In a post last week, I was critical of the Connecticut Stem Cell Program, a 4-year-old fund for research grants that was cut out of the current budget proposal.  My main criticism was that $10 million/year and an ad-hoc oversight board are not sufficient to justify the praise and hopes directed towards the program by state politicians–such programs are a distraction from the task of rebuilding the Connecticut economy.  The larger issue, however, is whether states competing against each other to offer research incentives is really the best use of tax revenue in general.  A new essay in the Chronicle of Higher Education argues that investing in technology research is a risky game for states, and that the federal government should step in and increase research funding in their place.

The article, written by three professors from the University of Michigan, describes the declining state-funding of research universities, and the need to return to a more centralized model for expanding education and innovation.  States, originally the beneficiaries of the federal land used to build the great “land-grant” universities (including UConn and the Connecticut Agricultural Experiment Station), are currently slashing costs like student aid and capital investments.

Why is state funding for higher education disappearing?  The shocking budgetary situation in most states has resulted in cost-cutting throughout public programs.  The authors point out, however, that local investment in research is also inherently risky:

The model of state-based support of graduate training made sense when university expertise was closely tied to local natural-resource bases like agriculture, manufacturing, and mining. But today’s university expertise has implications far beyond state boundaries. Highly trained and skilled labor has become more mobile and innovation more globally distributed. Many of the benefits from graduate training—like the benefits of research—are public goods that provide only limited returns to the states in which they are located. The bulk of the benefits is realized beyond state boundaries.

Any state politician claiming that high-tech research incentives will resurrect our local economy is in denial about the risks of these investments.  It takes much more imagination to devise state programs to improve less tangible things like infrastructure and lifestyle–investments that will stick around and attract the high-earning employers and employees that the Nutmeg State so desperately wants.

I’ve previously raised the possibility that, in its quest for economic revitalization, state governments are not suited to pick and choose among emergent industries to invest in, much less make the risky decision to invest in unproven technologies. Now I wonder whether some taxpayer-funded initiatives to attract high-tech jobs to Connecticut amount to anything more than glossy-sounding buzz-words thrown out by policymakers who have very little idea how to get the lagging Nutmeg State back on track.

Exhibit A for exciting-to-talk-about but dubiously significant state job-growth efforts is the Connecticut Stem Cell Research Program. The state initiative came up on Tuesday, in a discussion of the state job situation on Where We Live, WNPR’s daily Connecticut news program (disclaimer: my wife, Libby, is a producer for the show). Stem-cell jobs were one of the few items that the state politicians and economist on the show were particularly upbeat about.   Is the stem-cell program really something worthy of so much hope and attention?

First of all, no one is jumping out of their seats to say anything bad about an emergent scientific field that has enormous potential to cure many diseases. (Though I must interject that biomedicine has a history of “magic bullets” that didn’t really pan out; real advance comes from broad efforts combining many independent–and often iconoclastic–researchers and disciplines.)

In the midst of a depressing discussion of Connecticut’s daunting problems (regulatory instability, high energy costs, poor infrastructure, a 20-year slide in employment), one of the show’s guests, UConn economist Fred Carstensen, brought up the stem-cell initiative, in part because its continued funding is in question in the new, downsized state budget.  He described it as “phenomenally successful…we’ve had some extraordinarily important breakthroughs.”  He cites the fact that “we literally have had world-class researchers moving to Connecticut and looking to move to Connecticut because of our stem-cell initiative”.

Stem-cells funding may have brought a few researchers and their labs to Connecticut, and encouraged good ones that are already here to apply for more funding and, perhaps, hire a few new postdocs or technicians to perform research.  But Yale already has over 270 different labs working on biomedical science.  In 2008, it received $300 million from the NIH alone, not counting that from other major funders like the Howard Hughes Medical Institute.  UConn took in over $70 million from the NIH last year.  The total outlay of the Connecticut Stem Cell Initiative?  Ten million dollars per year.  Denise Merrill, the majority leader of the state house of representatives said that with stem cells, the state brings benefits “for a relatively small amount of money”.  The characterization of price is true, but what benefits do $10 million bring when spent on stem-cells instead of, say, transportation or inner-city education?

Proponents argue that stem-cells will become a centerpiece of some future, high-tech Connecticut economy.  However, a brief history of turbulent stem-cell politics brings this aspiration into doubt.  Connecticut began the stem-cell initiative in 2005, hoping to get a corner on the research after the Bush Administration had announced tight restrictions.  However, the Nutmeg State was not alone.  Our neighbors in Massachusetts, which considerably outranks Connecticut in the biotech sector, got in on the act, pledging $100 million over 10 years.  California voters approved a $6 billion state stem-cell initiative; unsurprisingly, perhaps, this program has been criticized for its enormous cost and lax oversight.

The problem with these programs is that they represent frenzied competitive maneuvering between states, but with dubious outcomes, especially for those that, like Connecticut, didn’t put that much on the table in the first place.  In fact, our tax dollars are already hard at work on biomedical research in a very serious way, through the NIH and other, federal, entities.  Compared with our centralized national programs, state science initiatives, on the other hand, are heavy with ambition but starved for good organization and sufficient money to fund more than a few research goals.

In hindsight, the stem-cell money appears to have been thrown at a good, celebrity-supported cause, but with uncertain prospects for Connecticut.  We absolutely need research investment to create future jobs.  I say “future”, because the short-term expense of research is not only in personnel, but in equipment, expendables, and energy, which might provide jobs where they are manufactured or generated, but that is unlikely to be Connecticut.  Why should we bet that Connecticut research dollars will stay, as future employment, in Connecticut if the research might be spun-off more efficiently in one of the big biotech regions already humming with infrastructure?

At its best we can hope that a bit of good science was supported by the CT stem-cell initiative.    At worst, the state stem-cell program is a rather pathetic talking point for politicians without the nerve to tell their constituents how poorly their state competes for jobs compared to other regions.  If policymakers want to use the state budget resources to engineer our way into the future, they should focus on the tasks that state government does best.  Oh, hold on, perhaps the Connecticut should figure out how to do the things it should be doing best first, instead of waiting for a small investment in stem cells to grow into a fresh, economic heart-transplant for the state.

• Update: John Dankosky and the folks over at Where We Live put up this post on their blog that summarizes the main discussion points in Tuesday’s “jobs” show.   The show included an interview with an official from Virginia, which leads the 37 states doing a better job than Connecticut in growing their economies, according to one survey.

Many thanks to the Hartford Courant, our nation’s oldest continuous newspaper, for keeping up with important issues in the local tech industry. My op-ed, reviewing the perils of biotech aspirations in the Nutmeg State, appears in today’s edition.

For a preview, this quote was highlighted in the print version:

We should be wary when an industry says that needs development incentives and protections from market pressures to be viable.

In the midst of the healthcare debate, the skyrocketing cost of care–including the tens of thousands now spent on some medicines–is a constant target for complaints and solutions.  Responding to criticism of the particularly high cost of “biologic”, or biotech-based, drugs, a recent op-ed in the Hartford Courant insists that encouraging the manufacture of cheaper, generic versions of drugs is a dead end, short-sighted attempt to cut costs. According to this view, the cost of biologics justifies lengthy “data exclusivity” periods, during which time the  clinical test data generated by the original drug maker cannot be reused by generic companies:

For investors to risk the $1.4 billion it takes to bring a new medicine from concept to approved product, inventor companies must have at least 12 years of data exclusivity. Anything short of this will shortchange investors, who won’t be able to recoup their biotech investments, and will mean an end to investment in biotech.

The author of this opinion piece, Paul Pescatello, is president and CEO of Connecticut United for Research Excellence, an industry group and cheerleader for biotech in the Nutmeg State.  It’s certainly not surprising to hear an industry representative lobby against unfavorable regulations.  However, a visit to the CURE website will reveal that among its more high-profile members are the major research universities in Connecticut, both private (Yale, Trinity) and public (UConn, University of New Haven).  A number of towns (Branford, West Haven, Trumbull) and the state Department of Public Health are also on the rolls.

I understand the hopes, shared alike by local universities and municipalities, that biotech will reenergize Connecticut’s sagging industry and employment landscape.  The actual realization of a wealthy, well-educated workforce and lucrative industry may someday redeem the subsidies and other favors made to incentivize the growth of local biotech shops and drug manufacturers in CT.

However, is the dividing line between profit and public interest crossed when a lobby group that is sponsored in part by government and academia dives into a debate over healthcare and technology policy in the public forum?

Reasonable people disagree about the benefits society will reap from lengthy monopolies on biological drugs–for periods of a decade or more.  For instance, is it true that a certain, dozen-year period of drug exclusivity is required for firms to recoup their research?  After all, manufacturers of generic biological drugs will, in all likelihood, confront the same bevy of expensive safety and efficacy testing as the original producer.  In some cases, the sheer cost of reproducing the process for making a biologic treatment may make these inventions immune to the kind of generic versions that can be made of simpler, small-molecule based drugs (mainstream antibiotics and antidepressants, for instance).

In addition, the monopoly provided by government-guaranteed data exclusivity has nothing to do with the already decades-long patent protections that cover the inventions packaged into drugs.

Considering the enormous price that our society will likely pay for high-tech drugs in the coming decades, we should at least understand what kind of deal we’re getting with drug manufacturers as we negotiate the monopolies they’ll receive on the next generation of life-saving treatments.  It is in the interest of the university community, not to mention the Connecticut taxpayer, to keep industry lobbyists like CURE at arms length, at the very least, so that meaningful, two-sided debate can occur on the enormous issues of drug cost and healthcare reform.

N.B. To say that local industry groups like CURE are against the public interest is, of course, an unearned generalization.  CURE shows a promising ability to direct local industry dollars to education (and PR).  For example, check out the cool-looking BioBus, which would have satisfied both of my biggest childhood interests: (1) science and (2) large, diesel vehicles.