Stem Cells: Private Sector
Can Do It Better

By Robert Oldham. Dr. Oldham is chairman of the South Carolina Biotechnology Association and CEO of Cancer Therapeutics, Inc.

President Bush's decision on federal funding of embryonic stem-cell research continues to arouse controversy. But much of the debate overlooks a very important question: Who can do the work better? The government or the private sector?

To answer that question, look at the race to decode the human genome, pitting a private company called Celera against the National Institutes of Health. That contest began when the government decided to fund selected laboratories to sequence genes. But the machines that do the sequencing were developed by the private sector, so they were available to anyone with the money to purchase them. That opportunity was eagerly seized by Craig Venter, president of Celera, working in conjunction with Perkin-Elmer, a company that makes gene-sequencing equipment.

The original projected NIH completion date was 2005. But Celera quickly raced ahead of the lumbering government project. The human genome sequence in a rough form was unveiled last year jointly by Celera and the NIH. Public relations aside, let there be no doubt: It was the private sector that was responsible for the rapid success of gene sequencing.

So did it make sense to spend billions in government money to achieve something that Dr. Venter's private company achieved faster and better? Many in the scientific community would say yes -- and for much the same reason they insist on federal funding of stem-cell research. Public-sector scientists believe they should pursue knowledge unfettered by grubby commerce. They fret that private companies would develop proprietary data and then deny society the fruits of their labors.

But does this distrust of capitalism make any sense? We don't depend on the government to develop life-saving medicines. Virtually all new drugs come from private pharmaceutical and biotechnology companies that spend billions on research because they know they can profit from it. The research dollars are provided through our capital markets.

That's how a free-market economy works. Valuable goods are delivered not because of the altruism of the producers but because they are risking their money in the hopes of profiting. If this principle works in every other sphere of our economy, why not in medicine too?

This is not to deny any role at all for government funding. Perhaps, instead of funding a massive research effort on the human genome, the government would have been better off letting Celera do the work and then purchasing the results for public use.

Another public-private race is now gearing up in the stem-cell field. A number of biotech companies, such as Advanced Cell Technology and Geron, are vying to play the role of Celera. Their chances of success have improved considerably because of the restrictions President Bush has imposed on federally funded research. Scientists working with government funds are forced to use only the 60 stem-cell lines already in existence, some of them not even located in the U.S.

The private sector labors under no such handicap. Private companies will be free to create more stem-cells lines from additional embryos that are going to be discarded by in vitro fertilization clinics. There is a tremendous entrepreneurial opportunity here -- stem-cell research may some day deliver cures for Parkinson's and other deadly diseases -- and there is no shortage of companies that will rise to the challenge. It is possible that, as the private sector races ahead, the Bush administration will find itself coming under growing pressure to allow more stem-cell lines to be used in federally funded research.

But whatever the government does, its money may be wasted. In stem cells, as in human genomes, the private sector will lead the way.