Arguments Against Proposition 71: The California Stem Cell Research and Cures Initiative
by Rich Deem

Introduction

The California Stem Cell Research and Cures Initiative will be voted on this November by California voters. The initiative will establish the California Institute for Regenerative Medicine,1 an independent stem cell research program funded through California taxpayer dollars. Currently, medical research is funded mostly through grants funded by the federal government. The initiative will put the California taxpayer in the position of funding a very narrow field of medical research - embryonic stem cells.

Why the initiative is bad

Update

Voters passed Prop 71 in November, 2004, and as of 2007, some grants have been awarded. However, with the news that human skin cells can be turned into pluripotent stem cell lines, the Institute now wants to now fund non-embryonic research. Could say, "I told you so!

Rich Deem

The California Stem Cell Research and Cures Initiative suffers from several major faults; fiscal, bureaucratic, scientific, and moral/ethical problems. Several provisions of the initiative are of questionable use and may actually hinder the medical cures it purports to encourage. Vote NO on Proposition 71!

Fiscal Problems

The state of California is in the midst of a huge budget deficit due to overspending at the hands of a reckless legislature and permissive governor (recalled by the California electorate in 2003). Although the California economy is beginning to recover, the deficit is in the tens of billions of dollars. We don't need to add an additional 6 billion dollars (3 billion for bonds and 3 billion for interest)2 to fund questionable research and special interest groups.

Prop 71 is funded by real estate and biotech industries that will profit from its passage

Individuals and special interest groups (from real estate and biotechnology companies) that stand to gain financially from Proposition 71 have contributed large sums of cash to the campaign. Robert Klein, president of real-estate development company Klein Financial, has since donated more than $1,000,000.3 Joseph Lacob, John Doerr, Joe Lacob and Brook Byers, partners with the firm Kleiner Perkins Caufield & Byers (which funds several healthcare and biotech-related companies),3 contributed $500,000, $974,649, $500,017 and $460,000, respectively.3 William Unger of Mayfield Venture Capital (which also funds biotech companies)3 contributed $50,000, according to campaign finance records.3  George Rathmann, co-founder of Amgen and is now chairman of biotechnology company Nuvelo, has contributed $50,000.3 William Rutter, co-founder and chairman of Chiron, contributed $50,000.3 Another biotechnology executive, Gilead Science vice president James Rooney, has contributed $10,000.3

Funding for real estate and facilities?

Unbelievably, the California Stem Cell Research and Cures Initiative provides up to 300 million dollars for real estate development and facilities construction.4 In, fact "four real estate specialists" are called for in the initiative.5 This provision is virtually unheard of in funding of medical research grants. Established investigators already have research laboratories. These facilities are provided by the institution (usually provided by a university or biotech company). In the case of universities, these buildings are usually funded through donations. Therefore, any scientist worthy of funding for medical research already has a research lab. This provision of the initiative will probably be lining somebody's pockets, instead of funding medical research.

Administrative Costs

Initiative Costs BreakdownThree percent of the debt will be used for general administrative costs. Another 6 % of the bonds (3 percent of the total cost) will be used for grant administration costs.6 In comparison, the National Institutes for Health budget calls for 4% in administrative costs.7 After all the extraneous costs, only 30% of the money spent will actually fund research.

Bureaucratic Problems

The California Institute for Regenerative Medicine, established by the initiative will be run by an Independent Citizen's Oversight Committee (ICOC)8 appointed by state politicians,9 and consisting of members from advocacy groups,10 and bureaucrats of the University of California and other universities.11 Putting politicians and special interest groups in charge of a major medical research group is asking for major problems. For example, funding provided through the federal National Institutes of Health (NIH) is run by scientists, who know what they are doing. Although politics does rear its ugly head occasionally at the NIH, it is quite rare. This initiative will create a bureaucratic and political nightmare.

Questionable scientific merit

The California Stem Cell Research and Cures Initiative specifically funds research using human embryos, which is currently banned from federal funding because of ethical and moral issues. Despite the federal ban, much research has already been done using embryonic cells from mice and humans. The promise of the research has yet to be demonstrated. Pluripotent embryonic cells can, and do, differentiate to form various kinds of cells. The problem is that they are not very controllable at present. When injected into mice, they form teratomas (tumors) and cancers spontaneously. In order to be useful in therapies, the cells must be differentiated into the cell types that are useful for therapies. So far, the conditions that result in the complete transformation of pluripotent stem cells into differentiated tissue have not been discovered. It is possible that residual pluripotent cells will exist in all preparations, posing the risk of tumors or cancers to those who have been treated with these therapies. At present, the risks are unknown, since no clinical trials using human embryonic stem cells have ever been evaluated.

An important question to consider is why advocates are going to an uninformed electorate to fund their research? If the research had potentials to cure diseases, why not go to the drug companies? The reason is that the drug companies do not want to take the risks associated with the use of embryonic cells in real patients. The downside is too great and the probability of success is small. If these therapies were going to work, the major drug companies would already be investing millions to get a jump on the big profits that could be generated. The scientific prognosis doesn't warrant the risk.

Limited scientific scope

The California Stem Cell Research and Cures Initiative purports to fund all manner of stem cell research (adult and embryonic), but a clause in the text prevents funding of any kind of stem cell research other than embryonic stem cell research - regardless of scientific merit.12 Even if future research shows that embryonic stem cells are not useful in therapy, the initiative locks in embryonic stem cell research as the only funded research.

Prop 71 exempts the Institute from "open meeting" laws

If passed by voters, Proposition 71 would let the proponents “Institute” to conduct secret, behind-closed-door negotiations with the very venture capitalists who bankrolled the initiative. Why would proponents exempt themselves from the “Open Meeting “ law which is specifically designed to stop backroom dealing with public money? (See Text of the initiative, Article I, Section 125281,05 (d), page 8)13

Prop 71 will increase health care costs

Supporters of Proposition 71 claim that the initiative will eventually save money on health care costs. The reality is that the cost to obtain human eggs for individual cloned stem cell lines will be over $200,000!14 Add to that the cost of the medical procedures to carry out the therapy itself and it could be in excess of a half million dollars. HMO's and private plans will be unlikely to pay these costs, so the procedures will be accessible only by the wealthy.

Won't Prop 71 provide patent and royalty revenues to the state?

Who will get the patent and royalty revenues from funded research? Proposition 71 does not require that one single penny of the patent and royalty revenues that might result from future research be returned to California taxpayers. The “Institute” established by Proposition 71 may, at its discretion, have taxpayers pay 100% of the costs, and award venture capitalists with 100% of the profits.

Prop 71 changes standards for patient informed consent and rights

All medical studies involving human subjects must inform the patients about every aspect of the procedures to be used. These safeguards were enacted to prevent abuse of patient rights. All researchers receiving federal grants must comply with the informed consent standards established by the National Institutes of Health. Proposition 71 will initially require grant recipients to comply with these federal regulations. However, there is a scary clause in the text of the initiative that provides for "modifications to adapt to the mission and objectives of the Institute."14 We don't understand how the mission and objectives of the Institute should be any different than any other medical research funded by the federal government, which should require any changes in informed consent standards. There should never be a need to modify the safeguards that protect patient rights while participating in medical research.

Won't Prop 71 generate new sales tax to cover the bond interest payments?

Proponents of Prop 71 claim that sales tax generated by the proposition will cover the cost of the bonds. However, their own economic study indicates that this claim is false:

“New state income and sales taxes generated from the program will supposedly cover the interest due on the bonds during the first five years. But the supporters’ own economic study shows that in the following nine years, when annual debt service on the bonds soars to more than $170 million, the putative tax gains will cover only 11% to 19% of that sum.” Michael Hiltzik, Los Angeles Times, 8/23/04

Huge grant awards

The size of the grant awards is enormous by federal grant standards - 6 million dollars per year (up to 2% of the total).15 In my job, our research group has a number of federal grants. Most of the grants are funded for a few hundred thousand dollars a year (including the one that pays my salary). Our group has one "Center" grant, which is funded for over one million dollars a year. However, this grant funds investigators and research at several different institutions. The 6 million dollar allowance provided in the initiative is virtually unheard of. Such high limits of awards is guaranteed to foster waste in an attempt to spend all the money.

Moral/ethical issues

Proposition 71 makes cloning human embryos for research a state-protected constitutional provision. The research specifically will utilize and destroy human embryos. However, if you examine the text, you won't find any mention of embryos. All the words are coded in scientific or vague terms to keep this information away from the California voter. The code words are:

Code Words Real Meaning
pluripotent stem cells stem cells from human embryos
products of in vitro fertilization treatments human embryos
somatic cell nuclear transfer cloning human embryos

Why didn't the authors of the initiative use terms the voters would understand? The truth is that they don't want you to know the kind of research the initiative will be funding.

Conclusion Top of page

About the Author

Richard Deem is actively involved in medical research since 1976, being funded through NIH grants. He is familiar with the current status of stem cell research, including the problems and questions that have yet to be addressed. This page is an analysis of Proposition 71, which will be voted on by California voters November 2, 2004.

The California Stem Cell Research and Cures Initiative is a bad law that writes into the state Constitution the funding of human embryonic stem cell research. Vote NO on the Proposition 71. The proposition is

  1. Fiscally irresponsible
  2. Economically wasteful (only 30% spent on actual research)
  3. Mired in bureaucratic and political special interests
  4. Contains provision for backroom deals
  5. No safeguards to provide the state with patent and royalty revenues
  6. Funds research of questionable scientific merit
  7. Research involves cloning of human embryos
  8. Research involves destruction of human embryos

Vote NO on the Proposition 71

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References Top of page

  1. SEC. 4. Article XXXV is added to the California Constitution to read:
    Section 1 There is hereby established the California Institute for Regenerative Medicine ("Institute").
  2. ARTICLE 2. CALIFORNIA STEM CELL RESEARCH AND CURES BOND ACT OF 2004
    125282.05. Bonds in the total amount of three billion dollars ($3,000,000,000), not including the amount of any refunding bonds issued in accordance with Section 125282.14, or as much thereof as is necessary, may be issued and sold to provide a fund to be used for carrying out the purposes expressed in this article and to be used and sold for carrying out the purposes of Section 125282.03 and to reimburse the General Obligation Bond Expense Revolving Fund pursuant to Section 16724.5 of the Government Code. The bonds, when sold, shall be and shall constitute a valid and binding obligation of the State of California, and the full faith and credit of the State of California is hereby pledged for the punctual payment of both the principal of, and interest on, the bonds as the principal and interest become due and payable.
  3. Paul Elias. 2004. Venture capital money backs California stem cell measure, USA Today, from Associated Press.
    See Kleiner Perkins Caufield & Byers Portfolio companies: Current investments.
    Dan Smith. 2004. The Buzz: Biotech interests boost stem cell initiative effort from the Sacramento Bee.
    Mayfield Venture Capital funds biotech companies Amgen, Genentech, Heartstream, Immunex, Millennium Pharmaceuticals, and Tularik (see Mayfield Impact Investments).
  4. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.13    Appropriation and Allocation of Funding.
    (4) Recognizing the priority of immediately building facilities that ensure the independence of the scientific and medical research of the Institute, up to 10 percent of the proceeds of the bonds authorized pursuant to section 125282.05, net of costs described in clauses (a) (ii), (a) (iv) and (a) (v) of section 125282.03 shall be allocated for grants to build scientific and medical research facilities of non-profit entities which are intended to be constructed in the first five years.
  5. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.12   Scientific and Medical Facilities Working Group
    (2) Four real estate specialists. To be eligible to serve on the Scientific and Medical Research Facilities Working Group, a real estate specialist shall be a resident of California, shall be prohibited from receiving compensation from any construction or development entity providing specialized services for medical research facilities, and shall not provide real estate facilities brokerage services for any applicant for, or any funding by the Scientific and Medical Research Facilities Working Group and shall not receive compensation from any recipient of Institute funding grants.
  6. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.13    Appropriation and Allocation of Funding.
    (B) Not more than three percent of the proceeds of bonds authorized by section 125282.05 may be used by the Institute for research and research facilities implementation costs, including the development, administration and oversight of the grant-making process and the operations of the working groups.
    (2)  Not more than three percent of the proceeds of the bonds authorized pursuant to section 125282.05 shall be used for the costs of general administration of the Institute.
  7. National Institutes of Health Budget
  8. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.02   Creation of the ICOC
    There is hereby created the Independent Citizen's Oversight Committee,
    hereinafter, the ICOC, which shall govern the Institute and is hereby vested with full power, authority and jurisdiction over the Institute.
  9. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.03   ICOC Membership; Appointments; Terms of Office
    (2) The Governor, the Lieutenant Governor, the Treasurer and the Controller shall each appoint an executive officer from the following three categories:
    (3) The Governor, the Lieutenant Governor, the Treasurer, and the Controller shall appoint members from among California representatives of California regional, state, or national disease advocacy groups, as follows:
    (4) The Speaker of the Assembly shall appoint a member from among California representatives of a California regional, state, or national Mental Health disease advocacy group.
    (5) The President Pro Tem of the Senate shall appoint a member from among California representatives of a California regional, state, or national HIV/AIDS disease advocacy group.
  10. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.03   ICOC Membership; Appointments; Terms of Office
    (3) The Governor, the Lieutenant Governor, the Treasurer, and the Controller shall appoint members from among California representatives of California regional, state, or national disease advocacy groups, as follows:
    (A) The Governor shall appoint two members, one from each of the following disease advocacy groups: spinal cord injury, and Alzheimer's disease.
     (B) The Lieutenant Governor shall appoint two members, one from each of the following disease advocacy groups: type II diabetes; and multiple sclerosis or amyotrophic lateral sclerosis.
     (C) The Treasurer shall appoint two members, one from each of the following disease groups: type I diabetes and heart disease.
    (D) The Controller shall appoint two members, one from each of the following disease groups: cancer and Parkinson's disease.
     (4) The Speaker of the Assembly shall appoint a member from among California representatives of a California regional, state, or national Mental Health disease advocacy group.
     (5) The President Pro Tem of the Senate shall appoint a member from among California representatives of a California regional, state, or national HIV/AIDS disease advocacy group.
  11. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.03   ICOC Membership; Appointments; Terms of Office
     The ICOC shall have 29 members, appointed as follows:
    (1) The Chancellors of the University of California at San Francisco, Davis, San Diego, Los Angeles and Irvine, shall each appoint an executive officer from his or her campus.
    (2)   The Governor, the Lieutenant Governor, the Treasurer and the Controller shall each appoint an executive officer from the following three categories:
    (A)  a California university, excluding the five campuses of the University of California described in paragraph (1), that has demonstrated success and leadership in stem cell research, and that has:...
    (B) a California non-profit academic and research institution that is not a part of the University of California, that has demonstrated success and leadership in stem cell research, and that has:...
  12. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.11   Scientific and Medical Research Funding Working Group
    (c) (1) (C)
    "In order to ensure that Institute funding does not duplicate or supplant existing funding, a high priority shall be placed on funding pluripotent stem cell and progenitor cell research that cannot, or is unlikely to, receive timely or sufficient federal funding, unencumbered by limitations that would impede the research. In this regard, other research categories funded by the National Institute of Health shall not be funded by the Institute." (Source: The California Stem Cell Research and Cures Act)
  13. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.05 Public and Financial Accountability Standards
    (d) Public Meeting Laws
    (3) The ICOC may conduct closed sessions as permitted by the Bagley-Keene Open Meeting Act, Government Code section 11126.  In addition, the ICOC may conduct closed sessions when it meets to consider or discuss:
    (B) Matters involving confidential intellectual property or work product, whether patentable or not, including, but not limited to, any formula, plan, pattern, process, tool, mechanism, compound, procedure, production data, or compilation of information, which is not patented, which is known only to certain individuals who are using it to fabricate, produce, or compound an article of trade or a service having commercial value and which gives its user an opportunity to obtain a business advantage over competitors who do not know it or use it.
  14. "...human oocytes must be harvested from superovulated volunteers, who are reimbursed for their participation. Add to this the complexity of the clinical procedure, and the cost of a human oocyte is [approximately] $1,000-2,000 in the U.S. Thus, to generate a set of customized ntES (nuclear transfer embryonic stem) cell lines for an individual, the budget for the human oocyte material alone would be [approximately] $100,000-200,000. This is a prohibitively high sum that will impede the widespread application of this technology in its present form."
    Mombaerts P. "Therapeutic cloning in the mouse." 2003. Proceedings of the National Academy of Science 100:11924-5.
  15. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.06 Medical and Scientific Accountability Standards
    (1) Informed Consent Standards for obtaining the informed consent of research donors, patients, or participants, which initially shall be generally based on the standards in place on January 1, 2003, for all research funded by the National Institutes of Health, with modifications to adapt to the mission and objectives of the Institute. (Source: The California Stem Cell Research and Cures Act)
  16. ARTICLE 1. California Stem Cell Research and Cures Act
    125281.13    Appropriation and Allocation of Funding.
    (3) In any single year any new research funding to any single grantee for any program year is limited to no more than two percent of the total bond authorization under this Chapter.  This limitation shall be considered separately for each new proposal without aggregating any prior year approvals that may fund research activities. This requirement shall be determinative, unless 65 percent of a quorum of the ICOC approves a higher limit for that grantee.

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Last Modified September 1, 2004

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