Ballyhoo, Economics and California Stem Cells

In an exuberant essay in the leading newspaper in Silicon Valley, an official of the California stem cell agency has touted its $271 million in lab construction grants as bold evidence of "the economic might of the little stem cell."

David Lichtenger (see photo), chairman of the Facilities Working Group at CIRM and head of Integrated Facilities Solutions of Palo Alto, Ca., wrote the op-ed piece that appeared May 16 in the San Jose Mercury News.

He said,

"Stem cells are tiny. In fact they are microscopic. Yet, they might prove to be the mighty engine not only for medical advances, but also for the ailing California economy.

"The economic might of the little stem cell was boldly evident earlier this month when the California Institute for Regenerative Medicine (CIRM), the state's stem-cell agency, awarded $271 million to 12 universities and research institutions to build new stem-cell laboratories."

The economic impact of stem cell research was one of the main arguments behind passage of Prop. 71, which created CIRM in 2004. It continues to play a major role in the justification for CIRM's $3 billion in spending.

We believe the agency has a responsibility to tell the story of its work and to maintain and build public support. Call it marketing, public relations, public education or whatever. Fundamentally, it is all the same thing and quite necessary. Without continued public support, the agency becomes vulnerable to assaults from many sides.

However, long after the last Prop. 71 vote was counted, the grandiose economic claims from the campaign generated blowback, including a study from a UC Berkeley economist Richard Gilbert debunking them. The agency last year also seemed headed for production of another economic study to justify its existence. More recently the proposed $500 million biotech loan program promised handsome returns even at default rates of up to 50 percent.

All of which indicates a need for some perspective. CIRM leveraged its $271 million in lab grants into a $1.1 billion program that will certainly generate hundreds, if not thousands of construction-related job. However, the biotech industry, which goes well beyond stem cells, is a tiny player in the California economy. It accounts for something over 100,000 jobs, according to a state report, a mere piffle compared to the total workforce of 18 million in an economy that runs at around a mammoth $1.7 trillion annually.

And CIRM's $271 million does not even surpass the $356 million being spent on San Quentin's "condemned inmate complex."

That said, CIRM's lab grants have indeed generated a long overdue investment in the science side of California's infrastructure. CIRM deserves ample credit for handily leveraging its dollars. The agency is also preparing to make another substantial contribution this year to the state's intellectual capital with $66 million in training programs.

Lichtenger's essay was reasonably measured and nicely written. However, it is doubtful that stem cells will be the "mighty engine" for the "ailing California economy" any time in the foreseeable future. It behooves CIRM to exercise judicious restraint as it touts its achievements. Managing expectations is the key, and the best course is to avoid over-promising.


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Where's the Money?

Even today headlines talk about the stem cell "gold rush" in California. And it is years after the Prop. 71 campaign financed a study that seemed to promise as much as $1 billion to the state from state-backed stem cell research.

While the headlines may reflect a paucity of imagination on the part of headline writers, the dreams of buckets and buckets of stem cell cash still energize much of the dialogue concerning ESC research.

Jesse Reynolds, writing on the blog Biopolitical Times, recently revisited the subject of stem cell swag. The occasion for commentary was an article in Nature Biotechnology.

Reynolds, who works for the Center for Genetics and Society in Oakland, said what is remarkable about the piece is what's missing. He wrote:

"There’s no reference to the over-the-top -- yet widely-cited -- optimistic scenarios spun in an economic analysis that was widely touted, and funded, by the campaign to establish the (California) state program."

Reynolds noted that Stanford University professor of health research and policy Laurence Baker was a co-author of both the Prop. 71 campaign study and the Nature Biotechnology article, a fact that Reynolds said was not acknowledged in the magazine.

Reynolds said Baker furiously backpedaled from his campaign study. Reynolds quoted the Nature Biotechnology article as saying:

"[A]t this point predicting particular breakthroughs or economic benefits would amount to little more than speculation.... New stem cell therapies will not necessarily reduce [health care] spending; indeed they may drive spending up...Forecasting and even retrospectively assessing the success of Proposition 71's IP provisions will be extremely difficult."

The economic promises of stem cell research are as of much interest today as they were three years ago. Lawmakers are currently struggling to ensure that the state does, in fact, share in any profits. The biotech industry and CIRM are opposed to that legislation (SB771), authored by State Sen. Sheila Kuehl, D-Santa Monica, chair of the Senate Health Committee.

CIRM itself is in the midst of drawing up rules for revenue sharing involving future grants to California businesses. And elsewhere in the country, other states are launching stem cell research efforts, peddling the idea that it can funnel vast economic benefits into the state.

Beware the White Coat Crowd

Health industry gadfly Merrill Goozner is taking a jaundiced view of the stem cell arms race in states across the country.

Citing New York's latest proposal and California among other states, Goozner wrote on The Huffington Post:

"Stem cell research is promising, and it shouldn't be impeded by a bunch of anti-science right-to-lifers with God and the president on their side. But like any strain of research, the likelihood of a major medical breakthrough coming from stem cells is probably not that much greater than gene therapy, the human genome project, the war on cancer or any of the multi-billion-dollar medical research programs that came before it. A lot of knowledge and a few good things will come out of stem cell research, but will it make those with severed spines stand up and walk? Call me irreligious, but I'm skeptical."

He continued:

"Of course, there will be some new jobs created for university researchers, their underpaid foreign graduate students, and the white coat crowd in the biotech industrial parks subsidized by the taxpayers. But is this really the best use of government subsidies, especially at a time when the health care sector -- 16 percent of GDP and still growing -- is sapping the vitality of the rest of the economy? Has anyone given any thought to how much some of these breakthrough stem cell technologies might cost, and how the rest of the economy might pay for them?"

Goozner is directs the Integrity in Science Project at the Washington-based Center for Science in the Public Interest.