Thursday, February 22, 2007

Kuehl to Lay Out CIRM Regulation

Details are scheduled to be disclosed on Friday concerning the latest California legislative foray involving the $3 billion California stem cell agency.

The bill will be carried by State Sen. Sheila Kuehl, D-Sacramento, chair of the Health Committee. Here is a legislative synopsis that was circulated on Thursday. It said the measure would:
"modify and strengthen current and proposed regulations that have been adopted by the ICOC by:

"Codifying requirements that grantees share 25 percent of net licensing revenues on inventions they develop, beyond a reasonable threshold that the CIRM may establish;

"Providing that grantees may only enter into exclusive licensing agreements with uentities that have plans the California Institute for Regenerative Medicine (CIRM) determines will provide significant access to resulting therapies, drugs, and diagnostics for uninsured Californians, rather than plans that merely meet 'industry standards.' 'Industry standards' could arguably include patient assistance plans currently utilized by most drug manufacturers, which have been shown to be inadequate in encouraging access to free or reduced price drugs by uninsured patients;

"Providing that grantees may only enter into exclusive licensing agreements with entities that agree to provide resulting therapies, drugs, and diagnostics to publicly funded health care programs in California at the best available prices, such as the federal Medicaid price;

"Ensuring that the state’s return from its grants to commercial entities for research or therapy development projects is commensurate with its level of investment and is not capped, as recently proposed by the ICOC. This is accomplished by requiring grantees to share 2 – 5 percent of revenues over the life of the product, depending on the level of state funds provided and the contribution made by state-funded patented inventions to the development of the product. An economic analysis commissioned during the campaign for Proposition 71 estimated that, based on the experience of universities and research institutions, the state could receive 2 – 4 percent of revenues on successful therapies and products developed with state funds, without any cap. Using these assumptions, the analysis concluded the state could receive $537 million to $1.1 billion in royalty revenues under Proposition 71.

"As you know, the ICOC has struggled since its inception with the development of standards to ensure a fair return to the state. A report commissioned by the ICOC in 2005 and completed in 2006 actually recommended that grantees not be required to share any revenues with the state. As a result of the introduction of legislation in 2006, the ICOC abandoned that recommendation."
Reporter Steve Johnson of the San Jose Mercury News prepared a story that said the measure by Kuehl and Sen.George Runner, R-Lancaster,
"would require firms that make products based on the institute's stem-cell grants to pay the state up to 5 percent of the product's lifetime revenues.
"Under a policy tentatively adopted on Dec. 7 by the institute, formally known as the California Institute for Regenerative Medicine, the most a company would pay the state would be 1 percent of its product's revenue, plus 9 times the amount of the grant.

"Another provision of the bill is intended to insure that poor Californians can afford treatments developed from the institute's stem-cell grants. It would require that uninsured Californians have 'significant access' to the treatments and that any treatments purchased with public money be provided at federal Medicaid prices, which are typically discounted.

"By contrast, the institute's current policy requires companies to provide their treatments to the state 'consistent with industry standards,' which Kuehl argued could allow companies to charge excessively for the treatments.

"Under Proposition 71, bills affecting the institute's operations can only be passed with a 70 percent majority, which could make it tough to get the measure enacted. Nonetheless, Kuehl said voters were promised the program would generate significant financial returns to the state when they passed Proposition 71 in 2004. The measure authorizes the institute to spend about $300 million a year for 10 years on stem-cell studies. Moreover, she noted that the institute last week awarded its first stem-cell research grants.

"'This is extremely important,' said Kuehl, who chairs the Senate Health Committee. 'We have to nail this down now, because the first grants have gone out the door.'

"'The voters believed they were going to get some royalty or benefit from their dollars,' added Runner's spokeswoman, Becky Warren. 'We just want to make sure that occurs.'

"Dale Carlson, spokesman for the stem-cell institute, declined to comment in detail about the bill until he has a chance to read its language. He also said the agency's policy governing the amount the state receives from companies that receive stem-cell grants is still being revised.

"But Carlson emphasized the institute wants to ensure Californians have reasonable access to therapies developed through its grants and added, 'we look forward to having a continuing conversation with the legislature about these and other issues.'"
Kuehl has scheduled a news conference on Friday to discuss her measure. Sphere: Related Content

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