spent on embryonic stem cell research.

California also serves as an example of another kind of government waste. The California Legislative Analyst’s Office estimates that the total cost of the Prop. 71 bond issue will be $3 billion in principal and another $3 billion in interest to be paid off over 30 years.

These are just estimates, and, if the bond anticipation notes sold by California earlier this year are any indication, the estimate is low. Those bonds were for $14 million in principal and $21 million in interest to be paid off over 30 years. Also, added to this cost must be the costs of administering the referendum and the cost to the taxpayer in defending the legal actions against Prop. 71.

Almost all stem cell research funding initiatives currently being considered on the state level involve bond issues that, when all is said and done, will cost tax payers at least twice their actual investment in embryonic stem cell research related expenditures.

Government funding isn’t advantageous when funds that could be spent on research are spent on lobbying, political upheaval over the issue of funding leads to restrictions on all research, money is thrown at extremely high-risk but low-yield projects, and efforts are wasted on obtaining close to worthless knowledge.

Private contributors spent $30 million or more in their efforts to pass California’s Prop. 71. That money would have been better spent in the form of a grant to a private research institution.

Even some of the biggest proponents for government funding have started to have second thoughts. Just this month, the Michael J. Fox Foundation for Parkinson’s Research made a significant, but undisclosed, contribution to ReNeuron, which says the donation will cover its operating costs for at least the next year and accelerate its progress toward trials in humans.

Legal Confusion

The lack of understanding with respect to what embryonic stem cell research entails has led to some confusing legislation. Florida is considering a bill that would allow embryonic stem cell research but prohibit “certain acts” related to human reproductive cloning or the purchase or sale of embryonic fetal tissue for research purposes.

Former Iowa governor Tom Vilsack is now urging the repeal of a ban on somatic cell nuclear transfer that he signed into law in 2002, saying that science has evolved since he signed the bill. In Nebraska, a bill has been introduced to ban all human cloning.

Legislatures are also floundering in their attempts to understand what is and is not worth funding. Government is inherently inefficient at making decisions regarding what research proposals to support. Any state-appointed board of private scientists assigned to allocate funds is open to criticism for conflicts of interest. Bureaucrats with no personal investments in the outcomes of research, on the other hand, tend to treat awarding grants with little more seriousness than handing out candy.

Private entrepreneurs and philanthropic organizations who are seriously trying to solve a particular scientific problem have too much at stake to make frivolous decisions. They are far more likely to show discernment and diligence in determining what research to support.

There is no doubt that government funds have supported some successful research. The Nobel Prize won by Martin Rodbell, Ph.D., in 1994 attests to one success. However, news reports are also replete with stories about governments wasting money on studies about paranormal communication and the homosexuality of seagulls. One rarely reads about such boondoggles with respect to private investment.

An Eye for Genius

Some argue that research and development is so expensive and risky that important research would go undone without government support. Nobel Prize Laureates represent the cutting edge of scientific innovation; they are the most notable group of successful research risk takers.

Of the 186 Nobel winners in Medicine since 1901, 99 did their prize-winning research with the support of U.S. research institutions. Of those, only five did their work at NIH and fewer than one-third did their work while affiliated with public institutions.

The other two-thirds were affiliated with private institutions and were primarily supported through private funds. While only a cursory analysis, the evidence seems clear that private investors, whether entrepreneurial or philanthropic, are much better at identifying truly innovative research than government institutions are.

Government funding is not just extra funding that wouldn’t exist otherwise; look at what happened with in vitro fertilization research, for example. For years, advocates spent millions of dollars trying to convince Congress to support in vitro fertilization research. They claimed that without funding the U.S. would suffer a brain drain and infertile Americans would have to seek treatment abroad. While a divisive debate over the ethical merits of test-tube babies raged, some scientists quietly pursued their research privately.

Even after decades of lobbying, the federal government never funded any IVF research, and today the U.S. has the largest IVF industry in the world. Human IVF is a $3 billion a year industry, human reproductive technologies as a whole is a $6.5 billion a year industry, and the total assisted reproduction industry, including animal husbandry, is close to a $16 billion a year industry. All that without any federal funding.

A second story is still in the making. Just last November, Missouri voters passed a constitutional amendment creating a safe haven for embryonic stem cell researchers, but included no public funding for the work. Within days, the Stowers Institute for Medical Research unleashed its $2 billion bank roll and an international team of stem cell researchers it had assembled in anticipation of the amendment’s passage. Remember California, where the $3 billion voters authorized to be spent over 10 years on stem cell research is still unavailable three years later? Well, in Missouri, the Stowers Institute put $2 billion in private funding to work within days.

It’s understandable that researchers are tempted by the prospect of easy money from government sources, but as the record shows, getting government funding is not worth the effort. Only private funding lets researchers do what they need to and leads to truly reliable results.

Sigrid Fry-Revere is director of bioethics studies at the Cato Institute. Web: E-mail:

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