California Prop 211 Drug R&D Fear

Unless defeated, Proposition 211 on the California ballot could hinder what are termed important advances for 384 new medicines and treatments for cancer, AIDS, Alzheimer's and heart disease, according to a study by the California Healthcare Institute and KPMG Peat Marwick. Proposition 211 is the frivolous securities legislation initiative on the November ballot in California.

According to the study, based on a statewide survey of biomedical executives, increased legal costs and coerced settlements from frivolous lawsuits would force 43% of biotechnology and medical device companies to cut back on medical R&D. Almost half (49.6%) of biomedical chief executives surveyed are considering relocating their firms' headquarters outside California unless the proposition is defeated.

Prop 211 also raised serious misgivings among leaders of California life sciences universities, with concerns including potential damage to partnerships between universities and industry as well as threatening the ability of life science start-ups to raise capital and seek collaborations with research universities.