Wednesday, December 19, 2012

Exploring the Straw Man Argument Against IOM Reforms at California Stem Cell Agency

Constitutional objections to some of the Institute of Medicine's sweeping recommendations for changes at the $3 billion California stem cell agency amount to little more than a straw man, at least based on a legal memo produced earlier by the agency.

The legal objections to structural reforms at the agency were initially advanced in 2009 when the stem cell agency was fighting an unwelcome analysis of its activities by the state's good government agency, the Little Hoover Commission. The objections were voiced again at a meeting earlier this month by some governing board members, particularly Sherry Lansing, who is also chairwoman of the University of California regents. Her comments came within minutes of the start of the Institute of Medicine's (IOM) presentation to the board.

She said directors' hands “are tied” because of requirements in Proposition 71, the ballot initiative that created the stem cell agency, which is formally known as the California Institute for Regenerative Medicine(CIRM). While Lansing did not elaborate, some of the initiative is written into the state constitution, which can only be amended by a vote of the people. However, Proposition 71 can also be amended by a 70 percent vote of each house of the Legislature and the signature of the governor, which is no small task to achieve.

The 2009 legal memo (see the full text below) dealt with the recommendations of the Little Hoover Commission, some of which were cited and echoed by the IOM. The legal memo contended that the legislature was barred from making major changes in the structure of the stem cell agency governing board because the changes supposedly would not “enhance the ability of the (agency) to further the purposes of the grant and loan programs.” The argument was that only the people could make “non-enhancing” changes. The vague “enhancement” requirement was written into Proposition 71 by its authors, one of whom is James Harrison, the outside counsel to the board, who was also the lead author on the 2009 memo. Harrison is revisiting the supposed constitutional issues in the wake of the IOM study.

However, the objections cited in his earlier memo are dubious and easily overcome. The meaning of “enhance” is so vague as to permit wide interpretations. Certainly, removing public suspicion about conflicts of interest would seem to help move the agency forward. Straightening out the muddled management structure of the agency, with its overlapping responsibilities for the chairman and president, would certainly seem to enhance the functioning of the agency. Assuring that the governing board has the full ability to exercise strong oversight over the conduct of the agency would certainly seem to be an enhancement and long overdue.

At least that is what the most prestigious body of its sort says. The Institute of Medicine studied the agency for 17 months under a $700,000 contract with CIRM. The IOM's charge was to evaluate the performance of the agency and make recommendations for improvements. The IOM recommendations echoed findings not only of the Little Hoover Commission, but some in two earlier studies also funded by the agency.

For CIRM directors now to reject the IOM findings and turn away would be to indicate that their earlier admiration and respect for the IOM was something of a sham or, more likely, now inconvenient.

As for removing ambiguity about what does or does not enhance the agency's mission, the 29-member board could simply adopt a resolution declaring that all the IOM recommendations would enhance the CIRM mission.

One of major obstacles to acting on the earlier recommendations for changes was Robert Klein, the first chairman of the agency board. Klein, an attorney and real estate investment banker, also directed the writing of Proposition 71 and wrote portions of it himself. He would often make numerical code citations to the initiative during agency board meetings.

Klein is now gone from the board, leaving in 2011 at the end of his term. He was replaced by Jonathan Thomas, a Los Angeles bond financier, who has ushered in a new and different era at the stem cell agency. Some might say a more reasonable era. He says he and governing board take the IOM study seriously. 

The report is scheduled for discussion Jan. 23 at a public workshop at the Claremont Hotel in Berkeley, Ca., the day before the regular board meeting. .

The IOM's recommendations have won theeditorial endorsement of all the California newspapers that have so far written about them. The newspapers believe that the proposals would indeed enhance the agency's mission and are, in fact, necessary if the agency is to survive beyond 2017, when the money for new grants runs out.

Directors of the stem cell agency are currently mulling the future of their efforts. If they are to be successful in raising additional hundreds of millions of dollars – be they private or public – the directors must confront the findings of the IOM in a forthright manner. And they must move to dispel the cloud that now hangs over the stem cell agency.

(Editor's note: The full text of the 2009 legal memo can be found below. Also below is another related legal memo from Americans for Cures, a stem cell lobbying group sponsored by Robert Klein at the same time he was chairman of the stem cell agency. Despite the language on the Americans for Cures memo, it is a public record. It became a public document when Klein submitted it to the Little Hoover Commission.) 

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