DC Circuit Court Allows “Rivals” in Research who are Competing for Federal Grants to Challenge Agency Actions that Benefit Their Opposition

Jul 26, 2010   

On June 25, 2010, the United States Court of Appeals for the District of Columbia Circuit issued an opinion holding that two doctors who were applying to the National Institute of Health (NIH) for funding of projects involving human adult stem cells (hASCs) had standing to challenge newly promulgated guidelines of the NIH permitting the funding of human embryonic stem cell research (hESC).

The National Institute of Health (NIH) has provided funding for hASCs for about 50 years; however, research of hESCs has only been done since 1998. Both plaintiffs, Dr. James Sherley and Dr. Theresa Deisher, conduct research on hASCs and have never conducted research on hESCs. The NIH did not provide any funding for hESCs research until 2001, when President Bush authorized some funding subject to the limitation that only hESCs derived from then-extent stem cells could be used.  In Executive Order 13,505, President Obama expanded hESCs research and directed the Secretary of Health and Human Services, through the Director of NIH to “support and conduct responsible scientifically worthy human stem cell research, including human embryonic stem cell research, to the extent permitted by law” and to “issue new NIH guidance on such research that is consistent with this order.  These Guidelines permitted the NIH to fund more projects involving hESCs. 

Plaintiffs, Dr. Sherley and Dr. Deisher, along with Christian Adoption Groups opposed to hESC research, filed a lawsuit in the United States District Court for the District of Columbia, requesting an injunction to block federal funding of hESCs research and a declaration stating the NIH Guidelines are invalid. The plaintiffs argued in their complaint that the NIH did not promulgate the Guidelines in accordance with law, specifically the “Dickey-Wicker Amendment”, which has been a provision of the Omnibus Appropriations Act for over a decade.  The pertinent part of the Act is Section 509:

(a) None of the funds made available in this Act may be used for–
(1) the creation of a human embryo or embryos for research purposes; or
(2) research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero under 45 CFR 46.204(b) and section 498(b) of the Public Health Service Act ( 42 U.S.C. 289g(b)).

The United States District Court for the District of Columbia dismissed the complaint, holding the plaintiffs did not have standing to challenge the NIH Guidelines.  Drs. Sherley and Deisher argued they had standing under the competitive standing doctrine, as “the new guidelines will result in increased competition for limited federal funding and will injure their ability to successfully compete for NIH stem cell research funds.” The District Court rejected this argument, finding Drs. Sherley and Deisher were “not participants in strictly regulated economic markets, but are applicants for research grants, where unlike an economic market, an increase in competition for funding does not mean that all other applicants are harmed.” The District Court further described the competitive process to receive NIH funding, and stated that even if the regulations did not exist, the doctors were not assured of receiving funding for adult stem cell research.  It also emphasized in its opinion that only about 22 percent of applications to NIH actually received funding.  The District Court found that the Guidelines neither prevented nor hindered either doctors opportunity to compete for funding. Their respective proposals would still receive funding if they survived the two-tier review process that all applications undergo. 

            The United States Court of Appeals for the District of Columbia reversed, noting in its opinion that it could see “no reason a person competing for a government benefit should not be able to assert competitor standing when the Government takes a step that benefits his rival and therefore injures him economically.” 

The specific rivalry between the hASC research and hESC research is acknowledged by the NIH on its website under the “Frequently Asked Questions”:

Question: Why not use adult stem cells instead of using human embryonic stem cells in research?
Answer: Human embryonic stem cells are thought to have much greater developmental potential than adult stem cells. This means that embryonic stem cells may be pluripotent”that is, able to give rise to cells found in all tissues of the embryo except for germ cells rather than being merely multipotent”restricted to specific subpopulations of cell types, as adult stem cells are thought to be.

The Court of Appeals found there was “no doubt that the Guidelines will elicit an increase in the number of grant applications involving hESCs.” It also noted that the Guidelines “intensified the competition for a fixed share of money” and will force the plaintiffs to “invest more time and resources to craft a successful grant application.”  The injury in fact to researchers of hASCs applying for NIH grants was more “imminent” and “traceable to the challenged guidelines” than the injury to all researchers applying for NIH grants because hESCs and hASCs could often be used as substitutes for each other. The Court of Appeals acknowledged that the actual loss of funding by researchers of hASCs could not be determined, but the substantial possibility of the imminent injury was sufficient for purposes of the competitor standing doctrine. 

The holding of the Court of Appeals is narrow. It merely has the effect of permitting obvious rivals in an area of research to have standing to bring suit when a government action eases their oppositions entry into the competition for federal grants. Whether the new NIH guidelines are in conflict with the Dickey-Wicker Amendment, and are thus unenforceable, are still questions to be decided by the District Court on remand.    

If you have any questions pertaining to new NIH guidelines, or the application process for receiving NIH grants, contact Fuerst Ittleman PL at contact@fidjlaw.com.