Innovation in biomedicine: can stem cell research lead the way to affordability?

In November 2004, California voters approved a ten-year, US$3 billion stem cell research program to pursue cures for diabetes, Parkinson disease, spinal cord injuries, and other chronic conditions. Campaign organizers also claimed the state would receive royalties from new therapies, economic development in the form of jobs and taxes, and access to cheaper medicines [1]. Once the initiative passed, its proponents sought to scale back unrealistic voter expectations about rapid advances in the field—recent revelations of scientific fraud involving a prominent stem cell scientist will undoubtedly have that effect. Yet the goal that stem cell therapies resulting from the initiative will be made affordable for state residents remains in place. Toward that end, some California legislators are focusing on how the newly created California Institute for Regenerative Medicine (CIRM) should handle intellectual property (IP) generated by its grants. In August 2005, at CIRM's request, the state-funded California Council on Science and Technology (CCST) recommended that CIRM adopt with minor variations the federal Bayh–Dole system [2]. The 1980 Bayh–Dole Act gives research institutions the primary responsibility for maximizing the health- and economic-development benefits from government research funding. It encourages researchers or their institutions to patent inventions generated under government grants and transfer the technology to private firms. While the act gives the federal government the power to influence the affordability of the resulting technologies, it has never used this authority. The CCST report, embracing that stance, discouraged efforts to recoup revenue through high licensing fees and postponed a discussion of preferential pricing for state residents [3]. The report suggested such approaches would inevitably hinder the development of the public–private collaborations needed to bring new therapies to market. While regional governments frequently fund biomedical research in Europe, California is the first state in the United States to embark on a large-scale program. The size of its commitment suggests that the state will be a major patron of stem cell research for years to come. This gives California a unique opportunity to create a climate that will not only be hospitable to innovation but also simultaneously deliver affordable medicine. The state government can do this by redefining how government, medical researchers, and the private sector interact. In doing so, it could serve as a model for reforming the US and global biomedical innovation systems. Change is necessary for two reasons. First, under the current system, new technologies, no matter how marginally effective, come to market at the highest prices. These advancing medical technologies are a major cause of rapidly rising health-care spending throughout the industrial world. Second, biomedical innovation in the US, long considered the global leader, has slowed markedly in the past half decade. Despite escalating research spending in the public and private sectors, the number of new drugs and biologics recently approved by the US Food and Drug Administration (FDA) has fallen below previous eras (Figures 1 and ​and2).2). And those new therapies that have been approved tend to have less significance than medical advances of the past. While the popular press excitedly reports that breakthroughs in nanomedicine, targeted therapeutics, and genomic medicine are just around the corner, applications to launch clinical trials have fallen well below the levels of the early 1990s (Figure 3). Something beyond the usual culprit—higher failure rates—is at work [4]. Figure 1 Applications for New Drug Approvals Figure 2 New Drug Approvals at the FDA Figure 3 Applications to Begin Human Clinical Trials