MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

ROBERT SIEGEL, host:

And I'm Robert Siegel. Something strange is happening in biomedical research in this country. Typically, the federal government funds basic research, but because of federal restrictions on human embryonic stem-cell research, several state governments have taken the unusual step of jumping in. Stem-cell scientists are naturally delighted by the new avenues of support, but as NPR's Joe Palca reports, they could be running to unexpected headaches.

JOE PALCA: Whether they deserve it or not, embryonic stem cells have come to represent potential salvation for many people suffering from incurable diseases.

Governor ARNOLD SCHWARZENEGGER (Republican, California): This is why we are not waiting for anyone to do it for us. We are creating the action right here in California.

(Soundbite of applause)

PALCA: By action, Governor Arnold Schwarzenegger means a ballot measure approved by California voters that provides $300 million a year for stem-cell research for the next decade, and California isn't alone in its faith in embryonic stem cells. At a meeting this week in Hartford, Connecticut Governor Jodi Rell said the ultimate goal of her state's $10 million annual funding for stem-cell research was to find therapies for a wide range of diseases.

Governor JODI RELL (Republican, Connecticut): We want to help people, and we want to be prepared to help those in the future who will be looking to us right here in Connecticut to say, boy, it all came to pass in Connecticut.

PALCA: But with cures years if not decades away, Connecticut's support for research isn't only about health.

Mr. PAUL PESCATELLO (President and Chief Executive Officer of CURE): It's also about our self-interest.

PALCA: Paul Pescatello is president and CEO of CURE, a consortium of Connecticut biotech companies. He says spending money on stem-cell research will attract venture capital and biotech companies to the state, all good for the state economy.

Mr. PESCATELLO: There are only going to be a few cutting-edge stem-cell research centers built around the world, whether Cambridge, England or Cambridge, Massachusetts or Connecticut, and they're all getting rooted right now. So we have gotten in the game, and we will be one of those stem-cell research centers.

PALCA: And Pescatello doesn't worry that his state's funding is dwarfed by California's.

Mr. PESCATELLO: Their $300 million is spread over - probably over a hundred institutions in California. The Connecticut dollars, the $10 million a year, are spread among really two or three or four institutions.

PALCA: But balkanizing funding is bound to cause problems. The fruits of federally funded research are available equally to all. Will Californian cures be only for Californians? And what happens when Yale and Stanford want to collaborate? Connecticut and California have different ethical and legal guidelines governing how their research money is spent.

Susan Stayn is a lawyer who's been working on stem-cell regulations. She says only a half-dozen states have active stem-cells programs now, so the complications can be worked out. But Stayn says the problem will escalate.

Ms. SUSAN STAYN (Attorney): Because many other states are putting their hats in the ring. New York has a major initiative that it's announced, Florida is considering a major funding initiative, and several other states are considering moving into this field in a way that would support the science. And I think that as additional states become players, I think the potential number of differences might only increase.

PALCA: And there's another problem: deciding what to fund. The National Institutes of Health relies on scientific advisory panels to help it decide which research projects deserve funding. Harold Varmus is the president of Memorial Sloan Kettering Cancer Center and former director of the NIH. He says states may have trouble doing that.

Mr. HAROLD VARMUS (President, Memorial Sloan Kettering Cancer Center): The difficulty, of course, is that there is a finite number of established senior investigators who will be willing to serve on these review bodies in many states and for institutions.

PALCA: And with each state acting independently, there could be unnecessary duplications in research.

Mr. VARMUS: It makes a lot more sense to have a federal research policy than to have state-by-state policies.

PALCA: Even so, Varmus is backing New York state's plans to get into the stem-cell funding game.

Mr. VARMUS: The states are sending an important message. They're saying the public endorses this. That is a message which I hope in a couple of years the federal government would be able to respond to.

PALCA: Even states that have stem-cell programs are hoping that as well. Joe Palca, NPR News.

SIEGEL: And you can follow the stem-cell funding debate in a timeline and also find out what's fact and what's fiction in stem-cell science at npr.org.

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