Assessment of Proposition 71
Assessment of the California Stem Cell Research and Cures Act
Center for Genetics and Society 
September 15, 2004
Revisions of September 22, 2004
The "California Stem Cell Research and Cures Act" appears on the November 2004 ballot as Proposition 71. If passed, it would:
- Authorize the state to issue $3 billion in General Obligation bonds over 10 years to support stem cell research.
- Establish a "California Institute for Regenerative Medicine" to disburse and oversee use of these funds.
- Amend the state constitution to create a "constitutional right to conduct stem cell research."
According to California's Legislative Analyst, Proposition 71 would result in a "[s]tate cost of about $6 billion over 30 years to pay off both the principal ($3 billion) and interest ($3 billion) on the bonds. Payments averaging about $200 million per year." 
The notes that follow provide background on the measure, a summary assessment of its provisions, and discussion.
In 2001 the Bush administration authorized federal funding for embryonic stem cell research using existing stem cell lines. In 2003 supporters of expanded stem cell research gathered enough signatures to put the "California Stem Cell Research and Cures Act" on the November 2004 ballot.
Stem cell research may indeed point the way to eventual therapies. The Bush administration's policies on stem cells are unnecessarily restrictive and should be liberalized, and federal funding for this research should be increased.
At the same time, stem cell research entails unique and serious risks. Without effective oversight and regulation, clonal embryos created for research could be misappropriated and used to create clonal children. The need for large quantities of women's eggs would create economic pressures on women to become egg providers, and pose risks to their health. The development of stem cell and research cloning techniques could open the door to a new, high-tech eugenics. 
Expanded federal funding and regulation of stem cell research would allow work on the medical applications of stem cells to proceed, while minimizing the chances that these technologies would be used for socially unacceptable ends. Many countries, including Canada and the United Kingdom, have adopted comprehensive national policies that accomplish this.
Given the real power for good or ill that these technologies hold, and given the existence of responsible models for regulatory oversight, the California Stem Cell Research and Cures Initiative is disappointing. It raises a number of concerns:
1. Proposition 71 would amend the California state constitution to include a "right to conduct stem cell research." To our knowledge this is the first instance ever of a particular research topic being proposed as a constitutional right. This sort of "right" is very different from the kinds of fundamental public protections that state constitutions are meant to provide.
2. Proposition 71 would vest control of the $3 billion of public funds in a new "Institute for Regenerative Medicine" controlled by a governing body dominated by people who are part of or close to the institutions and companies that would benefit from the funds.
3. The majority of the members of the Institute's governing body would be representatives of research universities, research institutes, and biotechnology companies. The balance would come from patient advocacy groups. Comparable oversight boards established at the federal level and those in other countries are far more inclusive, and often mandate that members of the public and/or people without potential conflicts of interest be included.
4. Although embryonic stem cell research is one of many types of biomedical research worthy of public funding, it is difficult to justify a state committing $300 million a year for ten years to this single area of research, with no ability to re-evaluate if the research results are not as promising as scientists now hope. By way of contrast, the California Breast Cancer Research Program, now the largest state-sponsored research effort in the nation, has granted scientists an average of $15 million a year since 1994—20 times less than the level that Proposition 71 would provide for stem cell research.
5. Ballot initiatives override other laws and regulations. Proposition 71 specifies that the Institute it would establish would set its own rules, thus exempting it from oversight by elected officials and from a body of state and federal regulations, including those that address informed consent and protection of research subjects. The text of the initiative affirms these exemptions, stating, for example, that "the Institute will develop its own scientific and medical standards to carry out the specific controls and intent of the Act, notwithstanding…any other current or future state laws or regulations dealing with the study and research of pluripotent stem cells and/or progenitor cells." 
6. Proposition 71 endorses and prioritizes somatic cell nuclear transfer, or research cloning, but would provide no meaningful oversight and control of this work. The unregulated production of clonal embryos would obviously increase the likelihood of their being used for reproductive purposes. Research cloning also raises concerns about risks to and economic pressures on egg providers, especially among low-income women domestically and internationally.
7. Proposition 71's appeal is based in large part on its promise of likely treatments and cures for a wide range of diseases. This prospect generates great hope, but is difficult to evaluate because the research is at a very early stage.  Key scientific backers of the initiative concede that much basic research remains to be done, and that treatments will probably take many years to develop.  This casts doubt on the backers' projections that royalties on discoveries or savings on health care costs will repay the public outlay. In addition, observers within and outside the biotechnology field have expressed doubts that the scenario for medical therapies being presented as most compelling—that is, individually tailored treatments based on research cloning and stem cells—could ever be affordable except by the wealthiest patients. 
In sum, Proposition 71 grants control over a huge allocation of public funds for controversial research to a particular set of interested parties insulated from public accountability. While we believe that appropriately regulated embryonic stem cell research should be supported, a close analysis of Proposition 71 raises an array of concerns.
Discussion of these and additional concerns
1. Budget and Fiscal Concerns
- Proposition 71 authorizes the sale of $3 billion in tax-supported bonds,  amounting to $6 billion once the interest and principal are fully paid, costing an average of $200 million per year. By law, California's taxpayers are responsible for paying this type of debt out of the state's General Fund.
- Proposition 71 provides no ability to reallocate funds should more promising lines of research for therapies and cures, other than stem cells, arise.
- According to the financial analysis prepared for Proposition 71's proponents, tax revenues from the projected economic activity generated by the research would cover less than $30 million of the average $200 million per year costs of the bonds.  Proponents hope that royalties on patents based on the research will generate additional funds. But by way of comparison, in 2003 the University of California's royalty revenue from its entire portfolio of 900 patented inventions generated only $67 million. 
- Addressing the longer term, the economic analysis prepared by Proposition 71's proponents states that "[a]s an illustrative calculation, if even a 1 percent reduction in total California health care spending could be achieved, the result would be over $1 billion in yearly savings total savings."  But little justification for this claim is offered, and experience suggests otherwise. For the past two decades health care costs have invariably increased, driven in no small part by expensive new therapies. The claim is particularly questionable given the preliminary state of knowledge about the therapeutic potential of embryonic stem cells, which suggests that even if new treatments are developed, any savings in health care spending may take place well after the debt must be repaid. 
- Proposition 71 provides no guarantees that the large sums of public funding it would commit would result in reasonable financial returns to California, rather than benefiting the research institutes and companies themselves.
- Proposition 71 claims to "protect…the California budget" by "postponing general fund payments on the bonds for the first five years."  This financing structure is described by proponents as guaranteeing they are not "crowding out other uses," to which these public moneys could be put.  But in recent years California has repeatedly deferred repayment of its deficit, the size of which has ballooned. Continuing state deficits, combined with political resistance to tax increases, make it very likely that public expenditures, including those for health care and other medical projects, will be cut. Liberal columnist Peter Schrag of the Sacramento Bee calls Proposition 71 an "audacious raid on the treasury." 
2. Exemptions from Current Laws and Regulations
- Ballot initiatives override other state laws and regulations. Proposition 71 affirms that the California Institute for Regenerative Medicine would be exempt from "current or future state laws or regulations dealing with the study and research of pluripotent stem cells and/or progenitor cells." 
- Proposition 71 contains a number of provisions that exempt the Institute and the researchers it funds from existing laws, regulations and guidelines that apply to other areas of biomedical research, including:
3. Governance and Accountability
- Proposition 71 details the selection criteria for members of the "Independent Citizens' Oversight Committee" (ICOC) that will govern the California Institute for Regenerative Medicine. A majority (17 of 29 members, or 59%) is to be drawn from research universities and research institutes defined by criteria given in the Proposition, and from the biotechnology industry. The remaining members of the ICOC are to be selected from prescribed disease advocacy groups, but many of them have close financial ties to biomedical researchers and the biotechnology industry. Even the Institute's "ethics officer" will be appointed by the ICOC from within the staff of the Institute. 
- The ICOC's membership contrasts with that of commissions in the United Kingdom and Canada that oversee stem cell research. Those bodies are required to include a much broader range of professional and constituency backgrounds in their memberships. 
- Proposition 71's selection criteria for the Institute's governing body appears to constrain the appointment of non-interested citizens; to preclude genuinely independent internal or external review, oversight, or controls over grant awards, spending, or research; and to disregard the kinds of protections from conflict of interest that have been established by the most reputable universities, professional associations, and scientific journals.
- Proposition 71 requires that a minimum of 35 percent of the members of any working group join together in order to issue a minority report.  This requirement for an unusually high bar for a dissenting report makes it unlikely that any disagreements will be openly aired and considered.
- Proposition 71 prohibits any legislative amendment to its statutory language until three years after its adoption, and then only when 70 percent of the legislators of both houses pass such amendments and they are then signed by the governor.  As with other initiatives, these requirements virtually prohibit any future changes or amendments.
If Proposition 71 fails to pass, we believe that the federal government should move to establish clear and enforceable regulations for stem cell and other embryo research in the United States, and to provide increased funding for stem cell research. The regulations should be grounded in values of public accountability, precaution, transparency, and health equity.
If Proposition 71 passes, there will be little that state and federal officials can do to ensure accountability or oversight. It will fall to the scientific and medical profession, and to concerned citizens and the press, to find some means of holding the new Institute accountable for its actions.
- The Center for Genetics and Society, https://www.geneticsandsociety.org, is a nonprofit information and public affairs organization working to encourage responsible uses and effective societal governance of the new human genetic and reproductive technologies. CGS works in a context of support for the equitable provision of health technologies domestically and internationally; for women's health and reproductive rights; for the protection of our children; for the rights of the disabled; and for precaution in the use of technologies that could alter the fundamental processes of the natural world. For more information, contact Associate Executive Director Marcy Darnovsky at [ Contact Us ].
- http://www.ss.ca.gov/elections/bp_nov04/prop_71_entire.pdf [PDF]
- The technical connection between embryonic stem cells and inheritable genetic modification has long been acknowledged. For example, John Gearhart, who in 1998 became one of the first scientists to isolate human pluripotent stem cells, wrote that same year, "Reports on the isolation of human pluripotent stem cells will no doubt catch the public eye, and there will be expressions of concern, rekindling the debate on human embryo research. The debate will encompass the source of the cells, human cloning potential, and the possiblities of germ line modification" (italics added). John Gearhart, "New Potential for Human Embryonic Stem Cells," Science (November 6, 1998, Vol. 282, p. 1062).
Also see Mark Frankel and Audrey Chapman, Human Inheritable Genetic Modifications: Assessing Scientific, Ethical, Religious, and Policy Issues, a report by the American Association for the Advancement of Science issued in September, 2000: "Genetically altered 'stem cells' can also be used to create animals with permanent new genetic properties in subsequent generations...Embyronic stem cells…have been isolated not only from mouse embryos but also from a number of other mammals, including humans. They can be grown indefinitely in the laboratory, modified by introduction of foreign genes via standard gene transfer methods, and finally re-introduced into an early embryo in a way that allows them to be incorporated into the tissues of resulting offspring, including the reproductive tissues." (p. 18)
- "California Stem Cell Research and Cures Act," Section 5 at 125290.35(a): "In order to avoid duplication or conflicts in technical standards for scientific and medical research, with alternative state programs, the Institute will develop its own scientific and medical standards to carry out the specific controls and intent of the Act, notwithstanding Health and Safety Code sections 125300 (b), 125320, 125118, 125118.5, 125119, 125119.3 and 125119.5, or any other current or future state laws or regulations dealing with the study and research of pluripotent stem cells and/or progenitor cells, or other Vital Research Opportunities, except Health and Safety Code section 125315. The ICOC, its working committees and its grantees shall be governed solely by the provisions of this Act in the establishment of standards, the award of grants and the conduct of grants awarded pursuant to this Act" (emphasis added).
- See for example, a report issued in 2002 by the National Academy of Sciences: "Because of a misunderstanding of the state of knowledge, there may be an unwarranted impression that widespread clinical application of new therapies is certain and imminent. In fact, stem cell research is in its infancy, and there are substantial gaps in knowledge that pose obstacles to the realization of new therapies from either adult or embryoderived stem cells." Stem Cells and the Future of Regenerative Medicine, page 41 (National Academy Press, 2002). A pre-publication version is available at
- For example, even Irving Weissman, a stem cell biologist at Stanford University and one of Proposition 71's main backers, acknowledges this. He recently told Science, "Every time a public relations sort of person tries to talk about cures, I tell them you can't say that without qualifications. It's just not right." Gretchen Vogel, "California Debates Whether to Become Stem Cell Heavyweight," Science (September 10, 2004).
- For example, writing in the Proceedings of the National Academy of Sciences, Rockefeller University scientist Peter Mombaerts concludes, "This analysis of the limited body of literature raises concerns about the feasibility and relevance of therapeutic cloning, in its current embodiment, for human clinical practice. Nuclear transfer is unlikely to be much more efficient in human than in mouse. Optimistically, 100 human oocytes would be required to generate customized ntES [nuclear transfer embryonic stem] cell lines for a single individual. A crucial difference is that, although 100 mouse oocytes can be obtained from a few superovulated females at a cost of $20, 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 $1,000-2,000 in the U.S. Thus, to generate a set of customized ntES cell lines for an individual, the budget for the human oocyte material alone would be $100,000-200,000. This is a prohibitively high sum that will impede the widespread application of this technology in its present form" (emphasis added). "Therapeutic cloning in the mouse," PNAS | September 30, 2003 | vol. 100 | Suppl. 1 | 11924-11925
- "California Stem Cell Research and Cures Act," Section 5 at 125291.30.
- State Legislative Analyst estimate. http://www.ss.ca.gov/elections/bp_nov04/prop_71_entire.pdf
- Professor Laurence Baker, Stanford University and Bruce Deal, Analysis Group, Inc., Analysis of the Financial Impact on the California State Budget of the Proposed California Institute of Regenerative Medicine, October 27, 2003, page 4: "the subsequent period between years 6 to 14, tax revenues should offset approximately 14 percent of the principal and interest debt service costs."
- "Benefits of Stem Cell Bond Issue in Question," Michael Hiltzik, Los Angeles Times (August 23, 2004).
- Baker and Deal, op. cit., page 4.
- See footnote 5.
- Baker and Deal, op. cit., page 3
- This claim was made repeatedly by Robert Klein, the real estate developer who has contributed $1 million to the "Yes on 71" campaign, at the "Stem Cell Action" conference held June 6, 2004 at the University of California, Berkeley.
- Peter Schrag," Stem cells, slick sells and other political soft soap," Sacramento Bee (September 1, 2004).
- See footnote 4.
- "California Stem Cell Research and Cures Act," Section 5 at 125290.35(b)(1): "The ICOC shall establish standards as follows:…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" (emphasis added).
- "California Stem Cell Research and Cures Act," Section 5 at 125290.35(b)(2): "The ICOC shall establish standards as follows:…Standards for the review of research involving human subjects which initially shall be generally based on the Institutional Review Board standards promulgated by the National Institutes of Health and in effect on January 1, 2003, with modifications to adapt to the mission and objectives of the Institute" (emphasis added).
- "California Stem Cell Research and Cures Act," Section 5 at 125290.35(b)(6): "The ICOC shall establish standards as follows:…Standards setting a limit on the time during which cells may be extracted from blastocysts, which shall initially be 8 to 12 days after cell division begins, not counting any time during which the blastocysts and/or cells have been stored frozen" (emphasis added).
- "California Stem Cell Research and Cures Act," Section 5 at 125290.50(e)(2): "The ICOC shall appoint an ethics officer from among the staff of the Institute."
- From the website of the UK's Human Fertilization and Embryology Authority, which oversees embryonic stem cell research in the UK:"To ensure that the HFEA has an objective and independent view, the HFE Act requires that the Chair, Deputy Chair and at least half of the HFEA Members are neither doctors nor scientists involved in human embryo research or providing infertility treatment. HFEA Members bring to the HFEA a broad range of expertise, from medicine to law and religion to philosophy." http://www.hfea.gov.uk/AboutHFEA/FAQs#1450
- "California Stem Cell Research and Cures Act," Section 5 at 125290.50(d): "If 35 percent of the members of any working group join together in a minority position, a minority report may be submitted to the ICOC."
- "California Stem Cell Research and Cures Act," Section 8: "The statutory provisions of this measure, except the bond provisions, may be amended to enhance the ability of the Institute to further the purposes of the grant and loan programs created by the measure, by a bill introduced and passed no earlier than the third full calendar year following adoption, by seventy percent of the membership of both houses of the Legislature and signed by the Governor."