Research Funding via Direct Democracy: Is It Good for Science?

On November 2, 2004, California voters passed the California Stem Cell Research and Cures Bond Act of 2004, popularly known as Prop 71. Its purpose and intent was to, among other things:

• “Protect and benefit the California budget: … by funding scientific and medical research that will significantly reduce state health care costs in the future; and by providing an opportunity for the state to benefit from royalties, patents, and licensing fees that result from the research.
• Benefit the California economy by creating projects, jobs, and therapies that will generate millions of dollars in new tax revenues in our state.
• Advance the biotech industry in California to world leadership, as an economic engine for California’s future.” (see )

With its passage by 59% of voters, Prop 71 became part of California’s constitution. It created the California Institute for Regenerative Medicine (CIRM), a new state agency to administer $3 billion of state bond–funded stem cell research over 10 years. This affront to the Bush administration’s restrictive policy on embryonic stem cell research received an enthusiastic response from scientists in California and elsewhere in the nation and around the world.

But as is usually the case beyond the initial hype and hope surrounding an emotionally driven public issue, the devil is in the details of designing and implementing good policies. And in this case, much can be learned from the delicate dance in the real world among elected policymakers, advocates for research on specific diseases, public interest groups, and the media. As other states try to emulate California’s example, it is important now, more than three years since Prop 71 was passed and its implementation began, to examine the process and the unintended consequences of this approach to funding.

Public funding of a particular research area through the drafting and passage of a topic-specific proposition poses a set of important challenges for research funding, including the unintended consequences of disruption of traditional legislative discussions of thorny public policy issues; fundamental shifts in the involvement and influence of some stakeholders, in this case disease and patient advocates; the Balkanization of research; and managing the expectations of the voters who fund science, particularly if outcomes are not certain. Those interested in science policy, stakeholders, policymakers, and the public ought to consider these challenges as other states consider imitating California’s approach.

An emerging trend

In states around the nation, research funding decided by direct voter participation is challenging the standard way in which public policy has been made. Traditionally, federal grants flowing from science mission agencies fund most U.S. basic science, primarily via a peer-review system. State funding usually supports state universities’ research infrastructures or programs of particular importance to the state. Changes in federal and state science funding policies in recent years, however, are causing the creation of new models, such as propositions at the ballot box, that warrant a close examination of their intended and unintended consequences. Whether out of frustration at the slow pace of action, impatience with the intrigue of political gamesmanship, or discomfort with compromises required during the political process, special interest groups and influential individuals are turning to direct democracy, rather than representative democracy, to shape public policy in their own interest.

In California, direct democracy occurs primarily through propositions, determined by direct vote of the people at the ballot box. Famous examples of direct voter decisionmaking are Prop 13, which limited the rise of property taxes relative to increases in real estate assessments, and Prop 209, which made racial preferences illegal as a basis for admission to public universities. This direct method of influencing policy emerged nearly 100 years ago during the California Progressive Era, when individuals, concerned that large businesses such as railroads were having an inordinate influence in the state capital, developed a mechanism to assert some control over policymaking. Successful propositions generally become part of the state constitution, making them exceedingly difficult to amend or repeal.

Prop 71 made its way to the ballot primarily through the efforts of Robert Klein, a California real estate developer whose teenaged son is afflicted with juvenile diabetes. Klein was frustrated with the Bush administration’s limits on stem cell research and the pace at which the state legislature was moving to fund stem cell research efforts, despite its recently enacted policies intended to draw stem cell research to California. Klein used his considerable wealth and wealthy contacts to underwrite Prop 71’s campaign, “Yes on 71: Coalition for Stem Cell Research and Cures.” Klein’s privately funded effort included drafting the language for Prop 71, securing its inclusion on the fall 2004 ballot through a signature drive, a persuasive multimedia communications effort, flyers mailed to voters, a Web site documenting scores of endorsements from state and national organizations, and strategically timed television ads using celebrities from Hollywood as well as the biomedical research community.

After Prop 71’s success at the ballot box, Klein led the effort to establish CIRM at breakneck speed, as specified in the proposition. Prop 71’s official language (eight-plus pages of fine print that challenges even those with the best eyesight) stated that the work of CIRM was to be overseen by an Independent Citizens Oversight Committee (ICOC) composed of 29 members representing patient advocate groups, major public and private academic medical centers, private research institutions, and commercial life-science companies in California. Klein was named ICOC’s chairman. Prop 71 designated state elected officials to select, within 40 days of the election, ICOC members from specific patient advocacy groups. The governor, for example, selected representatives from Alzheimer’s and spinal cord injury advocacy groups, and the president pro tempore of the Senate appointed a patient advocate for HIV/AIDS. Other elected officials selected members from specified disease advocacy groups. This potpourri of representation that now governs the workings of CIRM was in and of itself a new experiment in research oversight.

Because of all the attention generated by the Prop 71 campaign, the media and public watchdog groups cast a glaring light on CIRM, a new state agency being established quickly from scratch. CIRM was also emerging under the scrutiny of irked legislators, who, by the proposition’s carefully crafted language, were cut out of the process of legislating stem cell research funding, overseeing the formation of CIRM, or revising any of its policies. In fact, Section 8 of Prop 71 prevents the legislature from making any changes until after “the third full calendar year following adoption, by 70 percent of the membership of both houses of the Legislature and signed by the Governor, provided that at least 14 days prior to passage in each house, copies of the bill in final form shall be made available by the clerk of each house to the public and news media.” Legislators, displeased by this tying of their hands, showed their dissatisfaction in various ways in the intervening years by trying to impose more oversight and control through a series of legislative attempts, such as regular auditing of CIRM (in addition to the financial reporting required by Prop 71), rules for securing the eggs to be used in research, and the control of intellectual property (IP) derived from state-funded stem cell research.

When the ICOC held its first mandated meeting in mid-December 2004, CIRM existed in name only. It had no fixed location, executive or administrative staff, or guidelines or policies for its work. It also had no funding stream, because the process of selling bonds to fund the agency had not yet been established. The ICOC’s first order of business was to hire executives who were both experienced in managing biomedical research and up to the challenges of establishing a new, highly visible state agency. Once hired, that inaugural group’s immediate attention turned to the drafting of policies of the three required working groups (scientific and medical research facilities, funding, and medical and scientific accountability standards) for subsequent ICOC approval. Among the issues to be dealt with were conflict of interest, IP rules for recipients of funding from both nonprofit and for-profit institutions, grant submission and peer-review procedures, and a 10-year institutional strategic plan, all of which needed to be drafted, approved, and in place before research grants could be funded. It was no surprise that Klein’s initial goal of awarding initial research grants by May 2005, just six months after the November election, was not met.

In an odd twist of fate, funding was delayed because the state could not sell bonds to fund stem cell research due to a series of legal challenges by anti–stem cell research/antiabortion groups that challenged the constitutionality of CIRM on various grounds. As those cases were consolidated and worked their way through to the state supreme court, CIRM had more time to establish its policies in key areas, and the press, watchdog groups, and legislators had more time to examine every move in detail.

In order to maintain momentum in the face of legal challenges, Klein secured $5 million from private donors to fund CIRM’s operations in the first year; during the next year, he raised another $45 million from private donors for what were termed “bond anticipation notes,” which would be repaid only if bonds were ever sold. Those funds, which were used for training grants in research institutions around the state, elicited another lawsuit. In July 2006, Governor Schwarzenegger lent CIRM an additional $150 million to begin funding research grants. This move by the governor was politically significant because it occurred one day after President Bush vetoed bipartisan legislation that would have relaxed federal restrictions on stem cell research.

In mid-May 2007, nearly 30 months after its formation, the last legal challenge to CIRM’s right to exist and administer $3 billion in research funds ended when the state supreme court refused to hear the appeal of litigation challenging the constitutionality of Prop 71. As a result, the state finally sold the first $250 million in bonds to fund research in October 2007, a full 35 months after the vote that established CIRM. The irony is that in the close to four years after California’s grand experiment began with the passage of Prop 71, relatively little new public funding has reached stem cell researchers in California even though nearly $260 million in grants has been approved for research in 22 institutions around the state. More funding will flow later this year, after the approval in May 2008 of $271 million in state funding to build stem cell research facilities in 12 institutions (with $560 million in required matching funding from charitable donations and institutional reserves) and when grants are awarded for new faculty, disease teams, the development of new cell lines, and the creation of new tools and technologies.

Lesson learned

The Prop 71 should serve as a cautionary tale for anyone who believes that more direct democracy always leads to better policy. First, direct voter determination of policy without the input of elected legislators can result in unintended consequences by bypassing the traditional bipartisan and bicameral legislative debate about thorny public policy issues.

By excluding legislators from participating in the creation and design of CIRM, the framers of Prop 71 were short-sightedly taunting the state’s most powerful and skillful political players. Some legislators, most notably the then-chair of the Health and Human Services Committee, reacted by using their seniority and media savvy to mobilize often rancorous public attention around specific hot-button financial and ethical issues that, in large measure, were already being addressed by CIRM and the ICOC. CIRM, with its newly hired executive staff (who collectively had scores of years of expertise in research administration in universities, industry, and federal agencies) had rapidly begun developing policies and guidelines in all these areas through an open process that was subject to a high level of public scrutiny and accountability through members of the ICOC and the state’s open meetings laws. Nevertheless, legislators grabbed the attention of the press and numerous special groups with well-publicized hearings and proposed legislation. Because this effort involved little participation by scientists, it devolved at times into an unfortunate “us versus them” conflict that made it impossible to produce any useful substantive guidance for CIRM and ICOC. A painful irony is that many of the legislators leading efforts to scrutinize CIRM’s activities were among the state’s earliest and most ardent stem cell research advocates. Given California’s strict term limits, these legislators were reluctant to sit on the sidelines of an activity they cared about deeply.

A related unintended consequence was the circumvention of critical basic policy processes. In particular, public discussions about IP derived from the bond-funded initiative revealed deep misunderstandings by the legislature, the media, and the public about how basic research is conducted and the ownership of new knowledge derived from creative discovery. For many months, public discussions were bogged down in legislative and media rhetoric asserting that “since we Californians are paying for the research, then we own it.” Comments showed up regularly in the media and in hearings that revealed a failure to understand, or an unwillingness to acknowledge, generally accepted federal research grant policies such as the Bayh-Dole Act that govern IP ownership that provide the nation’s current framework for technology transfer resulting in commercial products, or in this case, new treatments and therapies. IP policies for nonprofit and for-profit organizations that will receive grants from CIRM were eventually established, accompanied by vigorous and rancorous public discussions that often produced more heat than light.

A second outcome of this exercise in direct democracy is that it concentrated a significant amount of power in a small group of self-designated disease and patient advocates. Those most active in promoting Prop 71 emerged with lasting political power. Whereas a number of disease and patient advocate groups have six- or eight-year terms on the ICOC, there is no formal mechanism for other groups that may have a stake in the advancement of stem cell research to influence policy and direction. Moreover, stakeholders who may have differing opinions, strategies, or priorities are left out of the discussion and have no access other than through highly structured public meetings. The danger of this arrangement is that research priorities are being influenced primarily by their potential applicability to certain disease categories. This is not an effective way to choose basic research projects, and it excludes too many knowledgeable people from the priority-setting decisions.

A third unintended consequence is the Balkanization of research. For example, within research institutions, new facilities will be built with Prop 71 funds. Although these new facilities will usually be welcome at public and private research institutions across the state, they also create a problem. It might be necessary to build in redundancies in facilities to mitigate the risk of sharing facilities that receive federal funding, which does not allow embryonic stem cell research on any cell lines developed after August 2001.

Within states, the funds flowing to stem cell research through the proposition process may pit this area of research against other research interests and needs in the state, such as energy, regional climate change, water resources, land use management, and so on. Among states, the creation of special state interests set in policies may impede research or the transfer of research results elsewhere in the nation or around the world. For example, policies that govern the use of IP by firms within California versus outside of California may potentially limit the easy flow of research results across boundaries. And when conflicts or internal inconsistencies exist between state and federal interests and laws, the federal regulations will prevail.

The fourth, and arguably the most serious consequence of direct voter participation is the necessity of managing public expectations. The campaign rhetoric in support of Prop 71 created very high expectations. Comments from the public, legislators, public interest groups, and the media after the election exposed unfettered optimism about the pace of creating new knowledge and applying it, reflecting a belief that within 10 years new treatments and therapies would be ready for those with debilitating illnesses. This is an impossibly short time for yielding applications from basic biomedical research. Public comments also revealed the strong expectations that uninsured Californians should have low-cost access to new treatments and therapies developed with any fraction of CIRM funding, and that a percentage of net licensing revenue from them (presumably from a succession of blockbuster products) be returned to the state’s general fund. Those expectations are now incorporated in CIRM’s policies for IP and revenue-sharing requirements.

Implications

Our system of government was intended to be a representative democracy, an admittedly messy and inefficient system, but one well-designed to put single goals in the context of other state needs. Manipulation of the public to bypass state legislators to support the most recent hot research areas is not a good way to make science policy or public policy. Among the unintended or intended consequences are the lack of deliberation around key issues and a failure to reach consensus about the goals of new public policy.

Moreover, creating a process that excludes legislators and reserves powerful positions for the representatives of specific disease groups unnecessarily limits the inputs and drivers of what ought to be an open, public, and dynamic process that can be responsive to new knowledge and opportunities as they emerge. Stakeholders who were not identified early on will continue to have severely limited ability to make contributions to the policymaking process for stem cell research in California.

Finally, the process of selling a research proposition directly to the public necessarily means that important details such as the time it takes to discover and translate new knowledge into new treatments and therapies and the real costs and benefits of research will not be included in the bumper-sticker sales pitch. We know from decades of research on public understanding of science and technology that although the public doesn’t know a lot about scientific or technical issues, in general it trusts the research community. The direct democracy process makes it too easy for scientists to be careless with that trust by becoming participants in campaigns that make unrealistic promises in the quest for research funding.

Although research scientists may not have been the primary drivers of Prop 71, they were willing participants in the campaign to market “stem cell research and cures” to the public. In doing so, they abdicated their responsibility to be sure that the realities of research and innovation were explained to the public.

As for the marketing experts who sold Prop 71 to the public, most have moved on to other nonresearch positions. They will not be held accountable for not meeting the expectations they helped create. When the public becomes disillusioned, it is likely to lose confidence in researchers and research—and not just stem cell research. That is not good for science.

Many in the scientific community regarded Prop 71 as a victory for scientists and research funding. A little reflection will make it clear that making science policy by public referenda is a risky high-stakes game. Basic science research is too important and too dependent on the continuity and stability of public funding to be subjected to the transitory whims reflected in direct democracy.