In November, Californians will vote on Proposition 38, the appealing Immunology Medical Research and Cures Initiative. The measure would invest billions in research on cancer, heart disease and Alzheimer’s disease. As a biomedical researcher and research administrator, I share that ambition.
But worthy goals do not excuse weak financing. Proposition 38 asks taxpayers to borrow $8.4 billion for research and repay the debt. At an interest rate of 3.5%, the state’s General Fund may need to pay as much as $12.74 billion. The nonpartisan Legislative Analyst’s Office (LAO) estimates annual payments of $500 million to $600 million for the next 20 years. That money would be unavailable for other priorities, including education, healthcare and public safety.
Proposition 38 includes a reassuring provision: 10% of revenue generated by discoveries funded through the measure must go to the General Fund until the principal and interest are repaid. This suggests that successful therapies could cover the measure’s cost. Yet the LAO warns that the amount and timing of this revenue are uncertain and that offsetting the bond costs could take decades.
Transparency is also a concern. The framers of the proposition engineered the language so that only one institution, UCLA, would be eligible to receive half of the funding. Coincidentally, UCLA has also been the recipient of named gifts from the two billionaire backers of Proposition 38. Voters are being told not to worry about the debt because 10% of the revenue from the intellectual property will be returned to the state. But we should not mistake the possibility of medical progress for a dependable plan to service public debt.
That warning is not pessimism. It reflects how biomedical research works. Drug development is long and failure-prone. An often-cited National Institutes of Health estimate found that only 1 of every 10,000 promising compounds from early-stage research becomes a new drug; at least 90% of drugs entering preclinical studies fail. Immunotherapy has produced remarkable advances, but it is not exempt from these odds. A promising laboratory result is not a marketable treatment, and a marketable treatment does not automatically produce substantial licensing revenue for the institution where the research began.
The timeline for receiving revenues from intellectual property is also unrealistic. Development and review of research proposals usually takes about 18 months. Research itself commonly takes three to five years. Results must be analyzed, replicated and published. Potential treatments then face clinical trials, regulatory review, manufacturing scale-up, and pricing and reimbursement decisions. Physicians and health systems must determine how treatments fit into real-world care. Implementation scientists estimate that moving research into routine clinical practice can take roughly 14 to 17 years. Discovery, validation, approval and widespread adoption operate on a much longer timetable than annual bond payments.
Revenue is even less predictable. Most funded projects will not yield commercial products. Of those that do, some will generate modest returns, some will take decades or generations, and ownership and licensing agreements will determine how much income reaches the covered institutions. Proposition 38 would return only 10% of that uncertain income to the state. Taxpayers, meanwhile, would owe scheduled bond payments regardless of whether a successful therapy emerges.
California’s experience with stem-cell research should temper claims that Proposition 38 will pay for itself. In 2004, voters authorized $3 billion in bonds — an estimated $6 billion in principal and interest. Twenty-two years later, the program has generated only about $16 million in royalties, less than three-tenths of 1% of its estimated cost. Proposition 38 uses a different revenue-sharing formula, but the lesson remains: Speculative royalties should not be portrayed as guaranteed repayment of an $8.4 billion bond.
California should support biomedical research. The question is not whether immunology deserves investment; it does. The question is whether the state should borrow $8.4 billion while implying that future discoveries may substantially repay the debt. A responsible research program should rely on transparent, realistic financing — not revenues that may arrive late, fall far short or never materialize.
Proposition 38 offers an inspiring scientific vision, but its fiscal promise rests on a timeline and success rate that biomedical research cannot guarantee. Californians should judge the measure by the obligation it creates: billions in public debt, repaid from the General Fund, with uncertain offsets that may not appear for decades. Proposition 38 promises more than it can deliver.
Robert Kaplan is a senior scholar at the Stanford University School of Medicine and a distinguished research professor at UCLA. He previously served as a National Institutes of Health associate director and chief science officer for the U.S. Agency for Healthcare Research and Quality.