ESC Research: Doing Well vs. Doing Good

Is embryonic stem cell research an economic boon or boondoggle for California? Or for other states as well?

Writer David Hamilton, formerly of the Wall Street Journal, discussed the subject this week on Slate. Here are excerpts of what he had to say:

"If medical treatments can be derived from stem-cell research, they are at least a decade or two away, if history is any guide. Even then, new therapies envisioned by supporters, such as diabetes treatments that regenerate insulin-producing islet cells, might add to government health-care costs instead of curbing them. The Baker-Deal report (from the 2004 Prop. 71 campaign) figured that stem-cell therapies could save California at least $3.4 billion in health-care costs over the next three decades by assuming the therapies would reduce state spending on six major medical conditions by 1 percent to 2 percent. While the authors cast that as a 'conservative' estimate, they don't even model the possibility that costs might rise instead. Recent medical advances haven't appreciably slowed growth in overall U.S. health-care spending, which continues to rise far faster than inflation.

"Ideally, of course, stem-cell therapies would start a trend in the opposite direction by reducing or eliminating the need for expensive and often lifelong medical care. For that to happen, though, the new treatments would need to largely replace existing ones at a reasonable price, and then doctors would have to use them sparingly—for instance, only on the patients most likely to benefit. None of these assumptions is a particularly good bet under the current U.S. health-care system, in which new treatments are often simply added to older ones, and where insurers so far have tended to pay top dollar for incremental medical advances."

Hamilton continued:

"What about the potential of stem-cell research to spur economic development—can a state that sponsors stem-cell research hope to attract cool scientists who will then draw others, plus a coterie of entrepreneurs and venture capitalists? Biotech companies do tend to cluster in places like San Francisco and Boston, but their overall impact on regional economies tends to be limited. While they often pay high salaries, the vast majority of these companies are tiny, unprofitable startups with fewer than 100 employees. They frequently collapse well before they earn a dollar in sales. Even successful biotech ventures are often bought out by distant drug companies, which sometimes shut down the acquired company while transferring its research activities and any products elsewhere. On top of all that, big states like California and New York are going to wind up competing for some of the very same scientists, VCs, and entrepreneurs, further shrinking the rewards.

"Why did Baker and Deal see dollar signs? The $200,000 stem-cell supporters paid to Deal's firm, the Analysis Group, for campaign consulting might have something to do with it. In an interview, Baker said he didn't think of the report as advocacy but added that 'we knew we were working for people who wanted to pass this thing.' And while he still believes the economic benefits of stem-cell research could be 'quite large,' Baker also describes the report as merely 'one possible version of how things might happen.'"

Hamilton's bottom line:

"None of this means that stem-cell research doesn't deserve government funding. Stem-cell science, after all, remains in its infancy. Nearly a decade after the discovery of embryonic stem cells in humans, scientists still don't know exactly how they work, how to assure their purity, or what unexpected side effects they might have when transplanted into the human body."

Since the Bush administration refuses to support ESC research, Hamilton, concluded "the states are right to ante up where the federal government has failed to. They just shouldn't expect to do well while they're doing good."

Hamilton's piece does not deal with a related reason for the economic argument for ESC research. Creating a dream of riches is an attempt -- generally successful, we might add -- to shift the terms of the debate. It is a no-win proposition if ESC research backers find themselves locked into a discussion of whether they are killing babies.