Wednesday, March 18, 2009

Timing Right for Sharing the Wealth on Federal Stem Cell Research

How are those folks over at 70 Pine Street in New York City helping those at 1750 Ocean Park Boulevard in Santa Monica, Ca.?

Unknowingly, they are creating a ripe opportunity in the nation's capital to extract a piece of the stem cell action from the recipients of government largess.

The players at 70 Pine are the executives at AIG, fast supplanting Enron as the most reviled company in modern American history. The Santa Monica address houses the offices of Consumer Watchdog, a nonprofit organization that has called for sharing the profits from any federally funded stem cell or other research.

A year ago, such a pitch would have died aborning. Today, given the scandals concerning AIG and other corporate failures, the political mood has changed and will change more – all in the direction that no one in the business community will like.

Trust in American business may be at its lowest point in history among the "informed public," according to one poll. Only 38 percent say they trust business to do the right thing, down 20 percent from last year. Presumably the figure would be even lower among the general public.

In a letter to President Obama, last week, Consumer Watchdog cited the California stem cell agency as an example for the feds to emulate in terms of sharing the wealth from any therapies that result from government-funded research. Under certain circumstances, CIRM grant recipients must pony up some cash if they bring a product to market profitably. No such requirement exists for the tens of billions of dollars handed out by the NIH.

The bailout brouhaha creates a golden opportunity for Consumer Watchdog and like-minded organizations to enact share-the-wealth requirements for federal research grants. The logic is compelling. Venture capitalists demand their share of the booty when they fund individuals or businesses. Why shouldn't the government, especially in these difficult financial times.

Consumer Watchdog and its allies could even make the case for attaching such requirements to the $10 billion biotech stimulus package being pushed by CIRM Chairman Robert Klein and the powerful Podesta lobbying group.


  1. Comment moderation has been removed from the California Stem Cell Report. Your comments will be posted directly to the site. You can post them anonymously, but we encourage all to post using your own names. Recent comments will be listed in this column if the coding works properly.

  2. Dave,

    Of course taxpayers should benefit directly from the fruits of the research they have funded.

    This is not some harebrained, wacko leftist idea.

    Back when the Bayh-Doyle Act governing federal funding of research was being debated, Adm. Hyman Rickover, the "father" of the U.S. nuclear fleet testified against the legislation.

    He warned that giving private companies exclusive rights to taxpayer-funded inventions was forcing the public to pay twice: once for the research and once for higher prices made possible by the monopoly granted under a patent.

    You can read more about this in Jennifer Washburn's excellent book, "University Inc.: The Corporate Corruption of Higher Education."

    John M. Simpson
    Stem Cell Oversight and Accountability Project
    Consumer Watchdog

  3. Simpson's allusion to Rickover understates an important point: Congress did not adopt Rickover's position.

    Of Bayh-Dole itself, one notes that the federal government retains rights in patents arising from federally-funded projects, and is free to exercise those rights. Furthermore, Congress can interfere with rights of non-government funded patents, and even the executive branch can do things, as Simpson recognized in his previous allusion to the airplane patent pool during World War I (although Simpson misstated the outcome).

    An issue with the "paying for things twice" viewpoint is that the costs of "making the invention" (the research and patenting costs) are generally DWARFED by the development/marketing costs. If someone can't get return on THOSE costs, they won't invest. If they don't invest, there is no product to benefit the public. All the public gets is an academic paper.

    Simpson's argument about "paying for things twice" is more relevant to whether the public should get free access to the information, an issue which is currently being debated in the copyright context.

    Of Washburn:

    Los Angeles Times Article Way Off Base on Stem Cell Issues

    Thinking negatively about Bayh-Dole

  4. As a separate matter, there has been previous discussion of Simpson's views of Bayh-Dole. See for example:

    Fact check: Simpson misinformed on publicly funded research

    but note comments by both Simpson and Ebert.

    There is a "deck chairs on the Titanic" aspect to Simpson's position, in that there may not be any money to share in the case of stem cell patent royalties from Prop. 71.

    Assuming for sake of argument that the funding of CIRM produced viable inventions/patents for therapies, one asks which the California taxpayer wants more in the next step of implementation: the cure or the royalty money?

    In the Bayh-Dole world, the federal government generally stays out of the picture, and deals are made between the federal grantee as licensor and the private licensee.

    Making an innovation, which really changes the way we live, is harder than merely making an invention. Incentives must be offered. Simpson would be advised to note the words of Lincoln:

    The patent system changed this; secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.

    In the past, Simpson has been confused on the
    "production" issue (eg, there were no US-built fighter planes in World War I). If California taxpayers really want tangible, functioning therapies PRODUCED, there must be incentives. Otherwise, the "product" will be academic papers.


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