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In January 2001, the British Parliament passed a bill that authorized government funding for human embryonic stem cell research. Seven months later, in his first televised address to the nation, President George W. Bush pledged to do the opposite. By executive order, he denied federal funding for all research involving the creation of new human embryonic stem cell lines. Stem cell researchers who accepted federal dollars would be limited to working with a small number of officially recognized preexisting lines.

Bush made his decision for moral reasons: he wanted to discourage “further destruction of human embryos that have at least the potential for life.” Regardless of whether the funding ban has accomplished that aim – and critics believe it has had the opposite effect – it has had a profound impact on a field that proponents believe holds the possibility of cures for Parkinson’s disease, paralysis, diabetes, and a host of other ailments.

Underlying Bush’s policy was the assumption that by knotting the purse strings of the National Institutes of Health (NIH), he could block a controversial avenue of research. To some extent, he was right. Although private industry stepped in to fill the vacuum left by the retracted federal funds, embryonic stem cell research in the United States has become fragmented. In the last four years, researchers have published few papers, prominent scientists have fled overseas, and, veteran researchers say, young scientists have become increasingly reluctant to enter the field. In the same span of time, Prime Minister Tony Blair has created an entirely different environment for stem cells in his country, establishing regulatory and financial control over all research relating to the technology. Blair’s stated intention is to not only help Britain’s fledgling biotech industry but also ensure that British stem cell research is subject to ethical oversight.

The centerpiece of the British plan is a national stem cell bank, launched in September 2002. Based in South Mimms, a suburb of London, the bank is designed to serve as a clearinghouse for all British stem cells, vouching for their genetic stability, cultivating large standardized stocks, and ensuring their ethical use. Before U.K. scientists may even attempt to derive human embryonic stem cell lines, they must secure a government license. Furthermore, the terms of governmental funding require that scientists deposit their cell lines in the bank, so other researchers can work with them as well. The bank distributes the cells free of charge under the strict supervision of a motley panel of scientists, civil servants, and ethicists.

Heike Weber, program manager at the U.K. Medical Research Council, the bank’s main funder, explains the philosophy behind the bank’s processes: “Stem cells are a public resource. We need to make sure that this research is done in an ethical manner and that once the lines are created, they are made available to other researchers. If you let private money get involved, then pretty soon you’re going to have companies that don’t want to share their lines, and you end up destroying a lot more embryos.”

That’s exactly what many believe has happened in the United States under Bush’s executive order, but as the president embarks on his second term this month, there is little chance that he will alter his policy. And in Bush’s second term, U.S. stem cell researchers will likely fall further behind not only their British counterparts but also those in Japan and Israel – countries that, like the U.K., have invested wholeheartedly in stem cell technology.

Currently, the best hope for American stem cell scientists lies outside the dominion of the federal government. In November, Californian voters passed Proposition 71 by a margin of 59 percent to 41 percent. The ballot measure calls for the state to invest $3 billion in stem cell research over the course of the next decade. But the new California Institute for Regenerative Medicine, established by the measure, will remain a deeply imperfect solution. The 29-member board that is in charge of distributing the research grants will be subject to almost no governmental or ethical oversight. And California has no plans to establish a stem cell bank.

Elsewhere in the United States, many researchers fear that private money will no longer be able to shoulder the burden of stem cell research. According to Eve Herold of the Stem Cell Research Foundation, a nonprofit group in Clarksburg, MD, “A lot of biotech companies [doing stem cell research] are having trouble raising capital right now. Not only is the legislative situation uncertain, but most of the research we need is basic biomedical stuff. We’re not at the stage yet where investors can expect to have a marketable medical advance. A pall has been cast over the whole field.”

Doug Melton, codirector of the Harvard Stem Cell Institute, believes that it is time the U.S. government offers stem cell researchers a new compromise. Don’t fund the derivation of new embryonic lines he says, but let scientists study stem cells “wherever they were derived, provided the cells were obtained in an ethically acceptable fashion.”

Launching a national stem cell bank like Britain’s would be one way to ensure that U.S. stem cell research proceeds in a way that is fair and ethical, and which maximizes the benefit to public health. “This is something I and others suggested at least three years ago and on numerous occasions,” says Melton, whose group recently announced the creation of 17 new human embryonic-stem-cell lines, all made with independent funding. “The NIH and [secretary of health and human services] Tommy Thompson have never given a good reason for not doing this. Oddly, they pay millions, literally, to companies – some of which are not in the U.S. – to distribute the ‘official lines.’ Go figure.” If a national bank were established, Melton says, he would happily donate his lab’s cell lines. In the meantime, he’s finalizing arrangements to ship them off to South Mimms.

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