BIO Response to NBAC on Stem Cell Research

Harold Shapiro, Ph.D.
c/o E. Randolph Hull
National Bioethics Advisory Commission
6100 Executive Blvd., Suite 5B01
Rockville, MD 20892-7508

Dear Dr. Shapiro:

Thank you for the opportunity to submit comments for NBAC's report on stem cell research. The Biotechnology Industry Organization (BIO) and its members want to ensure that the promise of new therapies and cures from research using stem cells is realized in a responsible and ethical way.

BIO represents over 850 organizations, including biotechnology and pharmaceutical companies, academic institutions, state and affiliated organizations engaged in biotechnology research on medicines, diagnostics, agriculture, environmental and industrial applications.

BIO appreciates the NBAC's leadership in analyzing the potential benefits and the ethical implications of research on stem cells and we thank you for this opportunity to comment. Some of our members are sponsoring human stem cell research. All BIO members are committed to ensuring that every avenue of promising research can be responsibly explored to improve the health of individuals living with currently intractable diseases.

Summary of BIO Positions

BIO and its members believe that research on pluripotent stem cells is a critical area of research and urge NBAC to take into account the unprecedented potential of this research.

To date, private sector support of stem cell research is leading to a greater understanding of basic cellular and developmental biology and aiding the development of new medicines.

BIO defers to the interpretation of the Department of Health and Human Services on whether federal money should be used to fund research to derive pluripotent stem cells or to study these cells once they are derived. Although BIO has not taken an official position to date, we believe additional funding, including the use of public monies, will expedite progress in development of new stem cell treatments. We strongly support federal funding of basic biomedical research.

We believe that NBAC should encourage aggressive and comprehensive research and development efforts in this field.

BIO strongly supports the incentives provided by intellectual property rights to spur both academic and private company research on stem cells and other biomedical technology. We believe that academic scientists can access research tools to facilitate basic research.

However, once a research project becomes commercially situated, scientists should gain the protections of the intellectual property system to reward high-risk investment and spur product development. Such protections also act as a spur to further innovation and competition.

Research Using Stem Cells

Stem cell research is a "cutting-edge" area of scientific research whose promise has captured the imagination of the research community, patient advocates, and the American public. We urge the NBAC to recognize the benefits of this research and the importance of responsible policies that will ensure development of new therapies to benefit patients.

Every year, medical innovation discovers new tools by which to understand and treat disease. Research using stem cells – or early human cells – is intended to discover treatments which do not depend on chemical compounds. Rather they use living cells as the treatment or cure.

It is anticipated that these cells will be able to differentiate in the lab into blood, skin, heart, or brain cells and may be able to treat cancers, spinal cord injuries, heart disease and potentially many other diseases.

The Science of Stem Cells

There are approximately 200 kinds of cells in the human body. These cells are differentiated, which means that they have a distinct morphology (shape and size), and have achieved a specialized function such as carrying oxygen or transmitting "nerve" signals. For years, scientists have known about "hemopoietic stem cells" (cells that can become one of several different blood cells such as white blood cells or red blood cells) and the potential uses of umbilical cord blood.

However, late last year, a company announced that its researchers had for the first time successfully derived human embryonic stem (ES) cells and maintained the cells in tissue culture. Stem cells are the earliest precursor of human differentiated cells. These cells come from a blastocyst which is the ball of undifferentiated cells from which a prospective embryo develops. These human embryonic stem cells, or "ES cells," are pluripotent and have the capacity to become virtually any cell or tissue in the body. They also have the capacity for self-renewal, meaning they can produce more of themselves without limit. There is no evidence that these cells are totipotent.

The company funded research in this area at two universities, using appropriate ethical safeguards and oversight of each university's institutional review boards (IRBs). Each university used different methods and is patenting the different technological approaches. The company is licensing the technologies from each university. The ethical safeguards and the patenting issues are discussed below.

The ES cells were isolated at one of the universities. Researchers obtained blastocysts with voluntary informed consent from clients undergoing in vitro fertilization procedures. The protocols were approved by the university's institutional review board, which consists of scientists and members of the community. Researchers derived embryonic stem cells from the inner cell mass of the blastocyst and maintained them for months in an undifferentiated state.

This research was done with private sector funding.

The company also funded work at a second university, where researchers isolated stem-like cells from fetal tissue obtained from terminated pregnancies, following appropriate informed consent procedures. These cells, known as human embryonic germ (EG) cells were taken from the primordial germ cells, which were destined to become the testes or ovaries.

Benefits of Stem Cell Research

Stem cells represent a tremendous scientific advancement in two ways: first, as a tool to study developmental and cell biology; and second, as the starting point for therapies to develop cures to treat some of the most deadly diseases.

The derivation of stem cells is fundamental to scientific research in understanding basic cellular and embryonic development. Observing the development of stem cells as they differentiate into a number of cell types will enable scientists to better understand cellular processes and ways to repair cells when they malfunction.

It also holds great potential to yield revolutionary treatments by transplanting new tissue to treat heart disease, atherosclerosis, blood disorders, diabetes, Parkinson's, Alzheimer's, stroke, spinal cord injuries, rheumatoid arthritis, and many other diseases. By using stem cells, scientists may be able to grow human skin cells to treat wounds and burns. And, it will aid the understanding of fertility disorders. Many patient and scientific organizations recognize the vast potential of stem cell research.

Another possible therapeutic technique is the generation of "customized" stem cells. A researcher or doctor might need to develop a special cell line that contains the DNA of a person living with a disease. By using a technique called "somatic cell nuclear transfer" the researcher can transfer a nucleus from the patient into an enucleated human egg cell. This reformed cell can then be activated to form a blastocyst from which customized stem cell lines can be derived to treat the individual from whom the nucleus was extracted. By using the individual's own DNA, the stem cell line would be fully compatible and not be rejected by the person when the stem cells are transferred back to that person for the treatment.

Preliminary research is occurring on other approaches to produce pluripotent human ES cells without the need to use human oocytes. Human oocytes may not be available in quantities that would meet the needs of millions of potential patients. However, no peer-reviewed papers have yet appeared from which to judge whether animal oocytes could be used to manufacture "customized" human ES cells and whether they can be developed on a realistic timescale. Additional approaches under consideration include early experimental studies on the use of cytoplasmic-like media that might allow a viable approach in laboratory cultures.

On a much longer timeline, it may be possible to use sophisticated genetic modification techniques to eliminate the major histocompatibility complexes and other cell-surface antigens from foreign cells to prepare master stem cell lines with less likelihood of rejection. This could lead to the development of a bank of universal donor cells or multiple types of compatible donor cells of invaluable benefit to treat all patients. However, the human immune system is sensitive to many minor histocompatibility complexes and immunosuppressive therapy carries life-threatening complications.

Stem cells also show great potential to aid research and development of new drugs and biologics. Now, stem cells can serve as a source for normal human differentiated cells to be used for drug screening and testing, drug toxicology studies and to identify new drug targets. The ability to evaluate drug toxicity in human cell lines grown from stem cells could significantly reduce the need to test a drug's safety in animal models.

There are other sources of stem cells, including stem cells that are found in blood. Recent reports note the possible isolation of stem cells for the brain from the lining of the spinal cord ("Parent Cells Found in Brain May Be Key to Nerve Repair; Discovery in Rats Points Way for Humans," New York Times, Jan. 8, 1999). Other reports indicate that some stem cells that were thought to have differentiated into one type of cell can also become other types of cells, in particular brain stem cells with the potential to become blood cells ("Cell Experiment Offers Hope for Tissue Repair," New York Times, Jan. 22, 1999). However, since these reports reflect very early cellular research about which little is known, we should continue to pursue basic research on all types of stem cells. Some religious leaders will advocate that researchers should only use certain types of stem cells. However, because human embryonic stem cells hold the potential to differentiate into any type of cell in the human body, no avenue of research should be foreclosed. Rather, we must find ways to facilitate the pursuit of all research using stem cells while addressing the ethical concerns that may be raised.

Funding Sources: Appropriate Roles

The biotechnology companies pursuing stem cell research with private funds have unleashed tremendous scientific potential for treatments and cures in this field. Without the advances made by the private sector in isolating stem cells for further basic research, we would not be on the cusp of revolutionary scientific advances for many diseases. Scientists in the public and private sectors now are clamoring to use stem cells to continue basic research discovery and to hasten the development of new technologies to treat disease.

NIH Position on Stem Cells

In compliance with current law and in respect for the public's concerns, the federal government has not sponsored research to derive stem cells from embryos. Now that these stem cells have been derived, the National Institutes of Health and the Administration have determined that the government can and should fund research using these stem cell lines, particularly because of the tremendous promise for new treatments.

In a legal decision, the general counsel of the Department of Health and Human Services (HHS) stated:

"The statutory prohibition on the use of funds appropriated to HHS for human embryo research would not apply to research utilizing human pluripotent stem cells because such cells are not a human embryo within the statutory definition."

Memorandum of Harriet S. Rabb to Harold Varmus, M.D. on "Federal Funding for Research Involving Human Pluripotent Stem Cells" on Jan. 15, 1999.

Although BIO has not taken a position on NIH's interest in funding research using stem cells, federal funding will undoubtedly accelerate advances in this field. We defer to the decision by HHS on federal funding and the decision that stem cells are not organisms. We believe there is tremendous promise in curing disease by using stem cells and we welcome increased research activity and interactions between all researchers within the current legal arrangements and safeguards. We also believe the federal government can and should determine the appropriate safeguards to address the ethical concerns of federal funding of stem cell research.

Oversight of Private Sector Research

Clinical research on embryonic stem cells by the private sector is overseen by the Food and Drug Administration (FDA), with requirements regarding informed consent from participants and approval by a national or local review board for medical research. The FDA has authority to determine the regulatory requirements for clinical use of cellular tissue which includes isolated cellular preparations ("A Proposed Approach to the Regulation of Cellular and Tissue-Based Products," February 28, 1998). Since the end product of this research is a cellular therapy, there is likely to be strong patient demand for continued research. With safeguards in place at FDA, there is little ethical conflict.

Prior to any clinical research using these cell preparations, sponsors of such research must fulfill FDA requirements for pre-clinical safety evaluation and establish a mechanism for appropriate informed consent. Existing regulations that protect the safety of research subjects include the requirement to obtain approval from an institutional review board and informed consent from research subjects (21 CFR 50 and 45 CFR 46). We believe the current procedures for clinical research using stem cells are protected by FDA's oversight. We believe it would be unnecessary for researchers who are not receiving public funding for stem cell research to submit basic research protocols to a body that would oversee federally funded research.

Public Sector Oversight

We recommend that the NBAC carefully review the recommendations outlined in the NIH Human Embryo Research Panel Report of 1994 for the ethical conduct of research on embryos. NBAC should take guidance from this report about ethically appropriate research on stem cells that are derived from embryos, research to derive stem cells, as well as other aspects of embryo research. This panel sought to identify types of research on human embryos prior to implantation that would be acceptable, and took into consideration the important human benefits that might be achieved from such research.

We also recommend that NBAC evaluate the recommendations and procedures for embryo research outlined in the report on "Cloning Issues in Reproduction, Science and Medicine" of the Human Genetics Advisory Commission in the United Kingdom, issued December 1998. The report addresses oversight of ethically appropriate embryo research and implications for stem cell research. (It is available at the web site:

Importance of Technology Transfer in Promoting Public/Private Research Partnerships

As NBAC examines the advances in stem cell research, it should recognize the important partnership between private sector researchers and the NIH and encourage this collaboration within the construct of the current system of technology transfer. Some argue that stem cells should be broadly available as research tools without intellectual property protection. BIO believes that academic scientists should continue to conduct research using stem cells and rely on the exemption for basic research from patent infringement lawsuits. Strong patent protection is essential to the discovery and development of new medicines. While it rewards risky investments, it also stimulates competitive innovation.

Recent studies have documented that government funded basic research is an important precursor to innovation by the biotechnology and pharmaceutical industries. 1 In addition, public funding stimulates additional investment by companies and enhances the effectiveness of their expenditures on research and development as well. 2 According to a study of connections between pharmaceutical firms and publicly funded scientists in academia and government, these relationships have a large impact, raising the level of private sector research productivity by as much as 30-40%. 3 (See "Federal Funding for Biomedical and Related Life Sciences Research, FY 1999," by Federation of American Societies for Experimental Biology.)

Technology Partnership Mechanisms

Technology transfer is a process by which areas of scientific research are defined (generally through patents), then sold or licensed to others. This process promotes the commercial development of products because it is designed to provide for the capturing of the value of basic research by the basic researcher (generally a non-profit university researcher), and the shifting of the research to organizations that are better able to assume the financial risk associated with developing a commercial product (generally a corporation).

In biotechnology, partnerships take a number of forms depending on whether they involve direct research at NIH, NIH-funded research at universities, or private support of research.

In each case, the biotechnology industry pays royalties for the patent rights to medical technologies.

Patents as a Tool for Innovation

Prior to the licensing of technology, the nebulous boundaries of a technology must be defined so that the intangible assets can be handled by the U.S. business and our legal system. In general this is done through the patent system. A U.S. patent is defined by claims that provide sharply defined borders to technology. These boundaries give clear notice to others so that the area can be avoided or licenses can be taken to practice what is defined. The claims can be directed to products and compositions of matter. Once boundaries are established and claims granted in fields, patents provide a powerful stimulus to competitive academic groups and companies to improve technologies and/or find new routes to achieve the same outcomes. In this way, patents increase the range of effective products available to treat intractable diseases and improve social welfare. Patents represent a limited exclusion of commercial companies from using a technology, as they expire 20 years from the date of filing.

There may be no industry more sensitive to patent protection than the biotechnology industry.

The rate of investment in research and development in this sector is higher than in any other industry. Any law which undermines the ability of biotechnology companies to secure patent protection undermines funding for research on deadly and disabling diseases. Also, if the ability to patent government inventions is undermined, it will diminish the ability of biotechnology companies to develop basic research advances from government scientists into products for patients. Capital will not be invested in biotechnology companies if they are not able to secure intellectual property protection to recoup their substantial investments to research and develop a product for market.

Our industry's position on patents follows from one simple fact about the biotechnology industry: most of our firms fund research on deadly and disabling diseases from equity capital, not revenue from product sales. Without investors taking the risk of buying the stock of our companies, much of our vital research would end. Almost without exception, our industry cannot borrow capital. Our principal – and for most of our companies the only source of capital – is equity capital.

Intellectual property protection is critical to the ability of the biotechnology industry to secure funding for research because it assures investors in the technology that they will have the first opportunity to profit from their investment. Without adequate protection for biotechnology inventions, investors will not provide capital to fund research. There is substantial risk and expense associated with biotechnology research and investors need to know that the inventions of our companies cannot be pirated by their competitors.

The Future Applicability of the Research Exemption

BIO's position regarding access to stem cells is entirely consistent with the continued existence of a "research exemption." 4 (This exemption is different from the statutory Bolar 5 exemption that provides additional protections for non-patent holders. Bolar is not relevant to stem cell research at this time as no therapeutics are nearing submission for regulatory approval). The courts and BIO recognize that it is important that patents not block academic research that moves a field forward and which does not compete in the marketplace.

Accordingly, the courts have created the "research exemption" as a defense against patent infringement for academic research – the type of research typically conducted by universities. This permits academic researchers to use patented tools in their research.

The biotechnology industry supports this exemption. The industry benefits from the knowledge that is created by the research being done on technology that the industry has patented.

This judicially created doctrine and the active support of the doctrine from the biotechnology industry has not resulted in any law suits from a biotechnology company against a university for performing academic research on patented technology.

In large part due to the patentability of innovative technology in areas like stem cell research as well as the transferability of patents, the United States leads the world in biomedical research. The competitiveness of the U.S. biotechnology industry means that the most vulnerable patients in the U.S. have hope. It means that they can look to American biotech companies to develop the therapies and cures which will ease their suffering and extend their lives.

Importance of Patents for Stem Cell Research

Our industry's general position on patents is identical to our industry's position on stem cell patents. In regard to stem cell research, patents are vital and they should be freely transferable. These patents are essential to the continuation of stem cell research. No money has yet been made from selling stem cell products. It is unreasonable to expect any money to be made for many years to come from this research and future products.


BIO believes stem cell research holds tremendous potential to bring about revolutionary medical treatments. This research can be pursued ethically and must be pursued if we are to realize the potential to save the lives of people currently living with intractable diseases. We appreciate the opportunity to share our concerns with the NBAC as it evaluates the appropriateness and safeguards of publicly funded stem cell research. We look forward to our ongoing collaboration in the pursuit of new scientific knowledge to save lives.

Carl B. Feldbaum


1 Andrew. A. Toole, "The Impact of Federally Funded Basic Research on Industrial Innovation: Evidence from the Pharmaceutical Industry," Madison, Wisconsin: Lauritis R. Christensen Associates (1997).

2 Andrew A. Toole, "Public Research, Public Regulation, and Expected Profitability: The Determination of Pharmaceutical Research and Development Investment," Madison, Wisconsin: Lauritis R. Christensen Associates (1997).

3 Iain Cockburn and Rebecca Henderson, "Public-private interaction and the productivity of pharmaceutical research," National Bureau of Economic Research (1997).

4 Popenhusen v. Falke, S.D.N.Y. 1861, 19 Fed.Cas. 1048, Northill Co. V. Danforth, D.C.Cal. 1943, 51 F.Supp. 928, Chesterfield v. U.S., 1958, 159 Supp. 371, 141 Ct.Cl. 838, Norfin, Inc. v. International Business Mach. Corp. D.C. Colo., 1978, 453 F.Supp. 1072, affirmed 625 F.2d 357, Ares-Serono v. Organon Int. B.V., D.Mass. 1994, 862 F.Supp. 603

5 Roche v. Bolar Pharmaceutical Co., Fed. Cir 1984, 733 F.2d. 858 and see 35 U.S.C. 271(e).>