How Stem Cell Research Might Trim California’s Health Costs

It’s going to be a revolution, according to researcher John Robson of CIRM, the California Institute for Regenerative Medicine.

“I see this as a scientist,” Robson said. “And this is the fastest-moving field in science, with enormous potential.”

Potential, he said, to change the way medicine is practiced and to change the way we view diseases like diabetes, AIDS or Alzheimer’s.

“Keep your eyes open,” he said. “There are changes happening here that are going to happen fast. It could take us to a place where we could produce cures of diseases that there’s been no hope of curing in the past.”

Robson is talking about stem cell research, a field in which California has become a world leader. The seemingly unlimited potential for medical good could also translate into medical gold for California, he said.

In 2004, when President George W. Bush essentially put a hold on stem cell research by limiting its federal funding, the reaction in California was quick. State voters passed Proposition 71, a bond measure which created CIRM. The agency has about $3 billion to fund stem cell research projects. It has invested about $1 billion so far.

“Some of these discoveries that are made and developed in California will go straight to state coffers,” Robson said. “Royalties would certainly be a benefit to the state.”

Besides an increase in state income, the state also will benefit from a hike in the number of jobs, Robson said.

Stem cell therapies also have the potential to reduce health care costs in the state, he said, by presenting lower-cost alternatives to procedures like knee and hip replacements, or bone marrow transplants.

And on top of all of that, if and when those “miracle” cures are developed, Californians would get something even better, Robson said — access to new stem cell therapies.

“There are guarantees of access for individuals in California to all of these therapies,” Robson said. “And that may be the most beneficial for Californians.”

California Research Boom

After the passage of Prop. 71 in 2004, at a time when the rest of nation had its stem cell funding disappear or drastically cut back, California was flush with research dollars. Because stem cell research is such a fast-moving area, those early years established California as the leader in the field.

“This is the biotech century, and biotech is going to be one of the engines of the California economy,” Bruce Conklin, senior investigator at the UCSF Gladstone Institute, said. “With [the creation of] CIRM, we’ve increased our position in the world in that economy.”

Conklin said that it wasn’t just the partial limitation of stem cell funding by the Bush administration that hit regenerative medicine research.

“A much bigger impact was the overall drop in NIH funding,” he said. “The funding for CIRM began right when NIH funding deteriorated. So that became a tremendous recruiting tool for California, and people wanted to come here from all over the country.”

“What California did [by launching CIRM], in my view it ignited an arms race, and other states have seen this and see the need for it,” Conklin said. “Texas passed a CIRM-like bill, but that was focused on cancer research. My guess is that this is a beginning, that other states will see this kind of thing as essential for their regional competitiveness.”

The difference will be, Conklin said, that those states aren’t California. “When [researchers] come here,” Conklin said, “they’ll stay. Not so much in Alabama or Texas or places like that. In California, we have golden handcuffs — because California’s just a seductively wonderful place to be.”

Leadership Role Means Money

The leadership role could mean a lot to California, and the first benefit is money. According to Don Gibbons of CIRM, the agency expects to give the state return on its investment — many times over.

“All tax revenue from stem cell research projects is going directly into the general fund,” Gibbons said. No one knows how much that could be, he said, but we could know soon enough.

“We have 12 projects that may get to clinical trial within four years,” Gibbons said. Any one of those projects has enormous financial and medical potential, he said. But even in the shorter term, Robson said, there will be a financial benefit for California.

“Our numbers are still preliminary,” Robson said. “But if you’re looking at just the grants out to 2014, that’s about 2,500 jobs a year in the state, about $200 million in state and local revenue. That’s one way to look at the impact. And that’s not even factoring any return from therapies.”

Reducing Health Care Costs

The therapies developed through stem cell research don’t really have an upper ceiling in terms of financial benefit, Robson said. It’s a paradigm shift in the way we look at medical developments, he said.

“We’re not talking about an ongoing treatment; we’re talking about a cure,” he said. “This is the promise of regenerative medicine, that the treatments won’t be chronic, they’ll be acute. You don’t have to take a pill or shot every day. The idea is, you’ll get one treatment, and that could be it.”

The financial benefit of that kind of breakthrough is immense, he said. So, beyond the immediate and long-term financial benefits to the state, Californians may eventually reap a few other benefits, as well, according to Gibbons.

“Down the road, it could dramatically reduce health care costs in California,” Gibbons said.

For instance, Robson said, it costs anywhere from $6,000 to $16,000 a year to treat Type 1 diabetes.

“If we had a cure for diabetes that would cost, say, $5,000,” Robson said, “that would cut the number in half.”

Or, Robson said, it can cost about $23,000 a year for treatments for AIDS. “The therapy we’re looking at there,” Robson said, “would end the drugs, take them off the drugs completely.”

The lower costs inherent in stem cell therapies could bring down the overall cost of care in California, Gibbons said.

Of course, he added, the medical and human benefits outweigh all of those financial gains. And the health benefits to many Californians will rise astronomically, he said.

Because, for Californians, the state’s leadership role in designing these therapies means better access to those breakthroughs when they happen.

“Medi-Cal will have a special rate for the therapies,” Gibbons said. “It’s designed to have broad access for Californians, since it was developed with our dollars.”

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