Monday, January 23, 2006

Revenue and Results Sharing Plus More March-In

The California stem cell agency Monday moved a step closer to adopting rules that will give the state of California a share of returns on revenue generated from inventions created by state-funded stem cell research.

The agency also moved towards requiring greater sharing of research than currently provided under much-criticized federal rules.

The actions were taken on a 7-0 vote by the agency's Intellectual Property Task Force. Basically the group adopted with some changes the draft of the policy prepared for today's meeting (see "25 percent" and the full text of the draft). The proposal covers only non-profit organizations.

The requirement on 25 percent revenue sharing would kick in only after revenues reach $500,000 (adjusted for inflation, a change added Monday). The revenue sharing applies only to the portion to be received by the grantee's organization. The individual grant recipient gets his cut first.

Regarding the sharing of research results, Ed Penhoet, chair of the task force, said the draft "pushes the envelope" compared to what is currently occurring nationally. He said the state could be "selectively disadvantaged" because other states will not have to share information while California would do so without requiring reciprocity.

But he did express hope that California's move towards sharing of research and non-exclusivity in terms of licensing inventions would spur a national movement in that direction.

The task force also made changes in the draft policy aimed at making therapies available at lower costs and to put muscle behind a requirement for plans to help uninsured persons.

One change would require that research licensees that develop therapies make them available at the lowest commercial prices to Medi-Cal or uninsured persons. Licensees could do that or come up with a plan for access to the therapies by Medi-Cal or the uninsured.

The task force then approved a rule to allow the state to "march in" – basically take back the rights of licensees when they fail to comply with their own plans. Federal law provides for "marches in" but none have ever occurred.

The language of the changes was loose and will more fully refined when the rules come up for adoption by the Oversight Committee on Feb. 10. Penhoet promised that the revisions will be posted online Feb. 5 on the CIRM, five days before the meeting.

Also on Monday, a key California state legislator released a statement on her position on intellectual property and accessibility of therapies. Sen. Deborah Ortiz, D-Sacramento, is carrying a proposed constitutional amendment that would force CIRM to change its IP approach.

Her position and the proposal approved on Monday appear to be creeping closer although they are still some distance apart.

Here is the text of the statement from Hallye Jordan, director of communications for Ortiz. It was not available elsewhere on the Web at the time of this writing:

"With the ICOC task force meeting today to consider intellectual property guidelines, as well as the recent proposals of the California Council on Science and Technology and the Foundation for Taxpayer and Consumer Rights, I thought it might be helpful to understand what Senator Ortiz is considering for legislation she intends to move this year.
"The senator supports the concept of requiring grantees to share with the state 25% to 50% of any revenues generated, with no direction that those funds by used for education and research. The senator believes the revenues should be available to help pay back the costs of the bonds. She also is considering allowing CIRM to direct the state’s share to a nonprofit organization if necessary to allow for the use of tax-exempt bonds. In addition, she is considering requiring the CIRM to provide a higher share of revenues to the state if possible without hindering research and the development of promising stem cell therapies.
"If CIRM is contemplating using taxable bonds, CIRM should be required to adjust the percentage upwards to so that the state can offset the use of more expensive taxable bonds with a higher level of royalties.
"If they are using tax exempt bonds, CIRM should be allowed to direct the state’s share of royalties to a nonprofit organization that is dedicated to enhancing access to clinical trials and therapies for low-income populations
"The Senator believes it is critical that licensees and grantees sell drugs, therapies or products developed with Proposition 71 funds to the state at the best price they are offered to anyone else.
"She also believes it is critical that CIRM be required to impose any and all licensing conditions that are necessary to ensure open dissemination of basic research tools and findings, including research exemptions, open source and nonexclusive licensing, retention of IP rights, and assignment or sharing of IP rights with entities designated by the ICOC to collectively manage IP rights associated with stem cell research."
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