Hard Questions on the Public Funding of Science

February 11, 2007

We should never be surprised when libertarians weigh in with radical questioning of the status quo. It is, as it were, their function. And the stronger the status quo, the more valuable the questioning.

So the op-ed in today’s NY Times (regional opinions) on public funding of science and technology, by Sigrid Fry-Revere of the Cato Institute, is to be welcomed. She points out, among other things, that most medical research in the US is not funded by the NIH, and lauds the market as the place where funding will be found for worthy ideas. Her special focus is the question of public funding for stem cell research, and she is critical of California’s multi-billion dollar effort and supportive of states that merely ensure it is legal so private funders can come up with the cash.

This makes a certain amount of sense, although the example she picks is a poor one. While some private institutions have been funding embryonic stem cell research, there is so little funding from for-profit corporations that I could state in the San Francisco Chronicle (a week or two before the vote on Prop. 71 in 2004) that the market had valued this research at close to $0 – without fear of my being proved wrong.

To that extent, Ms. Fry-Revere has opened a somewhat different debate about the role of hype in the getting of public funding (aka, in some cases, corporate welfare) as a means of transferring risk to the public purse – without, of course, the transfer of corresponding benefit (thanks to Bayh-Dole et al.). This is a debate we need to have. The post-War vision of Vannevar Bush that set out the model in which, as we might say, the federal government operates as the venture capitalist of last resort in funding long-term research projects, is in need of review.

Even where political consensus can be reached, government-financed research is enormously wasteful and bureaucratic. In California, once bonds are issued to raise the promised money, residents will end up paying an additional $3 billion in taxes to cover interest and related costs over three decades, when private research could have proceeded with no debt at all. Both the proposals in New York and New Jersey would also entail bond issues with huge interest burdens.

At least one state has gotten it right. During the last election, Missouri voters passed a constitutional amendment protecting the right to pursue all forms of stem cell research allowed under federal law, creating a haven for advanced laboratories. There was no state financing included. Within days, the Stowers Institute for Medical Research, which had raised $2 billion, put to work an international team of stem cell researchers it had assembled in anticipation of the amendment’s passage.

Medical research and development do not grind to a halt when government declines to support them. As a former Health and Human Services secretary, Tommy Thompson, said at a meeting of biotech industry leaders in December, 80 percent of all of the world’s medical research is done in the United States, in spite of more generous government subsidies in some countries.

According to The Journal of the American Medical Association, the amount of money for biomedical research in the United States increased to $94.3 billion in 2003 from $37.1 billion in 1994, and only 28 percent of that money came from the National Institutes of Health. Furthermore, data reported by the journal and by the National Science Foundation indicate that in areas where public financing remained the same or declined, the private sector stepped in and increased its share of research spending.

That’s exactly what happened 30 years ago, when the federal government – also for ethical reasons – refused to financially support in vitro fertilization research. The research went forward privately, and today, reproductive technologies represent a $6-billion-a-year industry in the United States alone.

Whether or not someone supports embryonic stem cell research from an ethical perspective, he should oppose subsidizing research that could potentially bring billions in profits to the biotech industry. There is no reason that private companies can’t invest in their own research and development; they do it all the time, though one can understand their desire to have taxpayers foot the bill.

If the federal government must be involved, it shouldn’t insulate companies from the financial risks of developing new therapies. It should do what Missouri did: promise to stay out of the way and let research proceed regardless of political whims.

Government financing, after all, comes and goes with the politics of those in power. Private money, by contrast, comes and goes depending on the progress of the research and the likelihood of success.

Scientists should spend more time seeking private assistance and less time lobbying for government support. If there is a need, and if there is a way, the private sector will do it and do it much more efficiently than government would.

Stem cell research holds more medical promise than any scientific breakthrough since Francis Crick and James Watson discovered the structure of DNA, and it should be explored with all the enthusiasm and ingenuity the scientific community can muster.