Wednesday, October 30, 2019

An Insider's Critique of California's Proposed $5.5 Billion Stem Cell Initiative: 'Too Little and Too Much'

Editor's Note: The following critique of the proposed $5.5 billion ballot initiative to re-fund the state stem cell agency was offered to the California Stem Cell Report by Jeff Sheehy, a longtime member of the governing board of the stem cell agency. Sheehy is also an HIV advocate and former member of the San Francisco County board of supervisors. His piece is verbatim, including the headline below. This web site more than welcomes additional comment on this important subject, both pro and con. You may comment at the end of this item. Or send your commentary to It will be carried verbatim. See here for an initial summary of the measure.)

"Prop 71 Redux, Thoughts on the 'California Stem Cell Research, Treatments and Cures Initiative of 2020'”

By Jeff Sheehy

"I have been a member of the Independent Citizen’s Oversight Committee (ICOC), the governing board of the California Institute for Regenerative Medicine (CIRM), since its inception in 2004. The original measure, Proposition 71, passed in 2004 and authorized $3 billion in bond funding for stem cell research, almost all of which has been spent.

"A new ballot measure has been proposed
It adds an additional $5.5 billion in new State of California issued bond funding for CIRM, along with additional language that makes changes in the original ballot measure. 

"Notwithstanding any debates about the relative value to California from having spent the initial $3 billion and whether there is any need for additional funding, I would like to address some of the several changes to the original Proposition 71 that are included in the measure authorizing the new debt financing meant to support CIRM’s continued existence.

"Proposition 71, while workable, has been criticized for some of its features. My hope had been that the new measure, 'The California Stem Cell Research, Treatments, and Cures Initiative of 2020,' would address shortcomings in the original initiative.

"It does not. In some instances, it exacerbates existing defects, in others it fails to address problems, and it introduces new elements, some of which are confusing and unnecessary.

"Conflicts of interest amongst ICOC members have been one of the largest concerns in the original measure. Executives from academic research institutions are named as members of CIRM’s governing board, the ICOC, and under Proposition 71, participate in making decisions about funding. The bulk of CIRM’s funding has gone to these institutions and that has raised significant conflict of interest concerns. These members have always recused themselves from funding decisions related to their institutions and, in 2013, CIRM’s board decided to recuse these executives from involvement in any funding decisions, although no instances of impropriety had taken place.

"The new measure addresses this issue by removing decision making over conflicts of interest from CIRM’s board and handing it to the National Academies of Sciences, a non-profit in Washington DC funded in large part by the federal government (Section 125290.40 (q) ..develop conflict of interest rules..) and (Section 125290.30, ( l ), To assure…rigorous conflict of interest rules…every four years the ICOC shall update its standards relating to conflict of interest rules…to be generally aligned with standards adopted by the National Academy of Sciences…).

"Questions related to conflicts of interest regarding the distribution of $5.5 billion in State funds obtained via debt financing should NOT be handed to an entity that is not under the control of the State of California. In addition, the National Academy of Sciences has no public meeting requirements nor other measures around public accountability and transparency that are uniformly applied to all government bodies in California.

"Those sections removing conflicts of interest oversight from the purview of Californians should be removed. The way to address any concerns expressed around conflicts of interests by board members is to add new language changing the composition of the ICOC.

"Governance has been problematic. The original Proposition 71 created ambiguity around leadership of CIRM and conflict between the Chair of the ICOC and CIRM’s President has often taken place due to this ambiguity. Based on the language of Proposition 71, each officer could claim the role of chief executive officer (CEO). Plus, the ICOC, with 29 members, is too large. The size of the board has made it difficult for all of its members to get to know each other, to develop strong collaborative relationships with each other and CIRM’s President, and for all members to meaningfully exercise their oversight duties as a body.

"The Chair should not have executive responsibilities, and the job duties in the original Proposition 71 should be rewritten (Section 125290.45. ( b) (1) (A) ). Specifically, at a minimum, Chair responsibility for bond funding, government relations, and intellectual property should be deleted. The Chair should have an oversight role leading an active (and smaller) ICOC. The absurd $400,000 salary for the Chair and the language allowing it should be removed (Section 125290.45. ( b) (4) ). I defy anyone in California to examine the workload and output of the ICOC chair and justify the current salary, which is almost double that of Governor Newsom. I also would note that the current ICOC/Proposition 71 has no mechanism for removal of the Chair—that oversight should be corrected in the new measure. In addition, the President should be clearly defined as the Chief Executive Officer.

"The new measure makes board governance worse. It expands the ICOC to 35 members, which makes no sense (125290.20. ICOC Membership…) A board of that size will be unable to properly oversee the agency. Oversight has been a challenge under the current measure with the ICOC having a roster of 29 members. The sole rationale for a board of that size is to obtain political support from various stakeholders for the new measure by setting aside seats for their representatives. What those stakeholders fail to realize is that a seat on the board is meaningless if the representative is unable to engage the agency with sufficient impact. I can tell you from experience that it helps to be in the Bay Area (where CIRM is headquartered), and it also helps to have the ear of the Chair. Otherwise, it can be quite difficult to know what is going on and also to exert influence.

"The new measure should include new language to shrink the board to between 7 and 11 members, with the same ratios between scientific, patient advocate and biotech industry appointments (Section 125290.20). The chair and two vice chairs should selected from and by board membership, on a rotating basis with one each from scientific, patient advocate and biotech members. The chair and vice chairs should constitute an executive committee. ICOC membership should be defined in a way to address the conflict of interest concerns around ICOC members having executive leadership roles at institutions receiving funding. Members should be paid on the same scale as members of the California Public Utilities Commission with at least the same level of commitment and time.

"Conflict between the Chair and the President is potentially heightened by the creation of a Scientific Advisory Board with each appointing five members (Section 125290.76. Scientific Advisory Board…). The ICOC is weakened by being left out of this process and work that belongs to the ICOC around strategic planning is duplicated, and the ICOC’s overall role in overseeing the agency is undermined. Half the members are from outside of California, which shortchanges Californians. The ICOC and the President have always been able to solicit external scientific advice so there is no reason for this in the ballot measure, and it is likely to create conflict. In addition, unlike the ICOC, this body is not required to meet in public. The scientific planning for spending $5.5 billion in debt financed funds should not take place outside of public view. This section should be deleted—it is unnecessary.

"A major flaw in the new measure is that it redirects responsibility for ethical concerns around gene therapy to the National Academy of Sciences (Section 125290.35. Medical and Accountability Standards, (8) Standard for Genetic Medical Treatments and Research) and (Section 125290.30, ( l ), Additional Accountability Requirements). As I alluded to earlier, the National Academy does not meet in public nor follow any California open government/transparency rules. Ethical concerns around gene therapy with the very real potential to permanently alter the human genome and/or genetically enhance some individuals represents ethical concerns of the highest order. These decisions should be made openly, transparently and with the participation of all sectors of society. As an example, the identification of 'gay' genes in a recent study has already raised the possibility of editing those genes out to eliminate homosexuality—a concern so grave that some researchers at the Broad Institute, where the research took place, thought the study was unethical. This type of gene editing is no longer science fiction.

"This change is also confounded by CIRM’s experience. Several thorny ethical issues around embryonic stem cell research were raised early in the agency’s existence. Those issues were successfully handled via CIRM’s Medical and Ethical Standards Working Group, superbly chaired by patient advocate Sherry Lansing and esteemed bioethicist Bernard Lo. I would expand the activity of this body and specifically delegate to it the work around genome editing and other issues related to gene therapy. In the same manner as the issues around embryonic stem cell research were resolved, the entire process should take place in public with active participation from multiple stakeholders. Moving this to the National Academies takes away Californians’ ability to influence the ethics of research that will profoundly affect the future of Californians and is paid for by Californians.

"These sections delegating responsibility for ethics issues to the National Academies should be deleted.

"The new measure fails to address a huge deficit in the original measure around intellectual property and the financial return to the State (Section 125290.30.) Proponents of Proposition 71 promised billions in return to the State from the original $3 billion in funding. To date, only a few hundred thousand dollars have been received by the state in royalties. The elements codified via amendment by the State Legislature have helped, but I still strongly believe that the mechanisms to maximize the financial return to the State are weak. Plus, the agency has been hamstrung by a lack of staffing specifically dedicated to tracking and dealing with intellectual property—the 1% of the administrative budget that is dedicated to “Affordability” in the new measure should be reallocated here.

"In addition, CIRM has not been able to accept equity stakes in companies using CIRM generated intellectual property and/or funded by CIRM to conduct research. Billions are made by venture capitalists who invest in biomedical research and holding equity is an important mechanism for investing. Unfortunately, the ban on holding equity is stipulated in the California Constitution. I note with interest AB-1027, authored by Assemblymember Burke, allows for an undiluted ownership stake for the State in companies that accept certain financing from the State. I mention that as an example of creative thinking that could be brought to bear on this issue.

"I believe that opportunities to get a fair return exist and the new measure should identify means and processes that engage experts in intellectual property and finance along with the Governor’s, Treasurer’s and Controller’s offices to develop policies and staffing that ensure that the return to the State is maximized.

"Some elements added in the new measure are very difficult to understand. One element of the initiative, the “Alpha Stem Cell Clinical Program and Establish Community Centers of Excellence Program” (12590.72), is particularly hard to wrap one’s head around. Five Alpha Clinics have already been established and CIRM can set up more. CIRM recently convened experts publicly to analyze our work to date and offer suggestions moving forward. Expanding the Alpha Clinic network was not identified as a pressing need. However, expanding cell therapy manufacturing capacity, especially large scale capacity beyond what we have at academic research centers, was clearly identified as an urgent need and a critical element in scaling regenerative medicine/cell therapies.

"The Alpha Clinic network should be expanded due to evidence-based need -- not political expediency — that’s the definition of government waste. With an additional $5.5 billion, CIRM and the ICOC are more than capable of expanding the network if the need is identified.

"Alpha Clinics are expressly designed for institutions that have existing cell therapy manufacturing capacity, along with existing clinical trial infrastructure that includes state of the art medical centers.

"The requirement to establish Community Care Centers of Excellence in the new measure is extremely confusing and at a minimum, too prescriptive. Increasing access to clinical trials can be positive, but I worry about sending a signal to individuals considering participating in early stage clinical trials that there is some hope they will be cured by early stage products. The ethics of early stage clinical trials are clear—these trials determine whether a product is safe and carry significant risks and promising efficacy is unethical.

"The real gap for patients is getting access to late stage clinical trial products that have been proven safe and are being tested to see if they really work to treat or cure disease. Frequently the sickest patients are not allowed into these trials because they are the hardest to treat successfully and inclusion will unfavorably skew the data necessary to secure product approval. A compassionate access program that allows patients desperate for therapies to get late stage products and exempts the trial sponsor from having to include their outcomes in their data sets is a way to get these therapies to patients.
"I do see an emerging problem in making sure approved regenerative medicine/cell therapies are available to everyone in California. For instance, the FDA has approved CAR-T cell therapies for cancer (eg, Kymriah and Yescarta). These therapies cure some cancers, mostly blood related, in some patients. A patient’s own disease fighting immune cells are removed and then genetically modified to target and kill cancer cells. The complexity of the processes around cell manipulation requires special expertise and equipment. These therapies are only available at select specialized comprehensive cancer centers, usually at major academic research hospitals. Creating capacity in underserved parts of California for these and other regenerative medicine/cell products would be beneficial in ensuring access to these emerging therapies for all Californians. While the new measure requires that the Community Centers of Excellence conduct clinical trials and deliver CIRM funded products, creating this capacity should not be dependent on clinical trial work or CIRM funded products (btw, none have been approved so far). The focus should be on ensuring access to all regenerative medicine/cell therapies to patients, wherever they may be in California.

"Additionally, setting up these clinics requires working with existing healthcare provider networks—whether Kaiser or Sutter Health or County Departments of Public Health—and should also involve payers such as major insurers and MediCal. These new therapies will need to be integrated into existing care delivery systems. To implement a program like this, different sets of processes at CIRM will need to be developed—this is not a research program but a healthcare delivery program and should not be funded nor managed like a research proposal.
"I would suggest that Section 125290.72 be deleted and new language added to accomplish clear goals such as ensuring compassionate access for patients in need and creating capacity to deliver regenerative medicine/cell therapy throughout California if that is the intent of this initiative. It’s not clear what, if any, goals will be achieved by the current language in the new measure.

"Likewise, the Treatments and Cures Accessibility and Affordability Working Group (125290.75) is confusing. Affordability is a huge issue, especially for the therapies being developed by CIRM. I am not alone in believing our healthcare system is irrational. Systematic approaches like those bandied about in the run up to the 2020 Presidential election are the real solution.

"The response proposed in the new measure is both too little and too much. Creating a working group that works out some of the issues around reimbursement for expensive regenerative medicine/cell therapies is duplicative. Policy researchers, health economists and companies producing these products are all investing heavily in figuring out payment/reimbursement schemes. Setting aside 1% of administrative funds for this working group serves political purposes by pretending to address affordability and access—the equivalent of setting up a blue ribbon commission to study an issue you know you cannot solve.

"Section 125290.75 should be deleted. Instead, I would propose expanding the duties of the Medical and Ethics Working Group to include access and affordability issues.

"The best way for California to address the affordability issue and improve access would be to take substantial funds, perhaps via this measure, and establish a California non-profit generics manufacturing company. If generics, 90% of all prescription drugs, were priced at the cost of production, the amount of money available within the healthcare system for higher priced innovative new products, i.e. products of CIRM’s research, would be significantly increased. I would love to see a new section in the new measure specifically allocating funding for that purpose.

"There are other elements in the new ballot measure that I find overly prescriptive. For example the measure specifically requires funding the “Shared Research Laboratory Program,” an initiative originally funded by CIRM to address problems around the need to segregate embryonic stem research from any and all federally funded research. The new measure also requires funding the “Medical Training Program,” which requires CIRM to reinstitute training programs that already exist or once existed. Programs similar to these are likely to be part of a new portfolio if CIRM is refunded, and it is micromanagement to put them in this measure.

"These sections, 125290.73 and 125290.74, should be removed.

"This list of issues is not comprehensive, but only encompasses those that immediately raise concerns. I acknowledge that the potential fixes merely represent my own opinion, but they are based on real experience over a span of 15 years on the ICOC. I would welcome robust public processes that include engagement with the proponents and other interested parties in order to produce the best possible measure.

"The measure before us was constructed in private with input from a Scientific Advisory Board consisting of a select group of individuals who have received funding from CIRM. I am deeply troubled by this process for extending the life of a public agency that has existed for almost 16 years. I am extremely troubled by the lack of formal, public input from the Legislature or statewide elected officials including, but not limited to, Governor Gavin Newsom, Treasurer Fiona Ma and Controller Betty Yee.

"The original measure was created in response to the federal government’s limits on embryonic stem cell research. Those impediments were removed under President Obama, and the Trump administration has not taken up the issue. This is due in no small part to the identification of a new source of pluripotent stems cells (cells that have the ability to become any cell type found in one’s body). When Proposition 71 was passed, the only source of pluripotent stem cells, which could have transformative uses in treating and curing diseases, was from embryonic stem cells. The source for embryonic stem cells is surplus embryos created during the in vitro fertilization process. This source was highly controversial.

"Since the passage of Proposition 71, a new source for pluripotent stem cells was developed—induced pluripotent stem cells (IPS). These IPS cells are derived from a donor’s tissue—for example, from a tiny piece of skin tissue. IPS cells are also believed to pose low risk of rejection by the immune systems of patients from whom they are taken. IPS cell technology has raised no ethical concerns and many research projects that anticipated using embryonic stem cells now employ IPS cells.

"Much of the structure of the original Proposition 71 was conceived in order to insulate CIRM from any interference from ideological opponents to embryonic stem cell research. That is why board appointments are spread among multiple statewide officeholders and a 70% vote threshold by the Legislature for amending Proposition 71 was deemed necessary (this feature should also be changed in the new measure to allow the Legislature to weigh in more easily). Times have changed and now is the time to make CIRM responsive and directly accountable to the State of California and its residents."

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