$6 billion from the Golden State
$1.1 billion in royalties?
40 new clinical trials projected
"Are taxpayers getting a good deal?" That's the question that was raised nationally this week by the New York Times in connection with federally funded research dealing with life-saving treatments.
The same question can be raised concerning the roughly $6 billion, including interest, that California is spending -- unsuccessfully so far -- to generate a stem cell therapy that can be widely used.
In the case of the Times, the article by Matt Richtel and Andrew Pollack dealt with cancer immunotherapies and the soaring business and medical enthusiasm for the treatments. The two writers started their lengthy piece with the example of Kite Pharma, which they said "has struck gold." The company's stock has soared from $17 a share two years ago to about $50.
The Times wrote that excitement over the treatment speaks "volumes about the value of Kite's main scientific partner: the United States government."
California too is partnering with researchers and companies to develop blockbuster treatments, including immunotherapies. It has awarded more than $2 billion for research into possible treatments ranging from arthritis to extremely rare diseases that affect only a few thousand people.
The state is financing its research via the California Institute for Regenerative Medicine (CIRM), which is more informally known as the state stem cell agency. The agency has only $692 million left before its money for new awards runs out in 2020.
CIRM is funded by $3 billion that state borrows (bonds). The interest on the bonds roughly doubles the cost of the research compared to pay-as-you-go financing, which the federal government basically relies on. Like the federal government, CIRM depends on the private sector to actually bring potential therapies into widespread use.
The stem cell agency was created by voters in 2004 when they approved a ballot initiative. The campaign raised rosy expectations that cures were right around corner for afflictions that reached into nearly 50 percent of California families. And supporters also said that the state could expect as much as $1.1 billion in royalties. But royalties and commercial therapies have yet to appear.
The Times piece laid out arguments concerning federal research that apply equally to California's research effort, which is unprecedented in state history and which operates outside of the control of the governor and the legislature. The Times piece said,
"Defenders say that the (public/private) partnership will likely bring a lifesaving treatment to patients, something the government cannot really do by itself, and that that is what matters most.
"Critics say that taxpayers will end up paying twice for the same drug — once to support its development and a second time to buy it — while the company reaps the financial benefit."
“If this was not a government-funded cancer treatment — if it was for a new solar technology, for example — it would be scandalous to think that some private investors are reaping massive profits off a taxpayer-funded invention,” said James Love, director of Knowledge Ecology International, an advocacy group concerned with access to medicines."