Friday, October 31, 2008

Conflicts of Interest, CIRM and Transparency

Do conflicts of interest exist among the scientists who make the de facto decisions on hundreds of millions of dollars in California grants for research related to embryonic stem cells?

The answer? Yes.

Even the California stem cell agency acknowledges that fact. Because of conflicts, the agency regularly excuses some of the scientists who review the grant applications from participating in specific cases.

But CIRM stoutly maintains that the financial and professional interests of reviewers are not suitable for release to the public or applicants. The agency contends the reviewers are only making recommendations. However, the reviewers' decisions are almost never rejected by CIRM's board of directors. The agency also has turned down a recommendation by the state auditor that it seek an opinion from the state attorney general on whether it should publicly disclose the reviewers' interests.

Trust us, the agency says. We will police the conflicts and assure that no abuses occur.

Rarely do rejected applicants raise conflict issues publicly. No one wants to offend the world's largest source of funding for human embryonic stem cell research. In August, however, one scientist brought up the question of conflicts at a meeting of the CIRM board of directors.

Steven Kessler, a scientific director at Advanced Cell Technology of Los Angeles, was not happy with the response he received from CIRM staff on a letter he wrote concerning what he said was a conflict of interest on the part of a unnamed reviewer.

According to the transcript of the meeting, here's how Kessler summarized his position for CIRM directors:
"If a grant reviewer has a financial relationship with company "X"...that is, he's receiving funding from that organization or he's expecting royalty income from some company by virtue of having licensed technology to that company and that reviewer is sitting in on reviews from other for-profit organizations...and doesn't recommend those for funding, to us, from a business perspective, that's a conflict of interest."
Kessler said he had cited "numerous instances" of conflicts on the part of the reviewer, where there would be "every incentive to help impede the competition for the company that he has a relationship with.".

Kessler said,
"I was told that the way CIRM interprets its own conflict of interest policy, the example I gave you was not a conflict of interest."
At that point CIRM Chairman Robert Klein cut off Kessler, declaring that the directors needed to discuss the names for CIRM-funded labs before going to lunch.

Kessler's comments followed a discussion in which Klein and other directors expressed concern about reviewers quitting if they were subject to public complaints.

Klein said,
"To the extent that (applicants) are criticizing peer reviewers, which is sometimes common, we're going to lose our peer reviewers."
On Sept. 14, we asked CIRM for a copy of Kessler's conflict-of-interest letter. On Oct. 22, more than five weeks later and after repeated follow-up queries, the agency declined to release the letter.

Initially, Don Gibbons, chief communications officer for CIRM, said there was a question of redaction of material from the letter. Then he said our inquiry was lost by CIRM's interim general counsel. Ultimately, on Oct. 22, Gibbons said,
"Our interim general counsel has determined that the Kessler letter is part of the grant application process and as such is not a public document."
We asked for the legal reasoning behind that statement. On Oct. 29, Gibbons quoted interim counsel Ian Sweedler as saying,
"Applicants need to know that they can contact CIRM with information about potential conflicts, and that they can do that without leveling public allegations against a professional colleague."
Obviously conflicts of interest can at times involve judgment calls. CIRM also places a burden on its reviewers, all of whom come from out-of-state and cannot apply for CIRM grants. Marie Csete, now CIRM's chief scientific officer, commented last year on the situation when she was a reviewer prior to her employment at CIRM. Among other things, she said that she and the other reviewers were being asked to fund the work of their competitors.

CIRM's overriding concern has been the care and feeding of reviewers. We acknowledge that they need considerable attention. However, the main issue here is the stewardship of public funds and the integrity of a state government process involving billions of dollars. From its birth, CIRM has wrestled with problems spawned by the ballot initiative that created the research program. CIRM was deliberately cobbled together with built-in conflicts starting at the very top. The chief beneficiaries of CIRM's largess sit on its board of directors and set the rules for grants and control the process.

The bounty from CIRM is huge. Here is a list of CIRM recipient institutions (with grant totals) which have or had employees or representatives on the CIRM board of directors: Stanford, $94 million; UC San Francisco, $82 million; UCLA, $51 million; UC Irvine, $51 million; USC, $48 million; Sanford (San Diego) Consortium, $43 million; UC Davis, $36 million; UC San Diego, $33 million; UC Berkeley, $29 million; UC Santa Cruz, $17 million; Burnham, $18 million; Salk Institute, $16 million; Scripps, $9 million; UC Merced, $8 million; UC Santa Barbara, $7 million; UC Riverside, $6 million; Caltech, $2 million, and City of Hope, $2 million.

The built-in conflicts at CIRM are not likely to change, short of another ballot measure. They are enshrined in the state Constitution, a move by Prop. 71 writers who wanted to make CIRM immune to normal government oversight.

However, handing out billions behind closed doors with no outside scrutiny is a recipe for abuse. State ethics officials are already looking into the attempt by one CIRM director to influence CIRM staff on behalf of his institution. Should a major scandal erupt, it would ill serve the agency, the people of California and the cause of science.

If only to protect itself, the agency should comply with its repeated promise to adhere to the highest standards of openness and transparency and publicly release the statements of the economic and professional interests of its reviewers.

(Further note: Kessler also declined to release his letter to us. The CIRM grant review committee meets next Wednesday and Thursday in San Francisco to review applications for $66 million in public funds. The review sessions are closed but the public may comment on Wednesday morning.)

Thursday, October 30, 2008

Sunday Afternoon with CIRM: A Personnel Matter

The Governance Subcommittee of the $3 billion California stem cell agency has an interesting little meeting scheduled for this weekend.

Interesting in the sense that the meeting of the group of CIRM directors poses more questions than answers.

Only one substantive item is on the agenda, a closed-door personnel session. Both the narrow scope of the meeting and the unusual Sunday afternoon timing made us wonder what exactly was going on.

We asked Don Gibbons, chief communications officer for CIRM, to illuminate the subject matter further and explain the Sunday timing. His one-sentence response:
"It is because of the chair of the subcommittee’s busy schedule."
The chair is Sherry Lansing(see photo), a former Hollywood studio head (think "Titanic"and "Forrest Gump")and now head of the charitable foundation bearing her name. She is indeed a busy woman and has her fingers in several major pies, including the board of regents of the University of California.

The responsibilities of the eight-member, directors' governance committee include such things as CIRM internal controls, ethics, outside contracting as well as monitoring management goals. One could speculate that the meeting's timing reflects a certain urgency and importance, although its recommendations generally must be approved by the full board of directors. That 29-member group meets on Monday.

Closed-door personnel sessions are permitted under state law. If the committee takes any action, it must be reported following the private session. However, the public will have a chance to speak out during the meeting at six different locations in California, if they choose to do so. The teleconference sites include San Francisco, Los Angeles, La Jolla, Palo Alto, Sacramento and Laguna Beach. The street addresses can be found on the agenda.

Wednesday, October 29, 2008

Rare Teleconference Session of CIRM Directors on Monday

Californians will have an unusual opportunity next Monday to tell the directors of the $3 billion California stem cell agency what they think and listen to them attempt to solve a problem that has nagged them since 2005.

The occasion is a meeting of the directors, who are officially known as the Independent Citizens Oversight Committee. Virtually all of their meetings have been held under circumstances that require the physical presence of interested parties who might want to observe or comment.

However, on Monday, the meeting will be conducted via teleconference arrangements from locations throughout the state, from Healdsburg to La Jolla. One site in San Antonio, Tx, is included. Apparently one director will be staying at the Grand Hyatt there.

All the locations are public for the purposes of this meeting. The agenda includes only one item – a plan to solve the problem of meeting the board's super-quorum requirement of 65 percent at meetings of the 29-member group. The requirement is enshrined in state law courtesy of Prop. 71 and is politically nearly impossible to alter. Instead, the plan to help provide better director attendance provides for the telephonic participation of a limited number of directors on a limited basis for regular meetings.

Monday's meeting also provides an opportunity for the public to comment on any issue, although the board is legally restricted to action only on agenda items.

Here is the current list of teleconference locations in California other than Healdsburg and La Jolla(two sites): San Francisco(two sites), Sacramento, Los Angeles(five sites), Duarte, Menlo Park, Elk Grove, Irvine, Pleasanton and San Carlos. The locations could change, so keep an eye on the agenda, which also includes the specific addresses.

'No Job Too Big, No Job Too Small'

What does a stem cell watchdog do for fun?

In the case of John M. Simpson(pictured), stem cell project director for Consumer Watchdog of Santa Monica, Ca., he takes two weeks vacation and goes to work in the Obama campaign in Missouri, one of the battleground states in this year's historic presidential election.

Simpson, who has been observing and participating in the affairs of the California stem cell agency for several years, is doing a bit of everything in Joplin, Mo., the fourth largest metro area in the "show me" state.

It is a far cry from expenses and lifestyle of California. The average home price is around $70,000-$80,000. Once the lead and zinc capital of the world, tourism now drives the Joplin economy, generating $220 million annually for the 400,000 persons who live in the metro area (49,024 for the city proper).

More than 70 years ago, Depression-era bank robbers Bonnie and Clyde pillaged several businesses in the community and were chased out of town in a gunfight, leaving their camera behind. The images in it were later developed and may be the most famous of those of the two thieves.

Simpson, however, is not interested in banks. He is looking for beds. Places where out-of-state volunteers can rest during the big push for Obama turnout next Tuesday.

We asked Simpson why he is taking his vacation time to work the long and arduous hours involved in the final stage of a presidential campaign.

He said the election is pivotal, a time to unite the country and move away from "Republican rule that is dominated by the interests of big business."

California seemed to be comfortably in the Obama camp. So Simpson volunteered for out-of-state work. He attended a two-day "Camp Obama" training session in October. They put him in touch with the folks in Missouri.

In addition to scrounging up bunks for volunteers, Simpson is setting up speaking engagements for Obama surrogates, lugging furniture and sweeping floors. "No job too big, no job too small" is Simpson's credo. He reported, however, that he can't keep up with the 20-something, paid staffers who put in 20 hour days. He said he can only do 12 hours.

Simpson is recording some of his experiences on his Facebook site. You can read them after registering as a friend of John.

UCI Defends Lab Press Notice

The University of California, Irvine takes umbrage at our item that pointed out that the school did not credit the California stem cell agency (the California Institute for Regenerative Medicine) specifically by name in its press notice on the Oct. 24 ground-breaking for a stem cell lab financed in part with $27 million in agency funds.

The omission occurred in a news release sent out widely to the media. We characterized the omission as a minor PR gaffe and noted that one page on the UCI site carried a photo caption describing the lab as a "CIRM institute.'

Jennifer Fitzenberger, assistant director of media relations, sent us an email that said,
"Our stem cell center website and event invitation make very clear the new building will be a CIRM institute: CIRM is very clearly listed on more than one UC Irvine webpage in connection with our groundbreaking event, not just one as your blog item states."
The ground-breaking received extremely limited media coverage(three items in advancing of the event), based on a Google news search to this morning.

Here is a link to the news release that was issued on the day of the event. That release did mention the California Institute for Regenerative Medicine by its full name. Here is a link to the Sue and Bill Gross Stem Cell Research Center at UCI, which is the name of the stem cell research operation at the campus.

As we noted in the item below, this is not a major issue, at least for us. But CIRM directors have retained the power to approve the names of labs that they help finance – one indication of the importance that they attach to naming and the credit it implies. The reality is that none of these labs are going to be commonly known as CIRM facilities. Rather they will be referred by the names of the donors or some piece of vernacular originating on campus.

Wednesday, October 22, 2008

UC Irvine Breaks Ground on Stem Cell Lab

In a bit of a minor PR gaffe, UC Irvine announced its groundbreaking ceremonies on Friday for a new stem cell lab that will be partially financed with $27 million in CIRM funds without specifically mentioning the California stem cell agency by name.

The news release named Robert Klein and the Independent Citizens Oversight Committee, but nowhere was the phrase "the California stem cell agency" or "CIRM" used. The Independent Citizens Oversight Committee is the ungainly official name for the CIRM board of directors, but few Californians would make that connection.

One page
on the UC Irvine web site did, however, carry a small rendering (see photo) of the lab which identified it as the "Sue and Bill Gross Hall: A CIRM Institute." All of this PR hooha makes little difference to the stem cell effort. However, CIRM directors have expressed their firm desire for PR credit by retaining the right to approve the naming of labs that they finance with public money. The names are not official until approved by CIRM directors.

UK, CIRM Ink Collaboration Agreement

The California stem cell agency has expanded its international connections once again, this time linking to the United Kingdom with an agreement that potentially will finance scientists working in California with scientists working half-a-world away.

No money, however, has yet been committed. Reporter Bernadette Tansey of the San Francisco Chronicle also reported that the touchy issue of ownership of IP has not yet been worked out.

The agreement was announced earlier this week. It follows similar agreements in June with Australia and Canada.

According to Maggie Shiels of BBC radio, CIRM Chairman Robert Klein said,
"...(O)ne of the diseases the CIRM was likely to focus on in the future would be stem cell therapy for a type of macular degeneration that leads to a blindness that affects 7% of the US population over 75.

"Mr. Klein said the UK was well ahead in animal trials in this field and that the deal could pave the way for earlier than hoped for human trials."

"'We are very hopeful that this collaboration can bring us together in human trials to prove the first global embryonic stem cell therapy. It will hopefully break open this entire field,' he said."
According to Monya Baker, writing on The Niche (the Nature magazine stem cell blog), Lord Paul Drayson, the UK minister of science, said,
"UK’s National Health System made his country particularly able to carry out clinical trials and gather clinical data."
Don Gibbons, chief communications officer for CIRM, was quoted as saying,
"We could do a one-off with an investigator in Paris, but that bogs us down."
Baker said the agreement permits CIRM to accept applications "under the same rules and avoid bureaucracy."

If Klein's optimism is borne out, the "break-through" on the first embryonic stem cell therapy could mean that Great Britain will be the first to see the clinical fruits of research funded at least in part by California taxpayers.

The UK/CIRM announcement received light news coverage. For example, Bernadette Tansey's story was tucked away on page D2 of the Chronicle.

A meeting is scheduled for January 2009 among scientists and others to determine the "most fruitful options" for collaboration.

CIRM IP Hearing Set for Oct. 29

For those of you interested in profits from California-financed stem cell therapies, you should pay attention to the latest CIRM meeting on intellectual property.

The IP Task Force has scheduled a session Oct. 29 to discuss what appears to be a routine matter, but it could also involve discussions that go beyond routine.

Here is the language from the agenda. No additional information is available to the public at this point.
"Consideration of draft amendments to consolidate non-profit and for-profit intellectual property regulations and begin formal process of adoption."
The meeting has teleconference locations from which interested parties can participate. They include San Francisco, La Jolla, Irvine and San Carlos. More be be added later to the agenda.

Tracking the Little Hoover Commission and CIRM

The Little Hoover Commission, which is looking into the governance of the California stem cell agency, has posted some material concerning its inquiry, accessibility and schedule.

The first meeting will be held Nov. 20 in Sacramento with the second Jan. 22, also in Sacramento. The agenda says,
"As part of its study, the commission will explore the transparency and accountability of the existing governance structure."
The agenda also says that more information can be had by contacting project manager Eric Stern. To be notified of events concerning the CIRM inquiry, send a message to The phone number for the commission is 916-445-2125.

Tuesday, October 21, 2008

Fresh Comment

"Ron" has filed a comment on the "courtier" item below, including the text of a San Francisco Business Times article on the veto of SB1565.

CIRM and the Cause of Philanthropy

By now, you all have heard about Larry Lokey's whopping $75 million gift to Stanford to help build a new stem cell lab. But there is another bit of the story that has not received much attention.

And that is the role of the California stem cell agency in creating a friendly climate that encourages our wealthiest citizens to make huge contributions to human embryonic stem cell research and science in general.

Stanford and Lokey did not specifically cite CIRM and Prop. 71. But the agency has done much to portray favorably hESC research and draw the attention of scientists who need to believe there is a stable source of potential funding for their research. If not, they will choose another path of inquiry.

Four years ago, hESC was the poor stepchild of the NIH, all but banned by the Bush Administration. That is unchanged at the federal level. But California's Prop. 71 fired up the efforts in a number of other states and created a sense that the science could proceed even without the sanction of the NIH.

Lokey is not alone in making a major contribution to stem cell research. Eli Broad, Denny Sanford and others have also donated tens of millions of dollars in California.

Their generosity has set an example and a standard for others to emulate. The hESC philanthropy trend serves both science and charity well.

Biotech Courtier, the People's Will and 'Money Talks'

Gov. Schwarzenegger's veto of this year's CIRM legislation was deeply buried by most news outlets, if they carried anything at all. But his action triggered a fiery op-ed piece by J. Wesley Smith in the San Francisco Chronicle.

Writing on Oct. 2
, Smith, senior fellow in human rights and bioethics at the Discovery Institute, asked,
"What is it about embryonic stem cell research that turns politicians into courtiers? "
He said government leaders are more than ready to denounce the "get-rich, money-talks ethos" of Big Pharma, but "trip over each other to grant (biotech) policy agendas carte blanche."

Smith was talking about SB1565, legislation by state Sen. Sheila Kuehl, D-Santa Monica, which was aimed at providing affordable access to CIRM-financed therapies. The measure was opposed by the biotech industry and CIRM.

Smith said the governor claimed "incongruously that it 'does nothing to advance the will of over 7 million voters,' when precisely the opposite - assuring access for the poor to CIRM-facilitated treatments - was clearly part of the package voters thought they bought when passing Proposition 71."

Smith continued,
"Given the governor's constant harping about the crucial importance of bipartisanship, the veto is ironic. Talk about a bipartisan measure! SB1565 passed the Senate unanimously and by an overwhelming 64-7 in the Assembly. Other than naming freeways after dead luminaries, it is rare to find such agreement in the ideologically divided California Legislature.

"In backing the CIRM's fiscal profligacy and giving the back of his hand to the poor and the ill through his veto, Schwarzenegger made a joke of his reputation as a fiscal conservative and bipartisan consensus builder. How sad that the once mighty Arnold, who came to Sacramento vowing to smash boxes, has instead assumed the role of a mere industry retainer."
Jerry Steele, an advocate of adult stem cell therapy writing on the TheraVitae blog, also was critical of the veto. He said,
"The CIRM has been mired in many controversies on where the money has been distributed and is deathly quiet on the issue of when it is going to produce any cure."
Steele asked if California has received a return on its investment,
"Well, even the staunchest supporter of the CIRM would be hard pressed to come up with any successful results- I tried Google and the most I could come up with was a few semi-famous scientists have migrated to California to live off the taxpayer."
Geron, a Menlo Park, Ca., stem cell company, had a different view, although it was very brief. In what amounted to a one sentence news release, the firm said it supported the veto because the legislation ran "counter" to Prop. 71.

Don Reed, patient advocate and a vice president of the private stem cell lobbying group belonging to CIRM Chairman Robert Klein, gave a cyberspace sigh of relief on his blog. But he noted that the Little Hoover Commission, a bipartisan good-government state agency, will be looking into CIRM.

Reed vowed,
"If the Little Hoover Commission develops a new law or initiative against us, I will let you know about it early, so we can protect California’s great gift to the world."
Unsaid was the implication that any proposed change in CIRM's operations would be an attack.

Friday, October 17, 2008

CIRM Seeking Solution to Director Absenteeism

The California stem cell agency has been dogged for four years by problems with attendance of its directors at its board meeting, and it now is moving forward on a plan to allow some of them to participate by telephone.

The attendance issue is not minor. Without a quorum, the board of the directors cannot take legal action. Concerns arose last month that the board would have difficulties at an important, two-day meeting in December.

John M. Simpson
, stem cell project director of Consumer Watchdog of Santa Monica, Ca., attended the meeting of the CIRM Governance Committee that approved the telephone participation. He wrote on his organization's blog earlier this week about the problems with attendance:
"Even when there has been a quorum present there has all too often be a mad rush to take votes before members left for the day. It's not the sort of atmosphere which is conducive to sound deliberation and good policy making."
The attendance issue stems from inflexible language in Prop. 71 that can only be changed by the legislature or another vote of the people. The measure requires a supermajority of 65 percent of directors to conduct business. It also created an unwieldy board of 29 persons, all of whom have major responsibilities elsewhere.

Here's how Simpson described the proposed changes to ease the current problem, short of changing state law.
"The proposed rules would allow up to five members to take part in ICOC meetings by teleconference, but would give the chairman the discretion to limit the number based on 'his or her assessment of the importance of in-person attendance at the ICOC meeting for which a teleconference participation request was made.'

"The rules also limit the number of times a member could phone in to twice a year and offer the teleconference option to ICOC members with significant medical needs."
Simpson continued:
"First, of course, folks who cannot maintain the substantial commitment to the ICOC (the board of directors) ought to quit. There's nothing wrong with that. There is something very wrong with holding a seat and never showing up.

"Second,  a better solution would be to reduce quorum requirements to a simple majority and to adopt a procedure to remove or otherwise sanction members who are chronically absent. Perhaps such suggestions will come from the state's efficiency panel, The Little Hoover Commission, as a result of its planned study."
The CIRM board of directors plans to call a special meeting to adopt the new rules so that they will be in place in December.

Science and Construction Dominate CIRM Newspaper Series

California reporter Sandy Kleffman has pulled together a lengthy overview of the state's $3 billion stem cell research effort, focusing primarily on the science of the research and the building of stem cell laboratories.

The two-part series began Sunday in some newspapers in the San Francisco area. Kleffman reported that therapies are 10 years away and "numerous hurdles must be overcome." Despite the hurdles, Kleffman reported that "optimism remains."

She wrote:
"'I would say this is the most exciting time to be in science, ever,' said Dr. Arnold Kriegstein, director of the UC San Francisco Institute for Regeneration Medicine.

"'I don't think there's ever been as many opportunities to actually alter the course of a disease as there is right now.'"
Kleffman also wrote,
"Others fear the new therapies will be too expensive for many Californians.

"Money may be one of the biggest hurdles. The $3 billion taxpayer investment will not be nearly enough to take most therapies through the required trials and bring them to market.

"'The drug industry computes that it needs $1 billion for every new drug,' said Alan Trounson, president of the state stem cell agency, known as the California Institute for Regenerative Medicine. "If that's the case, we're going to be handicapped severely here.'

"For that reason, Trounson and other stem cell leaders have begun to look at partnering with the biotech industry to ensure the work continues beyond the limits of the state program."
The series was written before the release of the latest, CIRM-financed, economic impact report on its activities. Kleffman's stories also did not deal with the bulk of the public policy issues surrounding CIRM.

Her work was keyed to the fourth anniversary of the agency, which came into being November 2004. The media have a fondness for anniversary pieces since they provide an easy entry point to a story. However, given the short staffing at newspapers today and the host of more compelling issues this fall, don't look for many more anniversary pieces on CIRM this fall. Next year is another story.

CIRM Denies It Was Prompted to Release Economic Study

The California stem cell agency today said that it was not prompted to release publicly a $50,000 economic impact study concerning CIRM as the result of an inquiry from the California Stem Cell Report.

Don Gibbons, chief communications officer for the agency, said in a one-sentence email to us,
"You have quite the ego, writing not once, but twice, that you prompted us to post the Analysis Group report, which is not true."
Gibbons did not explain why the report, which was originally scheduled to be released last January, was posted on the CIRM website one day after we inquired about its whereabouts. We attempted to email him several times this morning, seeking an explanation. However, our emails are being rejected by the CIRM email system. Our presumption is that there is some sort of technical glitch involving emails that are being sent via a satellite link from Mexico.

So this posting also serves as a request to CIRM for an elaboration on the reasons for the delays in releasing the Analysis Group report.

We have additionally asked the Analysis Group if it has any comments on the two items that were posted on Wednesday concerning its work. If they do, we will carry their comments verbatim.

Fresh Comment

"SEO Firm" has posted a comment on the $350,000 item below.


The item below concerning economic impact reports involving the California stem cell agency may have been confusing to some. The $350,000 includes the $50,000 already spent for the Analysis Group report that was released this month and the $300,000 proposed to be spent in the RFP.

Thursday, October 16, 2008

Coming Next Spring: A $350,000 Paean to CIRM's Value

Is the California stem cell agency performing work that is beneficial to the economy of the state of California?

Any fair-minded person has to respond affirmatively to that question, and perhaps even some who are not so fair-minded.

But does CIRM have to spend $350,000 of taxpayer funds to prove its economic value? Will such an effort convince any skeptics that the $3 billion ($6 billion including interest) stem cell research program is economically worthwhile? The answer to both those questions is no.

If CIRM pays for an economic study, it will be forever clouded by the reasonable assumption that the agency received the findings that it already knows it wants. And those findings would amount to a paean that holds up CIRM as critical to the economic survival of the Golden State.

That conclusion is even more likely given the language in the recent CIRM RFP for a consultant to prepare the economic propaganda piece for the agency.

The RFP makes no bones about what CIRM wants and what the consultant better provide for $300,000. Certainly not an independent, detached assessment of CIRM's economic worth. Instead, the RFP states that the consultant must "execute a vibrant and aggressive strategy to support the goals and initiatives of CIRM."

To be sure the consultant fulfills expectations, he will work with a high-powered CIRM panel consisting not only of the chairman and president of CIRM, but also the vice chair, the vice president for operations, the general counsel, the legal counsel and unspecified "others." Lots of "minders" there to be sure no heresy comes forth.

CIRM has already spent $50,000 this year for what was supposed to be a new economic study. That report was originally scheduled to be released in January. After the California Stem Cell Report asked about it on Oct. 7 in connection with the $300,000 RFP, the document was publicly released a day later on the CIRM web site.

The $50,000 report was prepared by the Analysis Group of Palo Alto, Ca., which is likely to have the inside track on this latest contract. (For more details on the report, see the item below.)

Analysis Group also received $200,000 from the Prop. 71 campaign, which was directed by now CIRM Chairman Robert Klein, for a document that predicted health care savings of as much as $12.6 billion over 30 years and a net state government profit of at least $1 billion.

That report, however, was held up as an example of stem cell hype. "Hopelessly optimistic" was how one reasonably detached writer, David Hamilton, described the campaign analysis in a "biotech bubble" story for

The latest RFP also indicates that CIRM grant recipients will be burdened with additional paper work in the future. It implies that grant applicants will need a nose for dollars and must be able to demonstrate how CIRM cash, if they receive it, will benefit the California economy.

The RFP states that the consultant must create "a standard and routinized methodology for data collection from CIRM grantees and loan recipients and other sources to enable future measurements of economic impact."

Compliance with that methodology is likely to become part of the terms of any grant or loan in the future. We would hope that all the data gathered would be available to the public so that other economists and health policy experts would be able to draw their own independent conclusions.

Interested economic consultants must submit their proposals by Oct. 24. The contract could be awarded shortly thereafter. Look for the economic report in March 2009, if the RFP is to be believed, with the lucky consultant also embarking on a bit of a road show, according to the RFP's terms.

Unsaid in the RFP is the near certainty that the consultant will have an ongoing, lucrative relationship with CIRM for years to come as he updates the report with fresh information annually.

Economists Say "Too Early" to See Significant, Quantifiable CIRM Results

Has the four-year-old, $6-billion, California human embryonic stem cell research effort already paid off?

According to a $50,000 study commissioned by the state stem cell agency, it is "too early to expect to observe significant quantifiable health and economic benefits from CIRM’s funding."

The 31-page report by the Analysis Group of Menlo Park, Ca., which previously performed two controversial economic impact studies for the Prop. 71 campaign, was originally scheduled to be released in January. The document was made available to the public on Oct. 8 after the California Stem Cell Report asked about it in connection with CIRM's plans to spend $300,000 for another economic study.

Analysis affirmed that it is too early to draw definitive economic conclusions about the world's largest human embryonic stem cell research program. The report also contained useful summaries of CIRM's efforts and related stem cell activities in California.

It said, for example,
"Some stem-cell related companies appear to have increased activities in California. For example, Stem Cell Sciences is expanding into California from the UK, and companies like Invitrogen and Novocell (formerly CyThera) have hired new scientists from within and outside the U.S. Other companies, such as Jackson Labs, have committed to major relocations or large-scale expansions in California. As an example, Jackson Labs is in the process of developing and expanding a new California research facility near Sacramento that will ultimately be more than 200,000 sq ft."
The report is largely based on CIRM press releases and other CIRM documents, which presented the justification for another, six-month study at a cost of $300,0000 and continued ongoing work for many years by an economic consultant. The Analysis Group's and the report's two authors, Laurence Baker of Stanford and Bruce Deal(see photo), managing principal of Analysis.

Deal and Baker wrote,
"While it is clearly too early in the course of CIRM’s activities to make a broad assessment of their economic benefits, it is possible to begin to monitor and report on some aspects of CIRM’s activities and their relationships to possible sources of economic benefits."
We queried Don Gibbons, chief communications officer for CIRM, concerning the relationship between the $300,000 proposal and the $50,000 study. He replied,
"It is a very different study from the one proposed in the RFP. Instead of analyzing existing related studies and making projections based on those studies, we are seeking to benchmark certain data points now and determine what data we should be collecting going forward so that we can compare today’s benchmarks to data from serial reviews over time. This requires much more extensive work."
CIRM obviously has an inherent self-interest in demonstrating its value and assuring its existence well beyond its 10-year financing limit. CIRM Chairman Robert Klein has talked on more than one occasion about keeping CIRM alive pretty much indefinitely, but it only has bond funding capabilities for 10 years. Perpetuating CIRM is one of the goals of Klein's $500 million biotech loan proposal, which is aimed at providing an additional $100 million in funding. Klein has additionally spoken of going to the legislature in a few years with a request for additional funding. He would certainly need a hefty study demonstrating CIRM's worth to California to support such an appeal.

Until more time passes and more data are gathered, that tome remains to be produced. Meanwhile, Deal and Baker say,
"CIRM research grants are just beginning to go out, and it would not be reasonable to expect any health benefits or therapies attributable to CIRM at this time. Making predictions about the likelihood of particular future breakthroughs for particular diseases is outside our area of expertise. It is possible that no new treatments of widespread therapeutic use will be developed, which would mean very limited or no economic benefits from improved health."
But on the other hand, Deal and Baker report,
"All told, the information available to date suggests that California is already starting to see new economic activity resulting from CIRM and that there is significant potential for additional future economic benefits."
We are certain that Deal and Baker will find ample evidence over the next few years to document CIRM's value. We hope that CIRM and Deal and Baker will share the raw data and other information with other economists as well.

Tuesday, October 07, 2008

Finessing the CIRM Directors' Attendance Issue

Next Monday, directors of the California stem cell agency will try once again to figure out how to work around their perennial problem of having enough directors on hand to conduct their business.

The 29-member board has regular difficulty meeting its 65-per cent quorum requirement. Chairman Robert Klein is reportedly worried that not enough members will be on hand in December to hand out many millions in additional grants.

Sherry Lansing, a CIRM director and former Hollywood film studio executive, has taken on the task of finding a work-around in her capacity as chairperson of the CIRM Governance Subcommittee.

The group initiated its effort last month. Several suggestions were made for changes in the proposed policy. However, the latest version is not yet available on the CIRM website.

The quorum issue is one created by Prop. 71, which locked into state law procedural issues that are better left to regulation, which is easier to change. Ironically, directors recently successfully opposed legislation to ensure affordable access to CIRM-financed therapies on the grounds that the bill would codify in state law matters better left to regulation by CIRM directors.

CIRM could ask lawmakers to change the super-quorum requirement but that would open up discussions for other possible changes.

The public can listen in or make comments at teleconference locations in La Jolla, San Francisco, Los Angeles and Irvine. Othere locations may be added later. You can find them on the agenda.

Poppycock and CIRM

The California stem cell agency generates a certain amount of nonsense from time to time.

Some of it comes from CIRM Chairman Robert Klein, including a comment he made to the San Diego Union-Tribune in connection with the upcoming examination of CIRM by a bipartisan good-government panel, the Little Hoover Commission.

Klein has repeatedly referred in the past to the heavy scrutiny that he contends CIRM has endured. Most recently he told reporter Terri Somers:
“It's very important that the (Little Hoover) commission recognize the exhaustive reviews we've already been through and come out of with totally and consistently extraordinarily high marks."
Poppycock, we say.

While Klein thinks CIRM has been subjected to exhaustive and heavy scrutiny, that is hardly the case. He and others who express that view really do not know what heavy scrutiny means. Think Watergate, think the ongoing national financial crisis, think the California/Enron electrical deregulation debacle, think Paris Hilton and Britney Spears, think about television news vans camped outside Klein's home should a scandal erupt at CIRM. Indeed the scrutiny of CIRM does not even go as far as the local government coverage we saw last year in a small town on the Arizona/New Mexico boundary. The local paper published every single payment by the city down to one dollar, along with the name of each recipient. In California, few would even remember the last time a story about the stem cell agency was carried on the evening television news or appeared on the front page of a newspaper.

Klein also refers to the financial audits paid for by CIRM. However, they have an exceedingly limited scope and cover such things as whether Klein provided receipts for his trip expenses and whether a reported purchase of a computer actually can be tracked to a specific computer being used in the CIRM office. Klein has additionally cited the legal challenge to CIRM's existence, which was handily rejected by the courts at every step. That, in fact, covered limited matters as well and was largely bungled by CIRM's legal opponents. The courts did not attempt to assess whether Klein and CIRM were doing their jobs well or whether Prop. 71 was useful to the people of California -- only whether the challengers had proved their case.

The courts also did not determine whether the 50-person limit on CIRM staff was appropriate. Klein now acknowledges that was a mistake on his part in writing Prop. 71, although the agency is still well below that staffing level, a matter of concern to some directors who are worried about burnout and overwork involving CIRM employees.

The state auditor did conduct a lengthy "performance audit." CIRM officially thanked the auditor for her work and made changes in its operations as a result. That audit also was limited in scope. It did not address such questions as whether the quorum requirements written into state law are hampering CIRM's mission. It did not address whether an agency such as CIRM should exist outside of any normal state government controls. It did not address the question of whether overlapping responsibilities between the chairman and president create an inherent, unhealthy conflict that will continue to generate problems as it has in the past.

Back in 2004, backers of human embryonic stem cell research could not find either private or federal funding for their cause. So they ventured into the political arena with Prop. 71 to seek funding from the California public. But playing with the people's cash carries trade-offs. One is public scrutiny that can be uncomfortable.

We recognize Klein's need to posture publicly about CIRM and its actions. Such performances are not uncommon among both politicians and business executives, who believe their main responsibility is to fend off perceived attacks on their endeavors.

However, the Little Hoover Commission is a solid state organization, not given to flip analysis or decisions. Its inquiry should result in recommendations that will help to improve CIRM's operations and deliver more value to the public. Corporations pay millions of dollars to outside consultants to examine their operations and make recommendations that maintain their competitiveness and efficiency. The Little Hoover Commission is going to do that for free for CIRM. The process will certainly make some uneasy, just as it does in the private sector. CIRM should welcome this as a healthy opportunity that could create momentum for needed improvements.

CIRM's Financial Immunity

Just how protected is the California stem cell agency from the financial travails of the state of California?

Almost entirely.

During the legislative/gubernatorial budget stalemate earlier this year, nursing homes, hospitals and other private sector providers to the state did not get paid by the state for nearly three months. Some firms went out of business or had to borrow money because the state could not pay its bills.

That did not happen with those providing services to the state stem cell agency because of its unique and unprecedented constitutional position, which assures that it has cash regardless of how the rest of the state is affected.

CIRM's extraordinary position was mentioned briefly last month at the agency's Governance Subcommittee meeting.

John M. Simpson of Consumer Watchdog asked,
"Is it the case that because of the state's budget crisis, the vendors have not actually gotten paid? Does that affect the (grant) checks actually being handed over?"
CIRM Chairman Robert Klein responded,
"No, it doesn't. our funds are segregated from the state budget."
All of which raises significant governmental policy questions. One can make a case that stem cell research cannot proceed properly if it is cut back every time the governor cannot muscle a budget out of lawmakers. But should researchers be treated differently than hospitals? Should they be treated better than needy children dependent on state aid?

Locking up public money in special funds is part of the state's budgetary problem. However, there are no good answers that will satisfy everybody concerning the creation of special pockets of cash for what almost everybody agrees are worthwhile endeavors, whether they are stem cell research or special programs for gifted children.

Nonetheless, it is likely to appear a bit unseemly to a good segment of the public for the stem cell agency to hand out tens of millions of dollars while California is so hard pressed that it may have to ask the federal government for a $7 billion short term loan so that it can pay its bills.

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