Talking Sense: The Economics Of Stem Cells
by NOELLE NICOLLS
khalilanicolls@gmail.com
IMAGINE living in a world where a drug-free fix for HIV/AIDS existed, or a cure for cancer, blindness, Parkinson’s, diabetes, heart disease, even Lou Gehrig’s disease. Advocates of stem cell research are driven by this vision. They say the promise of stem cell therapy is the birth of a new medical paradigm more revolutionary than the advent of the internet.
Some
even believe stem cell therapy is the key to immortality. As a result,
those pursuing medical breakthroughs in the field are often driven by an
age old obsession to find the magical elixir of life.
However,
it is not just anti-aging obsessives who support stem cell research.
Legitimate, professional medical researchers have sound reasons to be
optimistic about the positive impact stem cell treatments could have on
public health.
There
are also investors who want to cash in on new medical breakthroughs.
There are also patients suffering from incurable diseases or chronic
disorders praying for stem cell therapy to be their miracle cure.
Debate
on The Bahamas’ potential foray into the world of stem cell research
and regenerative medicine has touched on some of the moral and ethical
issues, but there has been virtually no debate of the economics of stem
cell research. The government’s economic claims have gone unchallenged.
For
the most part conversation has been hijacked by talk about a
millionaire fashion designer who is very interested in the use of stem
cells for anti-aging treatments and happens to be an investor in the
Bahamas. When debate resumes in the House of Assembly next week, I hope
it will turn to more substantive issues.
Despite
all of the reasons that make stem cell research an important area of
medical study, it remains controversial. ‘Frankenstein’ scenarios aside
(as stem cells could unlock the key to human cloning) the primary reason
for controversy is concern over the harvesting of human embryonic stem
cells, which are highly favoured among all types of stem cells.
Embryonic
stem cells are harvested from human embryos when they are only days
old. These embryos are usually destroyed as the cells are extracted.
Most religious institutions have strong moral objections to the
harvesting of embryonic stem cells, arguing for the sanctity of life,
even at the embryonic stage. However, many support the use of adult stem
cells and amniotic stem cells, which come from umbilical cord tissue.
In
countries that allow the harvesting of embryonic stem cells - Finland,
France, Greece, the Netherlands, Sweden, Italy and the United Kingdom -
these cells are obtained from surplus embryos at in vitro fertilisation
(IVF) clinics.
Last
year, the government’s task force took a stand against the use of
controversial embryonic stem cells in the Bahamas, while sanctioning the
use of adult and amniotic stem cells.
Although
the committee first reported its findings late last year, debate
reignited when the government tabled a Stem Cell Research and Therapy
Bill along with draft regulations in the House of Assembly in April.
The
new law will create a regulatory framework covering all aspects of stem
cell research, including clinical and pre-clinical research, the use of
non-human animal research subjects; and therapeutic uses in people.
The
opposition’s main argument against supporting stem cell research in the
Bahamas is concern over the proper enforcement of laws governing the
industry. In our country of lax government regulation, the concern is
valid; perhaps not sufficient to sabotage the government’s efforts, but
valid nonetheless, given the high risks posed by the industry.
It
is certainly plausible that one of the reasons the Bahamas is perceived
as a favourable destination for stem cell research, when it does not
have competitive infrastructure to supporting an industry of medical
research, is its lax regulatory environment. It is certainly plausible
that unscrupulous researchers, investors or medical practitioners could
prey on the Bahamas while advancing their own personal agendas.
We
all know a little too well that having a law on the books in the
Bahamas is not the same as having a strong regulatory environment with
robust systems of oversight. But the illusion of a legal framework could
provide the prefect cover for unethical players.
The economics of medical research
If
we put concerns about government oversight aside for the moment, and
questions of morality and ethics; if we take the government at its word
that its interest in stem cell research is not some kind of political
payback, or at least a political nod, to Mr Nygard for alleged political
contributions, there is still one glaring issue that has gone
unchallenged.
It is the economics of medical research and the economics of stem cell medicine.
The
Stem Cell Research Bill has been called “revolutionary”. It has been
portrayed as having the power to “catapult the health sector” in the
Bahamas and revolutionise medicine. When Prime Minister Perry Christie
tabled the bill, he said stem cell projects “promise to attract leading
scientists” who will relocate to the Bahamas and “conduct research,
establish institutions and centres of excellence”. Mr Christie said many
young Bahamian scientists and physicians will gain new skills and new
opportunities. That the industry will generate new jobs at many levels,
and will fuel accelerated growth in the economy. The industry will have
spillover effects on all areas in the economy, including the tourism
industry.
“Our
young Bahamian scientists and doctors will be able to establish
thriving professional lives right here in The Bahamas. They will then be
able to contribute back to our community in the years to come, as well
as to the international community,” said Mr Christie.
The
government has boasted that stem cell research could inject more than
$100 million into the Bahamian economy annually. Peter Nygard has touted
the idea that a stem cell centre in the Bahamas could raise to the
status of the Mayo Clinic in Rochester, which caters to thousands of
people around the world and employs some 50,000 people.
In
the context of a stagnant economy, these words sound like to me a
Junkanoo orchestra: sweet to the ears. Rhetorically, it is easy to
connect the dots between stem cell research, regenerative medicine,
medical tourism and economic development for the Bahamian people. At the
rhetorical level, the relationship between these four elements
represents a magic formula for pandering to populist sentiment.
Who
wouldn’t want to be associated with a medical breakthrough that could
cure all of the world’s ills? Who doesn’t like the sound of an economic
stimulus that requires no investment on the part of the government, only
the simple passage of a new bill?
In reality, sweet words do not make for sound economic policy.
There
are deep, uncharted chasms between each step on the trajectory from
private investment in stem cell research to economic profit for the
Bahamas as a whole.
I
am bewildered by the level of hype being generated around the issue,
when the evidence does not seem to support many of claims being made,
and our national needs do not justify them.
Let us unpack the economic issues first.
In
the United States, studies show medical research has a positive
economic impact. However, much of that success is attributed to a
private/public sector funding partnership. Government funding accounts
for approximately 36% of total research funding, according to some
estimates. In 2003, for example, the National Institute of Health (NIH),
the largest federal agency of medical research, was responsible for 28%
(about US$26.4 billion) of the total biomedical research funding spent
annually in the US. In 2009, the NIH injected $15.6 billion research
dollars into medical schools and teaching hospitals alone. In places
where medical research is highly successful from an economic impact
point of view, there is a large sum of government money being spent.
Unless I missed it, I have not heard the Bahamian government talking
about investing in stem cell research or regenerative medicine, only
legislating it.
The
Association of American Medical Colleges (AAMC) published a 2009
report, summarising the economic and employment impact from federal and
state funded research in the 25 states (plus the District of Colombia).
Number one on the list: California (population 38 million). The total
direct and indirect economic impact of the medical research industry for
California from the AAMC network was $5,360 million (as in $5.3
billion). The employment impact on the other hand was only 35,734.
Number 25 on the list was Iowa. With a population of 3 million people,
the economic impact on Iowa was $400 million; while the employment
impact was 2,719 jobs.
If
our government is projecting a $100 million industry for the Bahamas
(with a population of 0.4 million), where does that really place us in
the grand scheme of things? $100 million sounds like a large number at
first glance, but further analysis is required to assess its true value.
Does $100 million reflect a projection of total spending, total
revenue, total tax revenue, all of the above? And how many permanent
jobs would an industry of this size actually produce? Is the $100
million projection speaking specifically to stem cell research or also
stem cell therapy, because research and clinical treatment are two
different things. Stem cell research is still in its infancy, which
means stem cell treatment is still in a state of trial; it is not
practiced widely at the clinical level. So I ask again, what exactly is
the economic model?
In
California, $1.5 billion in committed research grants to the California
Institute for Regenerative Medicine is generating $286 million in new
tax revenue for the state and local governments through 2014, according
to a study conducted by Emeryville-based global consulting firm Berkley
Research Group. CIRM was established by the state government in 2004
with the passage of the California Stem Cell Research and Cures Act.
It
released an independently produced economic impact study measuring the
stem cell agency’s financial impact on the state. The study found that
the same grants will generate an estimated $530 million in tax revenue
for the federal government.
There
are models of success out there, but it goes without saying,
California’s success, for example, is not a blueprint for the Bahamas.
The markets are completely different. For one, California has the
infrastructure to support a medical research industry: legal framework,
sources of funding, technical expertise, supply chain, demand for
services. Without the infrastructure or “risk-sharing partnerships”, any
high risk industry will likely operate at 100 times the cost with 100
times the liability.
In
the Bahamas, a few private ventures that represent isolated pockets in a
global industry (no matter how world class they may be) will not
automatically propel the Bahamas into global dominance. We should have
learned that lesson from the tourism industry.
Bahamas Heart Centre
As
a case study, let us look at the Bahamas Heart Centre (BHC), which
entered the record books last year by performing the Bahamas’ first
cardiac stem cell implantation in conjunction with Advanced Innovative
Medicine Inc of Orlando, Florida. A very advanced team of doctors
treated a 62-year-old cardiac patient who had advanced coronary artery
disease by implanting some of the patient’s own stem cells into his
heart. The patient, a ‘medical tourist’, had already undergone by-pass
surgery on a number of occasions, after his first heart attack in 1989.
The stem cell treatment was considered a “last option” before
considering a heart transplant. He was eligible for this experimental
treatment after meeting “a very strict set of criteria” to qualify,
based on rigid clinical research trial protocols.
I
congratulate the Bahamas Heart Centre on this successful treatment, and
should they be able to save more lives with their stem cell therapy I
support them doing so. However, I would be interested in speaking with
the BHC’s chief financial officer. I highly doubt the medical facility
has plans to change its business model to invest everything it has in
stem cell treatment.
For
not-so-sinister business reasons, offshore clinical trials are being
promoted in places like China by leading centres of stem cell research
for the same reasons corporate America outsources many of its business
processes. In fact, China has picked up traction in the stem cell
research race. So perhaps the Bahamas could become a hub for offshore
clinical trials if it could help businesses lower their development
costs. In this light, the BHC’s work can also be seen as a success.
Nonetheless,
stem cell treatment for the foreseeable future is likely to be a small
line item in the centre’s over revenue model, I would suggest.
Big Pharma
It
might be the star player in the BHC’s research and development or
clinical trials department, but it is not likely to be the foundation of
their business model. Simply put, “the stem cell and regenerative
medicine market is still in its commercial infancy” despite the scope of
opportunities that exist. This, according to the Stem Cell Network
(SCN), a Canadian not-for-profit corporation that funds applied stem
cell research and facilitates collaboration between universities,
industry, government and non-governmental organisation.
According to the SCN, Big Pharma is not even on board with stem cell medicine, because the economics are too uncertain.
“Cell-based
biologic products represent both new technology and a business model
that remains largely unknown, but is certainly different from
traditional drug or device development. Drug and device companies are
proceeding cautiously, and waiting to see who emerges from the 100 or
more stem cell companies now operating around the world, most of which
tend to lack the critical mass and the clinical, regulatory and
manufacturing capabilities to establish a sustainable product portfolio
and technology pipeline,” states SCN.
Former
Fortune senior editor Jeffrey M. O’Brien publish a 2012 article
investigating the stem cell business. His research showed that “shares
in almost any public stem cell company can be had for less than $1. One
of the highest fliers, Stem Cells Inc. (STEM), reached $171 a share once
upon a time. In mid-September it was trading at 95�.”
The
first-ever clinical trial for embryonic-stem-cell therapy approved by
the Federal Drug Administration (FDA) in the United States was conducted
by Geron, a leading Silicon Valley biotech company. Geron injected four
spinal-cord patients with its stem-cell therapy. The treatment had
previous success enabling paraplegic rats to walk. The company shut down
its clinical stem cell trial months after it began, blaming difficult
economic conditions. Reports indicated “the treatment did not show the
immediate promise many had hoped”. The company, however, said it wanted
to concentrate resources on two new and promising cancer drugs”.
Advanced
Cell Technology (ACTC), another biotech company, picked up the slack.
Its chief scientist Robert Lanza has made substantial progress in
treating a type of blindness (macular degeneration), a condition that
affects tens of millions of people, where spinal-cord injuries only
represent a market of tens of thousands. ACTC has not figured out the
economic model either. One report said ACT “has been scratching and
clawing to survive for years”, dealing with a range of problems from
raising venture funding to settling patent-infringement lawsuits.
When
ACTC received FDA approval to commence clinical trials in 2010, it had
already “spent upwards of $100 million on research”, according to
reports.
No
matter which way you spin it, the economics do not seem to be there -
at the moment. For the Bahamas, stem cell medicine could be a hyped-up
experiment with an empty payoff or it could be a forward thinking move
by a bold government. Either way, it is a matter that could have been
handled with much less fanfare and controversy.
Dangers of distraction
Debate
about the stem cell bill has become a colossal national distraction,
not because discussing stem cell medicine itself is a waste of time; but
its advocates seem incapable of presenting sober arguments that tell
the full picture; and they seem motivated by the hype. Debate has
degraded into political squabbling, dreams of immortality and
‘Frankenstein’ science.
There
is no doubt that advanced breakthroughs in clinical stem cell therapy
could transform the Bahamas and the world. There is hardly anything to
debate when it comes to the medical possibilities; they are bewildering
and awe-inspiring.
But
what is most relevant to the debate at this time is not the dream of a
brave new world where incurable diseases are as obsolete as floppy
disks, it is the notion that stem cell research and regenerative
medicine can provide a viable economic stimulus for the Bahamas. It
would be good if our leaders could sit across the aisle like adults and
debate serious issues with competence, restraint and intellectual
honesty.
As
if the economics of stem cell medicine were not enough to fully explore
the matter, there is also the matter of establishing our national
health priorities. Next time, I plan to look at how our vigorous push
for stem cell medicine contends with our national health priorities and
the treatment opportunities that will open up for Bahamians in the near
and long-term future.
I
will also look at the government’s obsession with “revolutionary”
projects that never live up to their promise. Remember the former
government’s telemedicine project, which was also supposed to be a
revolutionary technology that would transform health care in the Bahamas
and put us on the map?
I
support stem cell research in theory, and if we are to venture into the
area (as private companies have already done in the Bahamas), there
should be government regulation. But I do not support stem cell research
becoming a national distraction. When debate resumes in the House of
Assembly next week, I caution the government, as the old people say,
when you lie with dogs you catch fleas. My advice to the government is
to approach the conclusion of this stem cell debate with sobriety and
restraint. Not everyone in the Bahamas deals in dreams. Some of us deal
in fact.
Noelle
Nicolls is the Tribune’s Features Editor. She is also a travel writer,
women’s activist and entrepreneur. Follow her on Twitter @noelle_elleon.
For questions or comments, email khalilanicolls@gmail.com
August 01, 2013
