IP Policy for Business Moves on to Final Step

Call it the 25 percent conundrum. Or the payback puzzle.

That was one key issue facing the Intellectual Property Task Force of the California stem cell agency during its meeting Thursday on IP policy for grants to businesses.

Specifically, when do businesses have to come up with plans for access to CIRM-financed therapies, making them available to the uninsured and public agencies in California? (You folks out of state are out of luck.)

As originally proposed, businesses would have to come up with access plans when the agency's funding exceeded 25 percent of the invention. At that threshold, they would also have to provide therapies at the "federal Medicaid price" when the therapies were purchased with public funds.

The committee expressed concern about definitions of such terms as the Medicaid price and public funds, which are expected to be clarified in time for the Oct. 11 Oversight Committee meeting.

Task Force Chair Ed Penhoet introduced the topic of the 25 percent trigger by noting that some companies would find it onerous. Francisco Prieto of Sacramento, another Task Force member, said he "pulled the number out of my hat" when he originally suggested it.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights, said a percentage might be the wrong approach. He suggested tieing access plans to when a CIRM grant was made -- a "decisive point." After discussion about concepts other than a flat percentage including the idea of an "enabling amount" from San Francisco attorney Ken Taymor of MBV Law LLP, Penhoet indicated the staff would work on a percentage figure that varied, depending on when it was made in the process of the development of the therapy. Generally, the percentage would be larger at an earlier stage and grow smaller as the development cycle matured. What ultimately will be proposed will have to wait until closer to the Oversight Committee meeting.

Todd Gillenwater, vice president for public policy for the California Healthcare Institute, a biomedical industry association, said he was reserving a position on the percentage, pending completion of informal survey of some of the group's members.

Also up for clarification prior to the October meeting is language requiring the sharing of biomedical materials. Members of the Task Force were concerned about creating a burden on companies but also wanted to ensure the free flow of research. A representative of Applied Biosystems of Foster City, Ca., said he would like a provision that would allow companies to make a profit on research tools.

Most of the rest of the draft IP policy remained relatively unchanged.

Speaking to audience of 15 to 20 persons, Penhoet noted the difficulty in devising a commercial IP policy even after months of work and detailed testimony from a number of businesses. He indicated that the Task Force had plowed much new ground. Penhoet said there was a dearth of organized material on the questions before CIRM, declaring that his deputy, Mary Maxon, who performed virtually all of the research, had become the "world authority" on the subject.

The Task Force did not have a quorum for the discussion, and no vote was taken. But Penhoet was given an affirmative response when he asked the other members whether he had their permission to take the IP draft to the Oversight Committee. The meeting took place in CIRM's San Francisco headquarters. Four members of the 12-member group participated through a conference call connection. No media were present with the exception of the California Stem Cell Report.

(Editor's note: A slightly earlier version of this item contained an error in the 7th paragraph. It incorrectly stated that the variable percentage would be smaller initially instead of larger.)