California's Biomedical Industry Lays Out Opposition to SB771

The chief lobbying group for the California biomedical industry Tuesday detailed its strong opposition to legislation that seeks to guarantee that California reaps an economic and health-related return on its $3 billion stem cell research investment.

David Gollaher, president of the 250-member organization, said the bill, SB771, will "create significant disincentives for firms to commercialize inventions funded with CIRM money. And without company participation, basic stem cell science cannot be developed into treatments for patients."

CHI's opposition was laid out in a five-page letter to Sen. Sheila Kuehl, D-Santa Monica, co-author of the bill and chair of the Senate Health Committee. It was also sent to Senate Republican leader George Runner of Antelope Valley, co-author of the measure, and all Republican members of the California Senate.

CHI is also unhappy with CIRM's own provisions for sharing the wealth on any inventions that stem from CIRM-funded research.

CHI's letter said:

"Because commercialization is essential for the development and production of new medicines that can be used by Californians and others, CHI believes that the basic goal of intellectual property policies should be to minimize barriers to transfer technologies from basic research laboratories to the private sector for commercialization into products. Moreover, while we strongly support policies to improve patients’ access to advanced medicine, we maintain that IP policies and regulations are not the way to improve access and cost.

"Investment in biotechnology is inherently very risky. Any aspect of a technology transfer contract that increases risk, particularly by adding an element of uncertainty, makes it less attractive to potential partners and investors and thus reduces the prospects for successful commercial collaboration.

"We believe the intellectual property policies in your measure would reverse the improvements thoughtfully considered and accepted by the ICOC (CIRM's Oversight Committee) during several public meetings. SB 771 would impose more stringent revenue sharing and pricing and access provisions than those finally adopted by the ICOC.

"Additionally, we believe that codifying IP provisions in statute will deny the ICOC the flexibility it may need to amend its IP policies in the event they prove to be unworkable. As you know, the CIRM has just begun to issue research grants and it will likely be a number of years before any discoveries from this research moves to the commercialization stage. Thus, the ICOC may not know for some time if the IP policies it has adopted are effective and will need flexibility to change its IP policies if the situation warrants."

The letter concluded by saying that CHI questions

"...the appropriateness of commercial companies being forced to pay royalties, beyond what they negotiate with basic research institutions. If additional payments like this are required, along with the revenue sharing, pricing and access clauses mentioned above, they will only serve as an additional disincentive to commercial participation in CIRM-funded research."

The CIRM Oversight Committee is scheduled to discuss SB771 on April 10. Three members of that group are also directors of CHI. They are Ted Love, CEO of Nuvelo; Richard Murphy, head of the Salk Institute, and Philip Pizzo, dean of the Stanford School of Medicine.

The Senate Health Committee takes up the legislation on April 11. We have asked Kuehl's office if it would like to comment on the CHI letter.