Bloomberg News

Embryonic Stem-Cell Funding Challenge Dismissed by Judge

July 27, 2011

(Updates with White House response in seventh paragraph.)

July 27 (Bloomberg) -- A lawsuit challenging U.S. funding for human embryonic stem-cell studies was dismissed by a federal judge after an appeals court found the government-backed research is probably lawful.

U.S. District Judge Royce C. Lamberth in Washington today ended a lawsuit in which two doctors sought to block the U.S. Health and Human Services Department and the National Institutes of Health from spending federal funds on research involving human embryonic stem-cells.

Lamberth last year temporarily barred the government from funding the research, finding it probably violated the so-called Dickey-Wicker Amendment. The 1996 law bars government spending on research that damages or destroys a human embryo. The U.S. Appeals Court in Washington in a 2-1 decision in April let funding continue pending final ruling from Lamberth, saying the language of statute wouldn’t support a funding cutoff.

“The D.C. Circuit’s conclusion that the term ‘research’ in the Dickey-Wicker Amendment is ambiguous binds this court,” Lamberth wrote in his ruling.

The doctors who sued asked the judge last month to block the funding again, arguing that the appeals court considered only one of their arguments.

Their lawyer, Steven Aden of the Alliance Defense Fund, said his clients are weighing all of their options for an appeal.

‘Responsible’ Research

“President Obama is committed to supporting responsible stem cell research and today’s ruling was another step in the right direction,” Stephanie Cutter, assistant to the president and deputy senior adviser, said in a White House blog post.

U.S. Representative Diana DeGette, who introduced legislation on June 24 to turn Obama’s policy into federal law, said in a statement that the ruling is good news for “millions of Americans looking to the promise of ethical embryonic stem cell research to treat or even cure their disease.”

In fiscal 2010, NIH spent about $200 million to fund more than 200 human-embryo research grants, the Justice Department and the institutes’ director, Francis Collins, said in court papers.

Collins said in a statement that Lamberth’s ruling will “help ensure this groundbreaking research” continues.

Potential Cures

Stem cells derived from embryos develop into different tissues and may lead to cures for conditions such as juvenile diabetes, Parkinson’s disease and some cancers.

Geron Corp. and Advanced Cell Technology Inc. are conducting three trials on therapies derived from embryonic stem cells to treat spinal-cord injuries and causes of blindness, the first clinical applications for cell-based treatments.

Geron fell 18 cents, or 4.4 percent, to $3.92 at 2:10 p.m. New York time on the Nasdaq Stock Market. Advance Cell Technology was little changed.

The cells come from human embryos donated by patients of fertility clinics. The work is controversial because abortion opponents say destroying embryos is equivalent to murder.

The U.S. allowed 37 embryonic stem-cell lines for taxpayer- funded research in June, the most of any month this year, according to the NIH. The total number of U.S.-endorsed lines now stands at 128.

Research Products

The dismissal could help Alameda, California-based BioTime Inc.’s research products business, which offers more than 100 different types of tissue derived from embryonic stem cells to scientists, said Mike West, BioTime’s chief executive officer, in an interview. Sales in the division total about $100,000 per quarter.

BioTime fell 13 cents, or 2.6 percent, to $4.92 at 2:22 p.m. in New York Stock Exchange trading.

More broadly, the ruling may help small companies like his persuade larger pharmaceutical firms to partner on projects using embryonic stem cells.

“Rulings like today’s help clear the air,” West said. “Large pharma boards discuss entering the regenerative medicine space because it potentially can be a very profitable business, but all these uncertainties cloud the air of the discussion.”

President Barack Obama in March 2009 opened up government funding for the study of embryonic stem cells when he reversed an executive order of his predecessor, George W. Bush, limiting research to about 20 existing lines of the cells.

New Guidelines

The NIH then wrote guidelines allowing research on cells derived from embryos that would otherwise be disposed of after in vitro fertilization procedures.

James Sherley, a researcher at Boston Biomedical Research Institute, and Theresa Deisher of Seattle, the plaintiffs, won the right to sue by claiming they were unfairly disadvantaged in competing for NIH funding with researchers who used embryonic cells.

The government said the stem-cell research is separate from any that destroys the embryo because the cells must be grown in a medium and are then “differentiated” into other cells, such as nerve cells.

The appeals court agreed with the government’s contention that because the Dickey-Wicker Amendment is written in the present tense the “statute strongly suggests it does not extend to past actions.”

In a dissenting opinion, Judge Karen LeCraft Henderson accused her colleagues on the three judge panel of “linguistic jujitsu” in parsing verb tenses in order to narrow the amendment’s meaning from what Congress intended.

Research Spending

The government has spent $546 million since 2001 on human embryo research, Collins wrote in an Aug. 31 court filing. If funding was banned, NIH’s Collins said, it would result in the loss of more than 1,300 jobs, as well as “the potential loss of top U.S. scientific talent as lead scientists may be forced to move to other countries to pursue their cutting-edge research.”

The original case is Sherley v. Sebelius, 1:09-cv-01575, U.S. District Court, District of Columbia (Washington). The appeal is Sherley v. Sebelius, 10-5287, U.S. Court of Appeals for the District of Columbia Circuit (Washington).

--With assistance from Alex Wayne and Roger Runningen in Washington. Editors: Andrew Dunn, Fred Strasser

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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