CIRM as a Lobbyist: Mission Creep, Industry Ties and Board Conflicts

The California stem cell agency is once again going to consider its position and lobbying efforts on behalf of industry-supported federal legislation dealing with development of generic biotech therapies.

The topic is expected to be placed on the June agenda of the CIRM board because of a question about whether the board's endorsement of the bill on May 12 complied with the state's open government laws.

On the surface, the matter involves what some might consider a relatively minor legal point. But the endorsement also goes to both CIRM's mission -- whether it should be involved in heavy-duty federal lobbying -- and the agency's ties to the biotech industry and possible financial links involving directors.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., raised the issue of legality of the board endorsement with CIRM's outside counsel, James Harrison of Remcho, Johansen and Purcell of San Leandro, Ca. Simpson has shared his exchange of emails with Harrison with the California Stem Cell Report.

Simpson wrote Harrison on May 14, arguing that the motion to support the federal bill was "improperly passed" and is therefore void.

Simpson said,

"No notice was given that there would be consideration of supporting a particular bill. In fact the consensus at the previous (board) meeting was to develop principles.

"Based on the earlier meeting and the posted agenda, I decided not to attend one of the public sessions in person where I would have been able to comment. Instead I opted to listen to the meting over the Web. It is quite possible some (board) members not in attendance made the same decision."

Harrison responded on May 19,

"As you know, (the) Bagley-Keene (act) requires that a board's agenda include a 'brief general description of an item' to be transacted at the meeting. (Gov. Code,§ 11125.) Furthermore, Government Code section 11130.3 provides that an action is not void for failure to provide notice so long as the agenda was in 'substantial compliance' with Section 11125. The board's agenda for its May 12, 2009, meeting clearly satisfied the requirements of Bagley-Keene. Indeed, it specifically cited HR 1548, the federal legislation that was the subject of the motion. The agenda requirements of Bagley-Keene were not intended to prevent debate from evolving or to hamstring a board from taking action. In this case, the board's agenda was more than sufficient to put the public on notice that the board would consider federal biosimilar legislation. We therefore disagree with your assessment regarding the propriety of the agenda.

"Nevertheless, in order to provide a further opportunity for board member and public comment and to address any new developments, Chairman (Robert) Klein has directed staff to include an item relating to consideration of federal biosimilar legislation (HR 1427 and HR 1548) on the board's June agenda. The board will therefore be free to consider public comment and additional motions relating to this item."

Simpson said he disagreed with Harrison's analysis but appreciated that the matter would be brought up again.

The move to endorse HR 1548 by Rep. Anna Eshoo, D-Palo Alto, dates back to last month. (You can read more here, here and here.)

Supporters of CIRM's endorsement of her bill have argued that it is necessary to protect the biotech industry, which has perennial financial problems, so that it will develop drugs. Opponents have worried about mission creep at the tiny agency, which has a staff of about 39 persons. They have also suggested that CIRM is fooling itself if it thinks it can be a major player in Washington.

One anonymous reader also raised concerns about possible conflicts of interests among board members. In a comment filed on our May 12 item, the reader said "the whole thing stinks." The reader wrote,

"The industry members of the board include at least one self-described former employee of biotech leader, Genentech. Are there stock options? What about former Chiron founder and ex-vice-chair, (Ed) Penhoet, does he have stock options? What about the new CIRM counsel, formerly at Genentech, does she have
options?

"What about the two UCSF members, the UCSF (medical school) dean and Jeff Sheehy, who now answer to a former Genentech executive, UCSF's new
chancellor?...

"The whole thing stinks. Using a position on a state board to direct state funds to lobby for a bill to advance one's own private interests over those of patients ought to be against the law. This smells like Cheney and Halliburton!"

We do not have answers to the reader's questions, but we should note that Sheehy has expressed major reservations about endorsing the bill. Nonetheless, the reader's concerns highlight the conflict-riddled nature of the stem cell agency and the virulent suspicions that the situation can generate. The reader's comments also speak to CIRM's transparency and accountability, which will come under scrutiny this afternoon in Sacramento.

That's when a subcommittee of the state's Little Hoover Commission, the state's good government agency, will consider possible recommendations for changes in the operation of the $3 billion state stem cell research effort.