Wednesday, October 11, 2006

Conflicts of Interest: From Press Releases to Matching Funds

For those of you who may have forgotten -- at least 14 members of the 29-member Oversight Committee come from institutions that could benefit from the roughly $300 million in proposed grants from CIRM to build research facilities. The committee will decide which instititions receive the cash and under what terms. Members, however, are forbidden from voting on grant applications from their own institutions.

Those built-in conflicts of interests at the California Institute for Regenerative Medicine surfaced today during a discussion concerning the grants and the process of issuing press releases about CIRM-funded research.

Just what should CIRM require from medical schools and other institutions that receive grants for multimillion dollar laboratories? The law requires that applicants must secure matching funds from other sources that equal at least 20 percent of the award. But how that credit is calculated is yet to be determined. Applications will not be submitted for many months, and fundraising is already underway. So the issue of what expenditures made now or even earlier can be counted as matching funds is not an insignificant matter for the deans of the medical schools and others who are raising the cash.

Also up for debate was a provision that would favor grants to institutions that propose a higher matching percentage.

Given their responsibilities to the institutions they work for, some of the deans wanted to be sure their fundraising efforts and money for initial building plans would not be wasted. Some also noted that an early clarification of the issue would mean meaning speedier construction, a goal that CIRM advocates.

Brian Henderson, CIRM Oversight Committee member and dean of the USC School of Medicine, said favoring institutions offering higher matching funds could lead to a "ridiculous escalation" in which schools try to outbid each other. David Baltimore, CIRM Oversight Committee member and president of Caltech, noted that a bidding war disadvantages "poorer" institutions. He favored a straight percentage.

Also disturbing some directors of the agency were grant criteria that would consider the geographic location of applicants within California with an eye to assuring that facilities are available to researchers throughout the state.

Baltimore said the board is "too conflicted" to consider geography. But Henderson said, "Reasonable geographic distribution is a laudable goal." Gerald Levey, an Oversight Committee member and dean of the School of Medicine at UCLA, opposed the use of geography as did Oswald Steward, chair of the Reeve-Irvine Research Center at UC Irvine.

The press release issue can be crystalized in the following manner: Should recipients of $10 million grants, or for that matter any size, be required to "coordinate" with CIRM press releases on the results of the taxpayer-funded research.

Baltimore, who brought up the proposed requirement, said it "was an inappropriate transgression of the independence of (our) institutions." It was a sentiment heatedly defended by others at various institutions.

However, Jeff Sheehy, Oversight Committee member and deputy director for communications at the UCSF AIDS Research Instititute, said coordination on press releases was not an onerous requirement and would help protect CIRM. Ultimately he dropped his opposition to removing the language, declaring that the board was wasting time on the matter in extended debate.

Our point – for now -- about these discussions is not which position prevailed. What is important is that the directors of the $6 billion California stem cell agency are setting the terms of contracts that could benefit their institutions.

The directors are not in a good place. When a director votes, one can imagine him or her thinking: Whose interests do I serve? My employer's? The person who appointed me? The groups I am supposed to represent? CIRM's interests? Or the people of California?

Some of these issues are found in other segments of state government but rarely to the degree they are found on the Oversight Committee of the California stem cell agency. And it is all legal, courtesy of California voters, who created this situation in 2004 when they approved Prop. 71. Nonetheless, for those affected by CIRM and who follow its activities, understanding the conflicts and how they can affect multimillion dollar decisions is an imperative.

By the way, the matching fund issue comes up again at the Oversight Committee meeting in December. The geographic criteria was retained on a 15-10 vote. And grant recipients can ignore any coordination efforts on press releases. The offending press release language, which has been around for months, was removed, triggering another delay in official adoption of the regulations.

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