Thursday, September 17, 2020

$2.1 Billion in California Stem Cell Awards Goes to Institutions Linked to Directors of State Stem Cell Agency

Editor's note: The following article by yours truly was published as a freelance piece this week on Capitol Weekly, an online state government and politics news service. 

By David Jensen

Over the last 15 years, California’s stem cell agency has spent $2.7 billion on research ranging from arthritis and blindness to cancer and incontinence. The vast majority of the money has gone to enterprises that have ties to members of the agency’s governing board.

All of which is legal. All of which is not likely to change.

Eight out of every ten dollars that agency has handed out have been collected by 25 institutions such as Stanford University, multiple campuses of the University of California and scientific research organizations. Their combined total exceeds $2.1 billion.

All 25 have links — directly or indirectly — to past or present members of the board of the agency, according to an analysis by the California Stem Cell Report, which has covered the agency since 2005.

“They (the agency’s directors) make proposals to themselves, essentially, regarding what should be funded. They cannot exert independent oversight,” says Harold Shapiro, who led a 2012 study of the agency by the prestigious Institute of Medicine (IOM), which is now called the National Academy of Medicine. The study recommended a major restructuring of the agency’s board to help deal with the problem.

The longstanding, conflict-of-interest issues are not addressed in Proposition 14 on the Nov. 3 ballot. The measure would give the agency, officially known as the California Institute for Regenerative Medicine (CIRM), $5.5 billion more and expand its scope of activities and research. The ballot measure is likely to increase the problems by increasing the size of the agency’s governing board from 29 to 35.

Another ballot initiative, Proposition 71, created California’s stem cell program in 2004. Ever since, conflict of interest questions have dogged CIRM. Indeed, critics of the agency can today point to the top five recipients of CIRM largess as examples of conflict problems. Stanford University ranks as the No. 1 recipient with $388 million. UCLA is No. 2 with $307 million. It is followed by UC San Diego, $232 million; UC San Francisco, $199 million, and UC Davis, $143 million.

All have had a representative on the CIRM board since the inception of the program.

(Editor’s note CIRM’s totals may change slightly as the result of the agency’s internal accounting procedures.)

IOM and public confidence in CIRM
The IOM study, with its criticism of conflicts, was commissioned by CIRM at a cost of $700,000. Directors expected that it would provide a “gold standard” evaluation of the agency that would support a ballot measure for additional funding. The study’s scope went well beyond conflicts of interest. In fact, it said it did not search for evidence of specific conflicts because the task was not part of the agreement with CIRM. The IOM did say that “studies from psychology and behavioral economics show that conflict of interest leads to unconscious and unintentional ‘self-serving bias’ and to a ‘bias blind spot’ that prevents recognition of one’s own bias.” While all of the study’s findings were consequential, the matter of conflicts attracted the most public attention.

“Ties to stem cell board lucrative,” said a headline in the Orange County Register shortly after the IOM report was released.

“The agency has used more than half of its funding and one day will almost certainly want to ask taxpayers for more. It should remember that voters will look for evidence of public accountability as well as respected research,” said the Los Angeles Times in an editorial in December 2012.

The IOM report itself said, “Far too many board members represent organizations that receive CIRM funding or benefit from that funding. These competing personal and professional interests compromise the perceived independence of the ICOC (the CIRM governing board), introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board.”

The IOM said the composition of the board makes it neither “independent” nor capable of “oversight,” although the board is legally dubbed the Citizens Independent Oversight Committee (ICOC).

Placing deans of medical schools and patient advocates on the board who are linked to specific diseases “raises questions about whether decisions delegated to the board—particularly decisions about the allocation of funds—will be made in the best interests of the public or will be unduly influenced by the special interests of board members and the institutions they represent. Such conflicts, real or perceived, are inevitable….”

The situation involves more than legalisms. “Properly understood,” the IOM said, “conflict of interest is not misconduct, but bias that skews the judgment of a board member in favor of interests that may be different from or narrower than the broader interests of the institution.”

The IOM study additionally surveyed board members about conflicts of interest and reported, “While a majority of respondents stated that personal interests did not play a role in their work on the ICOC, some responses were more equivocal. One respondent replied that it was ‘hard to tell’ given that so many decisions take place off camera in secret meetings,’ while another acknowledged that ICOC members are human, and, of course, their decisions are influenced by personal beliefs and interests.”

The ‘inherent’ conflicts
The conflicts were built in by Proposition 71, which dictated the composition of CIRM’s 29-member board. CIRM’s general counsel, James Harrison, once described the situation as “inherent conflicts of interest.”

Under Proposition 71, representatives from virtually all the California institutions that stood to benefit were given seats at the table where spending plans are approved and awards handed out. Directors are not allowed to vote on specific awards to their institution. But they control the direction of the agency and what CIRM calls “concept” plans, including specific elements and budgets for the award rounds. Some of those rounds run into hundreds of millions of dollars.

One of the “concept” plans created a $47 million program to help California institutions recruit star scientists to the Golden State. Another plan created the $50 million Alpha Clinic Network at five academic centers all connected to board members.

Following the IOM report, the CIRM board did remove most institutional directors from meetings where awards are ratified. Jonathan Thomas, chair of the board, declared then that financial conflict issues were “put to bed once and for all,” a position that the agency holds today. In May 2019, Thomas told directors that several “authoritative entities” have studied CIRM and produced written reports that dealt with conflict matters.

Thomas said, “Each had in it sort of quite vehement language about the conflict of interest issue, which has always been just perceived…..With respect to any given funding award, there’s never been an actual conflict.”

During the 2019 meeting, the board did not discuss issues involving board action on “concept” plans. They continue today to modify and approve “concept” plans.

Beyond the CIRM board
Conflicts of interest at CIRM go beyond the 29-member board. In 2014, the agency was shocked by a case involving a former president of the agency, Alan Trounson, and StemCells, Inc., a company that was awarded $40 million while he was serving as the top executive at CIRM. (The company later declined one of the awards.) Only seven days after his final day at CIRM, Trounson was named to the board of directors of StemCells, Inc.

He served on the company’s board for about two years and received $443,500 in total compensation, including stock options, according to StemCells, Inc., documents filed with the Securities and Exchange Commission.

Following the announcement of the Trounson appointment, CIRM looked into some of Trounson’s work at CIRM. In July of 2014, the agency said that its “severely” limited investigation found no evidence that its former president attempted to influence action on behalf of StemCells, Inc., during the previous month. The state’s political ethics agency, the Fair Political Practices Commission, said in a Feb. 6, 2015, letter to Trounson that there was “insufficient evidence to demonstrate” a legal violation.

Even before the agency was created, critics warned of conflict-of-interest problems. Writing in an opinion piece in October 2004 in the San Francisco Chronicle, David Winickoff, then a professor at UC Berkeley, said, “Contrary to what its name suggests, the ICOC is neither ‘independent’ of interest-group politics nor does it include any ‘citizen’ members. Hard- driving university scientists, disease group advocates and private industry executives who will make up the ICOC all have vested interests in how the money is to be used.”

A sampling of conflicts
The California Stem Cell Report, which calculated the percentage of awards linked to institutional directors, has chronicled the conflicts issues at CIRM over the past 15 years. In 2012, its analysis showed that 92 percent of awards had been collected by institutions tied to past and present directors. The figure dropped to 79 percent by this summer as the types of grantees have widened. Here is a sampling of conflict issues that have surfaced publicly over the years.

In 2007, violations involving five board members resulted in voiding applications from 10 researchers seeking $31 million. The applications included letters of support signed by deans of medical schools who also sat on the CIRM board of directors. Directors are barred from attempting to influence a decision regarding a grant. The agency blamed its employees for the problem.

In 2008, public complaints by one applicant from industry about conflicts of interest on the part of a reviewer were briefly aired at a public board meeting. The then chair of the CIRM board, Robert Klein, told the applicant the board needed instead to discuss naming CIRM-funded labs and then go to lunch. CIRM later refused to release the letter from the applicant detailing the problem.

In 2009, board member John Reed, then CEO of the Sanford-Burnham Institute, was warned by the state’s Fair Political Practices Commission about his violation of conflict of interest rules. Reed intervened with CIRM staff on behalf of a $638,000 grant to his organization. Reed took his action at the suggestion of then CIRM Chair Klein, an attorney who led the drafting of Proposition 71.

Also in 2009, then board member Ted Love, who had deep connections in the biomedical industry, served double duty for the agency. He was the interim chief scientific officer and helped to develop the agency’s first, signature $225 million disease team round while he was still serving on the board. As chief scientific officer, Love would have had access to proprietary information and trade secrets in grant applications.

When questioned, CIRM said that Love would serve only as a part-time advisor to the agency president, not as chief scientific officer. Nonetheless, in 2012, the board adopted a resolution with high praise for Love and his performance specifically as the chief scientific officer.

Beginning in 2010, a stem cell firm, iPierian,Inc., whose major investors contributed nearly $6 million to the ballot measure that created the stem cell agency, received $3.9 million in awards from the agency. The contributions were 25 percent of the total in the campaign, which was headed by Bob Klein. (See here and see here.)

In 2011, the chairman of the CIRM grant review group resigned from his position as the result of another violation, which the agency felt necessary to report to the California legislature. John Sladek, former president of Cal Lutheran University in Los Angeles, co-authored scientific publications with a researcher who was listed as a consultant on a CIRM grant application.

In 2012, StemCells, Inc., was awarded $40 million by the CIRM board despite having one of its $20 million applications rejected twice by grant reviewers. The action came after the board was vigorously lobbied by Klein, who had left his post as chair the previous year. Klein, who ran the Proposition 71 campaign, had campaign connections to researcher Irv Weissman of Stanford, who founded StemCells, Inc., and was on its board. Weissman was featured in a TV campaign ad for Proposition 71 and helped to raise millions for the 2004 ballot campaign.

The StemCells, Inc., awards were the first time that CIRM had approved that much money for one company, and the first time Klein lobbied his former board.

In 2012, an incident surfaced that illustrated how non-profit, disease-oriented organizations sometimes expect increased funding as the result of the appointment of sympathetic individuals to the board. That occurred when Diane Winokur was appointed to the board as a patient advocate. The chief scientist for The ALS Association, said Winokur will be “a tremendous asset in moving the ALS research field forward through CIRM funding.”

The IOM study identified as a problem the personal conflicts of interest involving the 10 patient advocates on the board. It said, “(P)ersonal conflicts of interest arising from one’s own or a family member’s affliction with a particular disease or advocacy on behalf of a particular disease also can create bias for board members.”

In 2013, internationally renowned scientist Lee Hood, winner of a National Medal of Science, violated the conflict of interest rules of the California stem cell agency when he was involved in reviewing applications in a $40 million round to create genomics centers in California. The conflict involved connections between Hood, Weissman and Trounson. It was not discovered by the agency during the closed-door review and was raised by another reviewer at the end of the review. The review had to be redone later in the year.

Hood never commented publicly, but CIRM said he acknowledged the conflict.

In January 2014, the genomics round surfaced again. The applications were by then before the CIRM board for public ratification of reviewers’ decisions. The reviewers’ actions are taken behind closed doors with no public disclosure of reviewers’ personal, professional or economic conflicts.

The genomics round riled some researchers who complained publicly in letters to the agency’s board about unfairness, apparent preferential treatment and manipulation of scores.

Only seven of the 29 members of the 29-member board could vote on the applications. Conflicts of interest and CIRM rules barred the rest from voting. The final vote on the award was 6-1 for a group led by Stanford. Two years earlier, however, when the “concept” plan was approved by the CIRM board, no directors were disqualified, even though some of their institutions were likely to benefit. The plan was approved on a show of hands. The transcript of the meeting does not indicate any negative votes or absentions.

The hidden review process
Under CIRM’s rules, the scientists who review the applications must come from out-of-state. They do not have to disclose publicly their economic, personal or professional conflicts despite the fact that they make the de facto decisions on the applications. The board rubber stamps nearly all of the reviewers’ actions to approve funding. A CIRM examination of the practice in 2013 showed that 98 percent of reviewers’ decisions were ratified by the board. Since then, the agency has not produced a similar report. Occasionally, however, the board will approve an application that was not recommended for funding.

The CIRM governing board has resisted requiring public disclosure of the interests of reviewers. The subject has come up several times, but board members have been concerned about losing reviewers who would not be pleased about disclosing their financial and other interests.

Nonetheless, public disclosure of economic interests among researchers is routine in scientific research articles. Many universities, including Stanford, also require public disclosure of financial interests of their researchers.

At the time of Hood-Weissman-Trounson flap, Stanford’s policy said, “No matter what the circumstances — if an independent observer might reasonably question whether the individual’s professional actions or decisions are determined by considerations of personal financial gain, the relationship should be disclosed to the public during presentations, in publications, teaching or other public venues.”

Proposition 71 placed the legal authority for grant approvals in the hands of the CIRM board. Traditionally in the world of science, other scientists (“ peer reviewers”), however, are deemed to be the most capable of making the scientific decisions about grant applications. The traditional practice calls for the reviewers to be anonymous and meet in private, which is also CIRM’s practice.

If the CIRM board concedes the decisions to the grant reviewers, state law is likely to require public disclosure of their financial interests, a move that the board has opposed for years. Former CIRM Chairman Klein repeatedly advised the board during its public grant approval processes that reviewers’ actions were only ”recommendations,” and that the board was actually making the decisions.

Proposition 14 implicitly recognizes, however, that a problem exists with directors approving “concept” plans for awards that could benefit their institutions.

To ease that problem legally, Klein inserted language in the new proposition that excludes adoption of “strategic plans, concept plans and research budgets” from being considered as matters involving conflicts of interest.

The measure does nothing to deal with matters involving the de facto, closed-door approval of awards by researchers who are unknown to the public and who do not have to publicly disclose their interests.

At the time the IOM report was released nearly eight years ago, some board members complained that its recommendations were unrealistic because of the likely, lengthy difficulties of altering a state law that had been created by the initiative. But since then, directors have not asked state lawmakers to change the structure of the board or to comply with the other $700,000 worth of IOM recommendations.

CIRM directors, however, missed an opportunity last year to seek conflict-easing changes through the $5.5 billion stem cell measure now on the ballot, Proposition 14.

Some board members have said they discussed the initiative privately with Bob Klein, who crafted the proposal last year.

Revision of CIRM’s conflict rules was discussed at a board meeting in May 2019. Several board members expressed concerns about the loss of valuable insights from board members who cannot vote on applications. Some also expressed concerns about whether loosening the rules would damage the possibility of voter approval of a ballot measure to refinance the agency. Several, including CIRM Chair Thomas, also said “there’s never been a conflict” involving a funding award and a board member. No action involving conflicts was taken at the meeting.

Editor’s Note: David Jensen is a retired newsman who has followed the affairs of the $3 billion California stem cell agency since 2005 via his blog, the California Stem Cell Report. He has published thousands of items on California stem cell matters in the past 15 years. This story was an excerpt from his upcoming book, California’s Great Stem Cell Experiment: Inside a $3 Billion Search for Stem Cell Cures, which is available for pre-order on Amazon.

Wednesday, September 16, 2020

CIRM Board Member Calls Proposition 14 'Fatally Flawed' and 'Unaffordable"

The San Diego Union-Tribune this morning carried an op-ed piece by a long-time director of the California stem cell agency that said this fall's $5.5 billion ballot stem cell ballot measure is "unaffordable, unnecessary and fatally flawed." 

The article was written by Jeff Sheehy, an HIV/AIDS patient advocate member of the agency's board and who was also chair of the board's Science Subcommittee. He has served on the board since the agency was created in 2004 and funded with $3 billion that is now nearly gone. 

The ballot measure, Proposition 14, would save the agency from financial extinction. 

Sheehy's column began:
"It must seem odd that someone who has spent countless hours over the last 15 years as a member of the governing board of the California Institute for Regenerative Medicine (CIRM) would oppose Proposition 14, which seeks to provide $5.5 billion in new funding for the stem-cell agency. While I value CIRM and its work to date, Proposition 14 commits California to spending money it does not have — $7.8 billion including interest for research that is already well-funded. Plus, CIRM’s pre-existing flaws are actually exacerbated by new provisions in the measure."

(The stem cell agency is officially known as the California Institute for Regenerative Medicine.) 

Sheehy's views are not entirely unknown, but the newspaper piece reaches a significantly different and larger audience. Plus San Diego is a hotbed of biotech. Its institutions and businesses have benefited mightily from funding by the agency.

UC San Diego has received $232 million, Salk Institute $53 million, Scripps Research Institute $51 million, the Sanford Consortium $43 million and Viacyte, Inc., $72 million. Among businesses supported by CIRM, Viacyte is No. 1. 

Sheehy said,
"And after spending all of that money, not a single U.S. Federal and Drug Administration-approved product has materialized on which CIRM’s funding played an important role." 
 Sheehy cited the financial costs of the agency as one major reason for his opposition to Proposition 14.  Combined with the $3 billion in state bonds provided in 2004, Sheehy said, 
"Proposition 14 will add at least another $260 million a year in annual repayments. That means California taxpayers will be on the hook for $587 million a year for stem-cell research. Remember state imperatives such as education, health care and housing are not only chronically under-resourced, but with a looming deficit, will be starved for funding because bonds must be repaid first. Cuts have already happened and more are likely on the way. Critical needs will go unfunded."

Sheehy also said that Proposition 14 fails to fix "severe flaws" in the measure that created CIRM. including the "absurd requirement" for a super, super-majority of the legislature to make even tiniest corrections in the existing law. 

He said the state is not receiving an adequate financial return on CIRM-funded inventions. He said "in practice" the provisions of Proposition 14 would undermine existing CIRM rules about "access and fair pricing." He said,
"It would require that any returns from the state’s investment in new therapies are given back to pharmaceutical and biotech companies, thus freeing them from any price restraints since CIRM will be making up the difference. This change is a blatant giveaway to those companies."
Sheehy concluded, 
"Unaffordable, unnecessary and fatally flawed, Proposition 14 is unsupportable. If California is going to continue to spend billions to fund stem-cell research, the Legislature should draft a new measure that does it the right way."
Sheehy said the San Diego newspaper solicited the article. Sheehy was the lone dissenting vote in June when the CIRM board voted to endorse Proposition 14.  His views on the proposition have been aired at some length on the California Stem Cell ReportThe text of his comments last October can be found here. The remarks in June can be found here.

Saturday, September 12, 2020

California Stem Cell Report Now Optimized for Mobile App/Phone Use

For those of you who have been frustrated trying to read on your cell phone the information on this web site, the California Stem Cell Report is now optimized for viewing on cell phones.  Please let me know if you have any difficulties in that regard or have other suggestions for the California Stem Cell Report at Thank you. 

Friday, September 11, 2020

Proposition 14: Newsom Endorses California's $5.5 Billion Stem Cell Measure

Newsom pushed a $17 million bid for the CIRM HQ

California Gov. Gavin Newsom, long a supporter of the California stem cell agency, today endorsed Proposition 14, the November ballot measure to give the agency $5.5 billion more and save it from financial extinction. 

Known officially as the California Institute for Regenerative Medicine (CIRM), the agency is running out of the $3 billion voters provided in 2004. It will begin shutting its doors this winter without a major infusion of cash. 

Newsom's endorsement was buried in a news release announcing his stand on a number of ballot measures. It also came on one of the worst days of the week in terms of securing news coverage, not to mention that California news is dominated today by wildfire coverage, among other things. 

The news release could not be found on the Internet at the time of this writing. It was forwarded to the California Stem Cell Report by the campaign. The full text of the Newsom announcement concerning the stem cell measure said, 

"YES on Proposition 14 to continue funding stem cell research, as well as research and therapy development for Alzheimer’s, Parkinson’s and other neurodegenerative conditions.  As Mayor of San Francisco, Newsom was an outspoken champion of Proposition 71 (2004), which created the California Institute for Regenerative Medicine (CIRM) and made California a global leader in the field." 

In 2004, Newsom played a major role in raising a $17 million, successful bid to lure the headquarters of the agency to San Francisco. After its free rent expired a few years ago, CIRM moved to Oakland because of the high cost of space in San Francisco. 

Here is the release thanks to the folks at the campaign. 


FOR IMMEDIATE RELEASE: September 11, 2020



Governor supports Props 14, 15, 18 & 19, opposes Prop 21


SACRAMENTO – Governor Gavin Newsom today announced his positions on remaining measures appearing on California’s statewide ballot in November.


Newsom SUPPORTS Proposition 15, which would reclaim billions of dollars for California’s public schools, community colleges and essential local services by changing the tax assessment of the most expensive commercial and industrial (non-residential) real property to current market value.


Newsom has long endorsed the concept of this balanced “split roll” property tax reform as a matter of fairness, as long as residential property owners and small businesses are protected.


“California, like every state in America, is currently experiencing the severe financial aftershocks of global pandemic,” Newsom said.  “As a result, we’ve seen numerous proposals floated to stabilize our state’s long-term fiscal outlook, to protect our most vulnerable and local communities, and to fund critical programs with new revenue.”


“In a global, mobile economy, now is not the time for the kind of state tax increases on income we saw proposed at the end of this legislative session and I will not sign such proposals into law,” he said.                                                                                                             


“I do however support Prop 15 because: it’s a fair, phased-in and long-overdue reform to state tax policy, it’s consistent with California’s progressive fiscal values, it will exempt small businesses and residential property owners, it will fund essential services such as public schools and public safety, and, most importantly, it will be decided by a vote of the people,” he said.  


Newsom OPPOSES Proposition 21, which, with some modifications, is similar to the failed Proposition 10 he also opposed in 2018.


“In the past year, California has passed a historic version of statewide rent control – the nation’s strongest rent caps and renter protections in the nation – as well as short-term eviction relief,” he said.  “But Proposition 21, like Proposition 10 before it, runs the all-too-real risk of discouraging availability of affordable housing in our state.”  


In addition, Newsom is taking positions on the following measures:


  • YES on Proposition 14 to continue funding stem cell research, as well as research and therapy development for Alzheimer’s, Parkinson’s and other neurodegenerative conditions.  As Mayor of San Francisco, Newsom was an outspoken champion of Proposition 71 (2004), which created the California Institute for Regenerative Medicine (CIRM) and made California a global leader in the field.  
  • YES on Proposition 18, which would allow Californians 17 years of age to participate, register and vote in primary elections if they turn 18 by the time of the general election that same year.
  • YES on Proposition 19, extending financial protections to homeowners 55 or older who purchase a new home or lose their home to wildfire.  It also closes a property tax loophole and allocates those savings to local firefighting programs. 


Previously, Newsom had taken an early position on important criminal justice and civil rights measures appearing on the November ballot, including:  


  • YES on Proposition 16 to restore affirmative action by repealing 1996’s Prop 209.
  • YES on Proposition 17 to restore voting rights for Californians on parole after completing their prison term.
  • NO on Proposition 20, which attempts to roll back criminal justice reforms enacted by California voters.
  • YES on Proposition 25 to ban cash bail, by upholding the 2018 law signed by Governor Jerry Brown.


Election Day is Tuesday, November 3, 2020.  The deadline to register online to vote is Monday, October 19, 2020, although Californians can register in person to vote up until Election Day.


In June, Newsom signed a law requiring election officials to automatically send a mail-in ballot to every registered voter in the state.  The law also requires election officials to count all ballots received within 17 days of the election. 


# # # 

Thursday, September 10, 2020

Fourth California Newspaper Opposes $5.5 Billion Stem Cell Proposal

The Santa Rosa Press Democrat yesterday editorialized against Proposition 14, the $5.5 billion measure to save the California stem cell agency from financial extinction. 

The headline on the editorial said:

"No on 14: It’s time for stem cell agency to stand on its own"

Including the Press Democrat, four California newspapers have now opposed the measure. One is for it. 

The newspaper said it does not oppose stem cell research per se.
"Our objection (in 2004 to the measure that created the agency) was to ballot-box budgeting. That’s an even more acute concern today, with millions of Californians out of work and the state struggling to fulfill its most basic obligations in the face of historic budget deficits caused by the coronavirus pandemic.

"Is stem-cell research more important than education? Transportation? Safety net programs?

"There isn’t an easy answer, and that’s the problem with budgeting by ballot initiative. Voters must say 'yes' or 'no' without an opportunity to weigh the relative value of competing priorities, with no ability to adjust to unexpected situations such as the pandemic and, in the case of the Institute for Regenerative Medicine, limited legislative oversight for a quasi-public agency that has been the subject of conflict-of-interest concerns."
The editorial continued,
"After 16 years, the California Institute for Regenerative Medicine is well established, and its successes should allow it to secure other sources of funding, including federal funding as the Bush-era restrictions have been lifted. The state, meanwhile, is struggling to balance its books, and it wouldn’t be wise to take on more debt at this time. The Press Democrat recommends a no vote on Proposition 14."

Read the California Stem Cell Report regularly for the latest and most in-depth coverage of the effort to save the California stem cell agency from financial extinction.  

Wednesday, September 09, 2020

How Does $5.5 Billion Turn Into $5.00 a Person? It's a Stem Cell Mystery So Far

Backers of this fall's $5.5 billion ballot measure to support the state stem cell research agency say that it will cost each resident of California only $5 a year. 

The calculation may be correct. It also could be campaign hype of the sort that arose in 2004 involving the initiative that created the California Institute for Regenerative Medicine (CIRM), as the state stem cell agency is officially known.  

But it is impossible to tell as the date of this writing. The campaign has not responded to requests from the California Stem Cell Report for information on how it came up with the $5.00 figure. 

Whether it is $5.5 billion or only $5.00 a person, it involves money borrowed by the state. Proposition 14, the ballot measure in question, directs the state to borrow the cash over a 10-year period. Paying interest to investors would cost an additional estimated $2.3 billion over several decades, bringing the total estimated cost to $7.8 billion, according to the state legislative analyst. 

Calculating the annual cost per person over decades involves a number of assumptions including population predictions, future interest rates, timing of bond sales and so forth.  

The only language that could be found on the campaign website concerning the figure says, 

"When you consider that chronic disease is the leading cause of death and the leading driver of annual health care spending, this initiative is a small price to pay to potentially save millions of lives and billions of dollars in health care costs in the coming decades – less than $5 per person per year." 

It should be noted that the campaign web site does not seem to include a search engine, although that is common practice on most web sites. 

As for CIRM's cost today, it began with $3 billion in 2004. Estimates then of the interest costs were about $3 billion, making a total estimated cost of $6 billion. The actual cost as of this summer was $4 billion, largely because of the low interest rates since the Recession of 2008. 

CIRM is now running out of money and will begin closing its doors this winter unless Proposition 14 passes. 

If the campaign supplies information on the $5.00 figure, the California Stem Cell Report will carry it when it comes in.

Tuesday, September 08, 2020

$5.5 Billion California Stem Cell Campaign Intensifies, Voting Begins in One Month

California's 21 million voters soon will be receiving mail that tells them a $5.5 billion stem cell ballot measure is "outrageous," unaffordable and will perpetuate long-standing problems with the state's stem cell research program. 

The assertions are contained in the official state voter guide. It also says the state stem cell agency, which is running out of money, has made "significant progress" in developing therapies during its 15-year life. 

Supporters say in the pamphlet that Proposition 14 will "dramatically expand access to clinical trials and new therapies, make treatments and cures more affordable for Californians, and provide patients, their families, and caregivers with financial assistance."

The ballot measure is intended to re-finance the agency, formally known as the California Institute for Regenerative Medicine (CIRM), which will begin closing its doors this winter unless the proposition is approved. CIRM's original $3 billion is nearly gone. The ballot measure that created it in 2004 provided no funding beyond the state bonds that were approved then. 

Because the money is borrowed, the actual cost to taxpayers rises. In the case of Proposition 14's $5.5 billion, the cost climbs to an estimated $7.3 billion, according to the state legislative analyst. The original $3 billion actually will cost about $4 billion, according to CIRM, and will not be paid off for many years.

The voters' guide is aimed at very briefly allowing supporters and opponents of ballot measures to make their cases. The guide has been issued by the state for many decades prior to actual voting, which begins in about a month -- not Nov. 3, which is the last day to vote either by mail or in person. 

Absentee voting has long been practiced in California. During the presidential primary election earlier this year, 72 percent of the ballots were cast by mail. The percentage is likely to be higher this fall because of Covid-19 and the intense interest in the presidential race. 

The mail-in voting pressures campaign organizations to make their cases very early and to assure that the turn-out of their supporters begins as soon as possible. Voters can expect to see more pitches for Proposition 14 in coming weeks. The opposition is not well organized and unlikely to mount a large media effort. 

In addition to the pro and con arguments, the guide includes the full text of the roughly 10,000-word measure, which is written in legalese and less than transparent. The legislative analyst's summary does a good job as far as it goes. 

However, important aspects of the measure are missing from the summary, including how CIRM's scope would be greatly expanded to include such things as funding research for "aging as a pathology" and "therapy delivery."  You can read about those here on the California Stem Cell Report.

Monday, August 31, 2020

The $5.5 Billion Stem Cell Proposition: A "Christmas Tree" Measure Loaded With More Than Cash

 Editor's note: The following item was written by the producer of the California Stem Cell Report and appeared last week on the Capitol Weekly online news service. 

By David Jensen

Proposition 14, the fall ballot measure to save California’s stem cell agency from financial extinction, contains much, much more than the $5.5 billion that it is seeking from the state’s voters.

Added to the agency’s charter would be research involving mental health, “therapy delivery,” personalized medicine and “aging as a pathology.“ That is not to mention a greater emphasis on supporting “vital research opportunities” that are not stem cell-related.

The measure would enlarge the board from 29 to 35 members. Even at 29, the board has been much criticized for its large size, which creates more possibilities for conflicts of interest, a long-standing issue for the agency.

Proposition 14 would ban royalties generated by state-backed stem cell inventions from being used for such things as prisons and schools, isolating the funds from tinkering by lawmakers.

It creates a building program for treatment centers that could total about $82.5 million. They would be located in areas not now well-served. And the measure locks up $1.5 billion for “diseases and conditions of the brain and central nervous system,” such as autism and schizophrenia. 

Approved by voters in 2004, the agency is already a prodigiously ambitious effort, seeking stem cell cures and treatment for afflictions that backers say burden half the families in California. However, the original $3 billion that voters provided is dribbling to an end. Unless voters provide $5.5 billion more, the agency — known officially as the California Institute for Regenerative Medicine (CIRM) — will begin shutting its doors this winter. 

While Proposition 14 is the cure for what financially ails the agency, the measure also sends CIRM into arenas that some would argue muddle its focus and distract from its original goals.

(Click here to see the Legislative Analyst’s description of the measure, which is going to nearly 21 million California voters )

Details of the changes in CIRM’s mission are tucked away in the complex and murky, 10,000-word initiative sponsored by Robert Klein, a Palo Alto real estate developer and attorney. He oversaw the writing of the initiative as well as the 2004 stem cell measure that created the agency. Klein was the first chairman of the agency and is now leading the current campaign.

The new playing field for CIRM encompasses particularly critical areas of costs to patients and profits for companies. Stem cell therapies are expected to be enormously expensive — $1 million or more in many cases. That’s a figure that makes health insurance companies balk and Medicare blanch.

Proposition 14  would launch a hefty effort to make stem cell therapies more affordable and accessible. The cash behind that drive could run as high as $155 million. And that’s not necessarily going for patients.

The intent is to create and build support for financial models for health insurance companies. CIRM would also be charged with helping to implement them. Such models would justify the cost of the theoretically one-time cures by demonstrating that they would actually save money — ending the need to treat patients in what currently seems to be an endless and expensive cycle.

Proposition 14 speaks of covering patients and, importantly,  their caregivers for medical expenses, lodging, meals and travel. That would help provide access to clinical trials that are located in prohibitively expensive urban areas, which poses financial barriers for persons who live some distance away. The added coverage would additionally help researchers and companies recruit enough trial participants, which can be a problem in some disease areas.

Proposition 14 creates a 17-member, CIRM affordability committee to drive all this. It would work with industry and the federal government to win their support.  The committee would be backed with as many as 15 CIRM staffers. The ballot allows as much as $55 million for their compensation over 10 or so years. 

But if 15 is not enough, more employees could be hired beyond the nominal cap on CIRM employees of 70 if they are compensated through the use of private cash.

The extraordinary cost of stem cell treatments involves something called “reimbursement,” a biomedical industry euphemism for how companies cover the high costs of the research and still make a profit. If money is not to be made, businesses are not likely to be motivated to turn CIRM research into cures.

The measure additionally allows the new affordability panel to hire consultants, capping that expense at about $105 million.

The affordability effort involves important public policy, industry and research issues that concern patient groups and industry. However, the affordability panel would be permitted to operate behind closed doors as it considers the problems and weighs the solutions.

Votes by the committee, however, would have to be taken in public.

Members of the panel would not be required to disclose publicly their economic or professional interests. The committee would be exempt from the state public records act except for material specifically submitted to the CIRM board.

Proposition 14 locks up $1.5 billion for “diseases and conditions of the brain and central nervous system, such as Alzheimer’s disease, Parkinson’s disease, stroke, dementia, epilepsy, depression, brain cancer, schizophrenia (and) autism.”  The $1.5 billion would not be available for research into the No. 1 killer in the United States, heart disease, or other excluded conditions. 

Beyond the affordability program, Proposition 14 gives CIRM new authority to finance research in several additional fields. The authorization is scattered throughout the initiative documentMental health research first appears on page nine. Depression appears on page 26. Therapy delivery, which is not defined in the measure, crops up in 10 locations. Personalized medicine and “aging as a pathology” surface on page 34.

On a much smaller scale, but important to researchers, the proposition includes up to $27.5 million for a shared labs program that was scrubbed a few years back when CIRM turned more towards clinical trials. And the initiative opens the door to even more programs that are not specifically mentioned. It gives a high priority to supporting pluripotent stem cell research that is unlikely to receive federal funding or where funding is “not timely or sufficient.”

Perhaps the biggest, but not entirely new opportunity for CIRM to expand beyond stem cell research involves “vital research opportunities.”  CIRM calls them VROs. And they are a loophole that allows CIRM to finance almost any kind of research if there are enough votes on the board to do so.

In both the original and current initiative, a  VRO is defined as “scientific and medical research and technologies” that provide “a substantially superior research opportunity, vital to advance medical science.”

Proposition 14 makes it easier for the CIRM board to declare a VRO. Currently, it takes a two-thirds vote of a quorum of the group that reviews applications. Under this year’s ballot measure, CIRM does not need to meet those criteria. The governing board could invoke a VRO on its own. In some cases, it could require only 12 votes or less of the 35-member board, depending on the quorum and the number of board members present.

Proposition 14 specifically added the fields of  “genetics, personalized medicine, and aging as a patholoqy” to VROs. In the 2004 initiative, the phrase “vital research opportunities”  appeared only seven times. In this year’s initiative, it appears 17 times as the possibility of its use has expanded. Significantly, experience involving vital research opportunities is now listed as part of the qualifications for the chair, two board members and 15 members of the group that reviews grant applications.

CIRM has invoked the original VRO clause only twice. A third attempt was rejected last May after directors expressed concern about mission creep. However, Klein’s new emphasis on it points to the likelihood of increased use, especially if he once again becomes chairman of CIRM.

Under existing law, CIRM’s royalties go into the state’s general fund, the source of state expenditures for prisons, schools and health services. Under Proposition 14, the royalties would still go into the general fund, but they would be locked up for use in dealing with affordability. In 2004, the stem cell campaign financed studies that envisioned royalties of as much as $1.1 billion. To date, they have totaled only $462,433. However, it can take years for a scientific discovery to work its way into an actual product. And a particular discovery may well amount to only a tiny contribution to a product, which would reduce the likelihood of major royalties.

In another major move, Proposition 14 would benefit some of the less-than-urban areas of the state in a new “geographic diversity” program. Rural or semi-rural areas suffer from a lack of physicians as well as the high tech facilities needed to make stem cell treatments available for participation in clinical trials. The measure earmarks as much as $82.5 million for new “community centers of excellence.” They would “support clinical trials and…serve as the foundation for the delivery of future treatments,” the proposition states, giving priority to “geographic distribution.”

One of them could well be in Fresno where the University of California, San Francisco (UCSF), has established an outpost. One of the new members on the CIRM board would be from the UCSF operation in Fresno, making it the only institution that has two representatives on the board. Another new member of the board would be from UC Riverside, whose medical school is only seven years old. UC Riverside also serves a community that incorporates large rural and semi-rural areas.

The increase in the size of the board to 35 flies in the face of recommendations by the prestigious Institute of Medicine (IOM). Among other things, it said in 2012 that the current 29 board members are more than sufficient for the agency. CIRM paid $700,000 for the IOM study, which it hoped would help generate voter support for more funding.

If Proposition 14 passes, the measure creates a relatively quick way to begin to overhaul the board. Under the measure, a number of current members of the board could lose their seats if they have served at least half of their terms.

It is not clear whether the CIRM governing board understood the removal provisions when they endorsed Proposition 14 June 26 on a 21-1 voteThe discussion lasted only 30 minutes. “It’s a no-brainer,” said George Blumenthal, chancellor of the UC Santa Cruz campus and a member of the CIRM board..

Proposition 14 is something of a “Christmas Tree” measure — a term used to describe legislation that has something for everyone. Many ballot initiatives are like that. They must run the gauntlet of a ballot campaign, luring millions of voters into voting for them. Backers of initiatives need to satisfy potential donors and potential beneficiaries, all the while not alienating anybody enough to generate well-funded, powerful opposition.   

The 2004 measure fulfilled those needs nicely. Nearly every institution that stood to benefit from CIRM funding gained a seat at the table where the decisions were made — for better or worse. 

Proposition 14 carries on in that tradition and expands it. Plus the initiative attempts to deal with the tough challenges of costs and profits in what many expect to be a revolution in medicine. Voters will begin casting their ballots in early October. Backers of the initiative have only five weeks to catch the early birds in that particular flock.

Editor’s Note: David Jensen is a retired newsman who has followed the affairs of the $3 billion California stem cell agency since 2005 via his blog, the California Stem Cell Report. He has published more than 5,000 items on California stem cell matters. His upcoming book, “California’s Great Stem Cell Experiment: Inside a $3 billion Search for Cures,” is available for pre-order on Amazon. 

Friday, August 28, 2020

This post was deleted.

It was a draft that was inadvertently published. 

Tuesday, August 25, 2020

Grand Goals and Record Speed; Hype and Human Biology

 An ad from 2004 ballot campaign that created the California stem cell agency. 

An article in the Los Angeles Times today took on scientific research and "grand goals and grander ambitions, all to be achieved with record speed."

The piece was written by Pulitzer Prize-winning Times columnist and author Michael Hiltzik. He was not writing about the California stem cell program. 

But, as readers know, the stem cell agency hopes voters will approve a $5.5 billion bond measure this fall to allow it to continue its own ambitious pursuit of stem cell cures. 

Hiltzik, author of "Big Science" and the just-published "Iron Empires," wrote about the Trump Administration and its "warp speed" therapies for Covid-19. But he also mentioned the Golden State's stem cell effort. Here is the text of what Hiltzik had to say:

"Hype has become an inextricable part of science because it can generate millions of dollars of support. Consider the 2004 campaign to pass Proposition 71, which created the $3-billion California stem cell program (known formally as the California Institute for Regenerative Medicine, or CIRM).

"As I’ve reported before, the measure 'was sold to a gullible public via candy-coated images of Christopher Reeve walking again and Michael J. Fox cured of Parkinson’s.'

"The hype got the proposition passed, but CIRM has struggled ever since to live up to promises that it has been unable to deliver. That could be a burden this election season, when CIRM is seeking an additional $5.5 billion from voters and will have to explain why all the cures it predicted haven’t materialized. 

"'That still might be a worthwhile public investment,' (Leigh) Turner (of the University of Minnesota) observes, adding that the research actually funded by CIRM has been conducted along responsible scientific lines. 'But you have this disconnect between what’s used to float the entire enterprise, and what the actual results are.'"

Turner, who is a bioethicist, was also quoted as saying, 

“In human biology often as you proceed with your research, as you think you’re getting closer and closer to the finish line, you begin to discover it’s more and more distant. You become increasingly aware of the complexity you’re dealing with.”