California's New Task: A $155 Million Drive to Make Stem Cell Therapies Affordable and Accessible

The enormous cost of stem cell therapies is 
a fresh target for CIRM. 

Proposition 14, California's $5.5 billion stem cell ballot initiative, is coming home to roost, so to speak. 

Next Monday, the governing board of the state stem cell agency is scheduled to begin to settle in under the new measure, which does much more than save the agency's financial life. 

One of the agency's biggest, new challenges involves the accessibility and affordability of the staggering expense of potential stem cell therapies. On the agenda is the creation of a legally mandated "working group" to deal with the treatment cost issues. 

Details of the proposed appointments to the group and its initial steps are not yet available from the California Institute of Regenerative Medicine (CIRM), as the agency is formally known. But the 17,000-word Proposition 14 has plenty to say about the new program. Here is a rundown drawn from my new book, "California's Great Stem Cell Experiment," which deals with the first 16 years of the agency's life, policies and financial times. 

"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.

"The affordability panel would be permitted to operate behind closed doors as it considers the problems and weighs the solutions.

"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.

"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 by 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 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."

The day-long meeting is open to the public, including scientists, who can also comment and ask questions. Comments are limited to three minutes. Lengthier comments should be emailed to the board via this address: kmccormack@cirm.ca.gov

Complete details on accessing the online meeting can be found on the agenda. 

(See here for a discussion of the $182 million awards program scheduled to be approved on Monday for the first six months of the next year.)

Gold-Plated Stem Cell Treatments, Multi-billion Dollar Benefits and Potential Industry Profits

One of the nation's leading regenerative medicine industry groups is touting multi-billion dollar savings that may be achieved with the type of stem cell and gene therapies that are being developed with cash from California's financially beleaguered stem cell program.

The industry group is the Washington, D.C.,-based Alliance for Regenerative Medicine (ARM). It is tackling one of the major issues facing development of commercial stem cell therapies -- sticker shock at their expected prices, running upwards of a $1 million or more.

Without a willingness from health care insurers to cover the costs and provide a pathway to profit, it is unlikely that the biotech industry will embrace production of the therapies.

In a study released last Friday, the group said,

"Advances in molecular biology and genetics are leading to new treatments for rare diseases that require new ways of assessing value. CGTs (cell and gene therapies) are directed at the underlying cause of a condition and offer durable, potentially curative, or near-curative benefits. These transformative therapies create challenges for current reimbursement frameworks as they (the therapies) require significant upfront costs but are expected to provide a lifetime of benefits. The recurring treatment costs of chronically-managed patients can be greatly reduced and even eliminated with a one-time administration or short course of these novel therapies. 

"As CGTs arrive on the market, payers need new models for assessing their value. These treatments could potentially end the patient’s burden of illness, resulting in cost offsets (eliminating or reducing the need for long-term treatment, hospitalizations, and other care) and productivity gains that span a lifetime. Manufacturers incur a high per-patient development cost for these therapies and payers who bear the cost of treatment may not realize the long-term financial benefits due to health plan switching."

The ARM study predicted cost savings of as much as $33.6 billion over about a decade in connection with three afflictions: sickle cell disease (SCD), multiple myeloma (MM) and hemophilia A (Hem A). 

California's stem cell agency was not mentioned in the study, but it has funded research in all three areas. The agency is a member of ARM.

The study, backed by ARM and performed by the Marwood Group, said,

"Access to CGTs for even a modest number of patients with MM, SCD, and Hem A each year can reduce overall disease costs by nearly 23% over a 10-year period. The savings from lowering healthcare costs and raising productivity are considerable, approaching $34 billion by 2029. Of the savings, $31 billion are from a reduction in healthcare costs and $3 billion are from productivity gains."

The model used by ARM assumed CGT prices as high as $2 million. The study said,

 "The model has tested more than 180 different prices across the three potential CGTs that ranged from a minimum test price of $150,000 and up to a maximum price test of $2,000,000. The prices entered into the model created 60 different cost savings curves for all three of drugs in this model. Prices were distributed with more than 50% of test prices in the $100,000-$600,000 price per administration range."

The discussion of the costs of stem cell therapies has special resonance in the Golden State where voters are likely to be asked next fall to give $5.5 billion more to its stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM).

The agency, funded with $3 billion in 2004, is down to its last $27 million. A new, proposed ballot initiative is focusing hard on affordability of stem cell treatments. The initiative has no specific solutions but stipulates that a new version of CIRM  -- if the ballot measure is approved -- should devise some ways to come up with answers for insurers who are not likely to warm easily to $1 million therapies.

"Natural Killer" Cells Score Points for $10.6 Million California Stem Cell Investment

This item has been removed because of inaccuracies in its reporting. The information in the item is under review.

California's "Huge Ecosystem" for Stem Cells: The View from Europe

Some folks in Europe are worried about stem cell research, particularly about organizations like California's $3 billion stem cell agency.

The alarm was sounded just yesterday in Horizon, which calls itself  "The EU Research and Innovation Magazine."

The article in question (the second most popular on its web site at midday today) was headlined:

"Europe is in danger of being out-innovated in regenerative medicine"

Ton Rabelink, Arno Massee Fotografie

The piece consisted of an interview with Ton Rabelink, professor of internal medicine and head of Leiden University in the Netherlands. He cited the California agency as a "huge ecosystem" for developing much needed stem cell therapies.
nephrology at

Rabelink said that the European Medicines Agency is wrestling with finding the "the right mechanisms to support the field."

‘It is very important that they do this because the regulatory landscape in the US and Japan has changed over the past two or three years to accommodate recent advances. For example, Japan has an early access programme for treatments that seem promising but are not yet proven to work. If they appear safe in say, 40 patients, then doctors can start applying them. The US has created the 21st Century Cures Act that allows for clinical trials for stem cell therapies and fast-track access to market for those that appear effective."

Rabelink said,

"The risk is that if we don’t organise locally here in Europe, we’ll end up having to buy these treatments from those countries. We’ve already seen this with genetically modified cells, so-called CAR cells, to attack tumours in leukaemia. The treatment works quite well but costs about €500,000 ($582,670) per patient.

"It's very interesting to look at what happens in the rest of the world. You really need ecosystems — academia, but also legislatures, manufacturing and, of course, finance. The US has huge ecosystems like CIRM, the California Institute for Regenerative Medicine, which was founded through taxpayers’ money following a referendum, and invests about $250 million per year in this space. (The agency actually was created by a ballot initiative, which is much different than a referendum.)

The Dutch researcher continued,

"The situation in Japan is even more remarkable. The early breakthroughs were made by a Japanese scientist so they consider regenerative medicine almost as their national invention. And, of course, Japan has an ageing population so the concept is very appealing. The government set up a planned economy around regenerative medicine and adapted its regulatory framework, putting national systems in place to oversee quality and safety and organising private-public collaborations, bringing together academic institutions and big pharma. Fujifilm, which was originally a photographic company, is devoting resources to stem cell research and using its film technology to make biomembranes.’

Stem Cell 'Ethical Tensions,' Recouping the Public Investment, Affordability and Much More

"Staggering" amounts of public money have been spent on stem cell research, and "care must be taken" to assure that commercialization does not exact an excessive "human or monetary price," according to an article this week in the journal Science.

The cautionary note was sounded in the prestigious publication while the world's largest stem cell gathering is underway in Australia with more than 2,500 researchers and others in attendance. Plus next week, the $3 billion California stem cell agency convenes its directors to mull over its own programs and give away more millions. 

Written by Douglas Sipp, a researcher at RIKEN in Japan, Megan Munsie of University of Melbourne and Jeremy Sugarman of John Hopkins University, the Science article said

"Ethical tensions related to stem cell clinical translation and regulatory policy are now center stage...."

They said that expedited government procedures for use of stem cell treatments have been set up in the United States, Japan and Italy. At the same time, they wrote, 

"A staggering amount of public money has been spent on stem cell research globally."

The article declared, 

"The state and the taxpaying public's interests should arguably be reflected in the pricing of stem cell products that were developed through publicly funded research and the regulatory subsidies. Detailed programs for recouping taxpayers' investments in stem cell research and development must be established."

They warned, 

"Care must be taken to ensure that entry of stem cell–based products into the medical marketplace does not come at too high a human or monetary price."

Another journal article this week also sounded cautionary notes. Written by Paul Knoepfler of UC Davis, it was titled: 

"Too Much Carrot and Not Enough Stick in New Stem Cell Oversight Trends"

Knoepfler addressed the Food and Drug Administration's efforts to speed use of stem cell therapies. He wrote in Cell Stem Cell and also on his blog, saying,

"It’s been remarkable to see the FDA approve up to 20 regenerative medicine advanced therapy(RMAT) designations in just over a year. However, I think there’s a strong possibility the agency has swung too far from the too slow review of stem cell and regenerative medicine investigational therapies in the past to now going at warp speed. Since none of the current 20 designated RMAT products had any kind of prior expedited review designation given, is it reasonable to think all 20 now meet rigorous enough standards and all because of new data? It’s hard to say, but there’s likely a spectrum of existing data behind these RMAT designated studies.

"We won’t have an overall RMAT verdict for years as the RMAT trials play out. However, I predict that the agency has lowered the bar too far. There are also concerns that the conditional approval system in Japan is too liberal, as evidenced by discussion over the approval of a recent IPS cell cardiovascular study. Taken together this is what I mean by 'too much carrot.'  Another issue with RMAT is that the criteria by which the designations are given (or not) are not clear." 

Next Thursday, the governing board of California's $3 billion stem cell agency is scheduled to meet to give away more millions for stem cell research in the Golden State. The agency will also be examining the non-scientific considerations that it uses in deciding which applications to fund. It may be that some of the issues raised by these four researchers will also come into play.

Cost of a Stem Cell Therapy? An Estimated $900,000

What is the likely cost of a freshly minted stem cell therapy? Close to $900,000. That's at least by one current estimate.

In the United States, such calculations are rare. Researchers and biotech executives shy away from discussing in public such daunting figures.

The figure emerged last week, however, in news from Japan about groundbreaking research to treat macular degeneration with reprogrammed adult stem cells.

While stem cell insiders are not keen on discussing $900,000 therapies -- at least their cost -- the public, however, is deeply interested. Development of expensive therapies is also likely to play a role in the future of California's $3 billion stem cell agency, which expects to run out of cash in 2020. Voters may look askance at publicly financed therapies that appear to be out of reach.

Exorbitant health care costs are on the minds of many. Forty-seven percent of the public said in 2016 that cost and access are the nation's most urgent health care problems, according to a Gallup Poll. Of all the nearly 4,300 items published on the California Stem Cell Report over the last 12 years, the most widely read article deals with the cost of stem cell treatments.

As of this morning, the 2013 article had recorded 21,963 page views, a standard way of measuring readership on web sites. Another related document chalked up 27,699 views on Scribd, where it was also published by the California Stem Cell Report. The figures are roughly four and five times higher than other relatively well-read pieces.

Readers do not give reasons for choosing the articles. But it is likely that their pocketbooks and hopes of affordable therapies are driving their interest.

Affordability was a big issue in the creation of the stem cell agency via a ballot initiative in 2004, Proposition 71. The agency, formally known as the California Institute for Regenerative Medicine (CIRM), has not devoted any significant attention to the matter in the last few years.

But if the agency wants to secure additional public or even private funding, it will need to make the case that its work is more than just another entry in the medical arms race.

Just yesterday, OncLive,  an oncology news site, carried a report on the skyrocketing expense of cancer drugs alone, which cost the nation $16 billion annually in 2010 and jumped to $38 billion in 2015. As for individual cancer patients, they are looking at costs of more than $150,000 a year for drugs, figures that have generated a ruckus in the cancer treatment community.

Drug costs are a small part of the total health care bill for country. But they are a litmus test for policy makers and the public. The costs are relatively straight forward compared to some other health care measures. But they are readily understandable by most families, who usually have one member or more involved in prescription purchases.

 As efforts to repeal-and-replace the Affordable Care Act gain increasing attention over the next year, the public is likely to focus even more on the costs of treatments and drugs, whether it is a $19 aspirin or a $900,000 stem cell therapy.

The "good" news, however, last week out of Japan was that the $900,000 cost of the stem cell macular degeneration treatment could be reduced to below $200,000 as the kinks are worked out and the treatment becomes more common -- if it clears its clinical trials.

As for California, CIRM  has pumped $125 million into research dealing with blindness, including macular degeneration which afflicts 1.7 million Americans. Nearly one million Americans are blind from all causes and another 2.4 million suffer significant visual impairment. More information on the state research can be found here. A CIRM video on vision issues is below.

A $6 Billion Question: Affordability of California's Stem Cell Therapies

Imagine this headline popping up on the Internet and in the New York Times in about four years:

“$6 Billion for ‘Price Gouging' Stem Cell Therapy” 

The possibility of such a news story is not all that fanciful -- given the growing tension and anger over exorbitant drug prices being set by a variety of Big Pharma firms. The likelihood of such a report and its impact is a matter for careful consideration by the 29 directors of the $3 billion California stem cell agency.

They are presiding over an effort that will cost the Golden State’s taxpayers roughly $6 billion by 2020.  Nominally, the agency is giving out $3 billion in research awards. However, the cost is approximately doubled because the state is borrowing money to finance the research, a move approved by voters in 2004.

No therapies for widespread use have yet emerged from the agency, formally known as the California Institute for Regenerative Medicine (CIRM). But the agency is pushing hard. It could have a therapy on the market within four years. The question is whether it will be something that is perceived as affordable or something available only to the wealthy few.

CIRM is now expecting to be involved in 65 clinical trials by 2020. One of those trials is currently in phase three, which puts the proposed treatment on the cusp of commercialization.

A second phase three trial – with a $20 million taxpayer investment -- is all but certain to be approved tomorrow during the CIRM directors meeting. The session also includes a strategic discussion about how the agency will spend its last $890 million – for basic research, clinical trials, infrastructure and so forth.

Not on the table, however, is what those therapies are likely to cost consumers. The spending plan does not address the question of whether a publicly financed agency should back development of therapies that could cost, for example, $512,000. (See here and here.) Or whether it should focus on more affordable treatments.

The issue of high cost of drug therapies has roiled the medical community and the public for some years. The matter has now moved to a higher level and is not likely to vanish during the next five years, as it has in the past. It is tied to the income inequality debate and the upsurge in patient advocacy. (See here and here.)

The issue surfaced this week in the presidential campaign. Democratic aspirant Hillary Clinton used words like “gouging” and “outrageous,” causing biotech stock prices to drop. Republican presidential candidates used the problem to attack Obamacare. Folks in the scientific community said they were “shocked.” 

This afternoon, a Google search on the term “high drug prices” turned up 33.7 million results. “Outrage,” “huge spike,” “4,000 percent” and “insanely high” were some of the words in the headlines.

The affordability question is not new to the California stem cell agency. It popped up in the ballot campaign that created the agency in 2004 but has largely died down in recent years. (See here, here and here.)

It could surface again in the California legislature and elsewhere as lawmakers see a public desire to curb perceived greedy pharmaceutical companies that prey on the weak and afflicted.

It is not a prospect that would be pleasant for the California stem cell agency. And it would put a major damper on efforts to continue funding of the agency from both public and private sources.

As they consider their strategic direction, the CIRM directors of the agency may be well advised to move earlier rather than later on the question of high prices and affordability. As Ben Franklin’s medical homily goes,

"An ounce of prevention is worth a pound of cure."

Prodigious Pricing and Stem Cell Treatments: Implications for the California Stem Cell Agency

The most widely read item in the last 10 years on the California Stem Cell Report is one that deals with the cost of a possible stem cell treatment.

Newscom image

The piece contains a $512,000 figure and has chalked up 10,714 page views as of this evening. It deals only with a potential treatment in a fully legal and medically acceptable situation. The item is also nearly two years old. The $512,000 number is likely to have been modified by the researchers involved.

Now comes an item by UC Davis stem cell researcher Paul Knoepfler, who has put together a survey of prices of stem cell “treatments” that are being offered around the world. The costs are for procedures available largely outside established medicine with its accompanying government certification and testing.

Knoepfler reported today on his blog that American clinics – non-FDA approved – run about $10,000 per procedure, with more than one treatment usually described as necessary. Outside of the United States, the procedures run up to $100,000.

Knoepfler wrote,

“Whether inside or outside the US, insurance does not cover the costs of these potentially dangerous, unproven treatments.”

He noted that high profits are associated with the procedures. He said,  

“Part of the way that clinics cut corners to boost their profits is by not following FDA regulations, putting patients in danger. Clinics typically do not do pre-clinical studies to get evidence of safety and efficacy before starting to sell their offerings to patients. Clinics also do not include sufficient follow up in the cost of the treatments. They do not publish their data to get peer review and feedback. They often do not have GMP compliant facilities or devices.”

Knoepfler concluded,

“Of course other costs to patients going to dubious clinics, sometimes not considered, include the price of false hope, potential injury due to dangerous stem cell ‘treatments,’ possibly being excluded from a real clinical trial in the future and injury from deferring other arguably more real treatments.”

The high readership on the 2013 cost item on the California Stem Cell Report is likely due to readers who are considering some sort of stem cell procedure.  Knoepfler will also likely see a similar trend.

The strong interest in stem cell costs is something for the California stem cell agency to consider as it invests in clinical trials. Obviously the expense is of considerable concern to those not ensconced within the stem cell community, where the focus is on a euphemism called "reimbursement," shorthand for making a handsome profit.  Stem cell insiders sometimes shrug off the possibility of a severe, negative kickback on prices. 

But it has already happened in other areas of medicine. A physician protest involving the cost of a particular cancer treatment received national attention in 2013. The article about it in the New York Times received 500 reader comments.  

Obviously no stem cell therapies will reach the marketplace if they do not offer the potential for profit. Nonetheless, if one of the California agency's trials is successful but also carries a prodigious pricetag, California taxpayers who have financed the agency are likely to look askance at the agency’s work.

Prieto: Cost of Stem Cell Therapy Could Be 'Pretty Good Bargain'

One of the directors of the $3 billion California stem cell agency this week commented on the likelihood of very high costs for therapies that the agency and others are pursuing.

Francisco Prieto, a Sacramento, Ca., physician who has been on the agency’s governing board since 2004, was responding in connection with this Oct. 8 item on the California Stem Cell Report: “Rosy Outlooks, Stem Cell Therapy,Stunning Costs.”

Prieto said in an email,

“Like any new transformative technology, I expect that stem cell treatments will start out quite expensive and (hopefully) decrease as they become more common and the cost of producing them drops. If some of them are cures (as opposed to treatments), then that cost needs to be weighed against the lifetime cost of treatment that would now be eliminated, as well as the gain in productivity and years of life. Even before you start to factor in the cost in human suffering, I predict they will start to look like a pretty good bargain.”

CIRM Reform Legislation Advances in Senate

Despite industry opposition, legislation aimed at improving transparency and accountability at the $3 billion California stem cell agency easily cleared its first legislative hurdle this month.

The bill, also aimed at ensuring affordability of taxpayer-financed stem cell therapies, was sent to the state Senate Appropriations Committee on a 6-0 vote in the Senate Health Committee, which is chaired by the bill's author, Sen. Elaine Kontominas Alquist, D-San Jose.

The California Healthcare Institute opposed the bill, SB1064. The biomedical industry group said the measure's requirements for affordability would create a “disincentive” to commercialization of therapies and give CIRM less flexibility.

The board of the stem cell agency is expected next week to formally ask that the bill be sent to interim study, which would effectively kill the measure for the next year or so. However, the legislation contains a rather large carrot for the stem cell agency, which is struggling with a legal cap that limits it to only 50 employees to monitor the $1 billion in grants CIRM now has out – not to mention another $2 billion that it intends to give away. The legislation would remove the staff limit, which CIRM President Alan Trounson has said is endangering the quality of CIRM work. A spending limit on administrative expenses would remain in place.

CIRM Chairman Robert Klein and a handful of his associates in 2004 wrote the staff cap into the 10,000-word ballot measure, Prop. 71, that created the agency. It was an obvious ploy to defuse potential opposition arguments that CIRM would become another large government bureaucracy. Klein led the political campaign on behalf of Prop. 71.

Earlier this year, Alquist said that she was introducing the legislation because CIRM is essentially accountable to no one. Her action followed a call by a sister organization to CIRM that urged greater accountability and transparency on the part of the agency, whose 29-member board is packed with representatives of institutions that have received the bulk of the $1 billion given by CIRM.

The sister organization is the Citizens Financial Accountability Oversight Committee and is chaired by state Controller John Chiang, the state's top fiscal officer. Chiang endorsed Alquist's legislation as did the Little Hoover Commission, a state good government agency that studied the stem cell agency. Much of the Alquist legislation is based on the findings of the Hoover Commission.

Among other things, Alquist's bill would eliminate overlapping responsibilities between the CIRM chairman and president, which have been the source of turmoil in the past. It would change the selection process for the chairman and require performance audits of CIRM and its directors. Currently, CIRM operates with unprecedented autonomy in state government. Its finances and budget cannot be touched by the governor or the legislature. Cash flows from state bonds directly to CIRM in an unfettered stream, regardless of the state's financial crisis and severe cut backs elsewhere.

According to the Health Committee staff analysis by Lisa Chan-Sawin, Alquist states that

“while stem cell research is an important and laudable goal, concerns about transparency, accountability and oversight raised by the public, the independent Citizen's Financial Accountability Oversight Committee, the Little Hoover Commission, and the State Controller detract from CIRM's ability to provide grants and loans in the most efficient way. These concerns divert resources and attention from CIRM's ability to maximize voter's investment in stem cell sciences.”

High Costs of Stem Cell Therapy: Will Stem Cell Firms Share More Risk?

Stem cell therapies are likely to be quite costly because of high development expenses and potentially high usage, according to a new report from the University of California at Berkeley, which said that new “financial risk-sharing mechanisms” could be needed.

“The cost impact of the therapy is likely to be high, because of a therapy’s high cost per patient, and the potentially large number of individuals who might benefit from the therapy. This expense would put additional stress on the Medicare and Medicaid budgets, cause private insurance health premiums to increase, and create an incentive for private plans to avoid covering individuals eligible for a therapy,” the report said.

Entitled “Coverage, Cost-Control Mechanisms, and Financial Risk-Sharing Alternatives of High-Cost Health Care Technologies,” the October 2009 study was prepared for the California stem cell agency at a cost of $15,000 by Richard Scheffler, director of the Petris Center on Health Care at UC Berkeley, Brent Fulton, also of the center, and three other persons. The agency said it did not endorse the report's conclusions.

California lawmakers are currently considering legislation (SB1064) by Sen. Elaine KoutaminasAlquist, D-San Jose, aimed at ensuring the affordability of state-financed stem cell therapies and requiring more openness and transparency at CIRM.

Concerning coverage by private insurance, the report, said,

“Because private plans experience approximately 20 percent annual enrollee turnover, this gives them an incentive to avoid covering an individual eligible for a therapy, not only because of the high cost of the therapy, but also because future healthcare savings might benefit a different insurer. Risk adjustment and reinsurance programs, which compensate an insurer for covering an individual with above-average risk or high health care expenses, or both, could be used to mitigate this incentive.”

The study said,

“The development of new stem cell-based therapies could significantly improve and extend the lives of people with currently incurable medical conditions, such as diabetes, macular degeneration, osteoarthritis, and spinal cord injuries. However, there is concern that these therapies may not be affordable and accessible because of the high research and development costs, coupled with the uncertainty as to whether health plans will cover these therapies. This may result in these therapies not being developed at a rate that corresponds to their economic benefit.”

The final paragraph of the study said,

“To improve the likelihood that new stem cell-based therapies will be covered by health plans, financial risk-sharing mechanisms may need to be formulated. These may include stem-cell firms bearing some financial risk, particularly regarding the uncertainty as to whether the therapies will result in future health care cost savings because of potential to cure diseases and disabilities. Risk-adjustment and reinsurance programs, which compensate an insurer for covering an individual with above-average risk or high expenses, or both, could be used to reduce private insurers’ incentive to avoid covering individuals who might benefit from an expensive therapy. In turn, this will increase the new therapies’ affordability and access, and will help ensure that investors who fund therapy development will be compensated, resulting in a development rate that more closely corresponds to the therapies’ benefits.”

The California Stem Cell Report asked CIRM for a copy of the document, which is a public record. Don Gibbons, communications chief for the agency, said,

“Please note that CIRM commissioned the attached report to provide a background survey regarding reimbursement for medical therapies.  We are providing the report to you for information purposes only.  The report and its recommendations do not reflect the views of CIRM's management or the Board’s leadership. We had intended to post this report at the same time that we post the full economic impact study that is underway, which will be later this spring.”

Here is the report.

  Stem Cell Therapy Costs by DavidJensen

CIRM Directors to Take Position on Affordability, Accountability Measure

Directors of the California stem cell agency on March 4 will take their first public look at new legislation aimed at ensuring affordable access to therapies financed by taxpayers, including proposals to improve accountability and openness at the state research effort.

Also on the table at the meeting of the directors' Legislative Subcommittee is legislation to create a state board to deal with umbilical cord-blood matters.

Already three leaders on the CIRM board, Chairman Robert Klein, vice chairmen Art Torres and Duane Roth, have publicly opposed the affordability and accountability legislation as unnecessary. The CIRM board has successfully resisted every effort over the last few years by lawmakers to make changes in agency operations.

However, this year CIRM has declared that it needs to bypass the voter-approved limit on its staff at 50 persons, an action that the legislation would allow. The restriction was written into the law via Prop. 71 by Klein and others along with caps on agency spending. On the surface, removing the cap would seem to require a 70 percent vote of the legislature, also imposed by Prop. 71. But Klein says the agency is considering unspecified alternatives that would not require a vote of the legislature to avoid the restriction.

Earlier this month, Sen. Elaine Kontominas Alquist of San Jose, chair of the Senate Health Committee, introduced the accountability legislation (SB1064), declaring that CIRM is “essentially accountable to no one.” Introduction of the measure followed recommendations from a sister state panel to CIRM, calling for increased openness and transparency. The action apparently triggered two harsh newspaper editorials concerning CIRM.

The umbilical cord blood measure (AB52) is authored by Assemblyman Anthony Portantino, D-Pasadena. In addition to creating a new state board beginning next January and raising fees on copies of birth certificates to fund it, the measure specifically mentions CIRM. It says,

"California pioneered the first sibling donor cord blood pilot project, and is a world leader in the more general area of stem cell research and its medical applications through the establishment and funding of the California Institute of Regenerative Medicine (CIRM). This makes California ideally situated to become the leader in harnessing the therapeutic potential of nonhematopoietic cord blood-derived stem and progenitor cells."

In addition to the Legislative Subcommittee location at CIRM headquarters in San Francisco, the public can participate in the session at teleconference locations in La Jolla, Davis and Menlo Park. The specific addresses should be posted on the agenda in the next day or two. Comments also may be submitted to the board via email.

CIRM Trio Says Alquist Legislation Creates Unnecessary Jeopardy

Three top leaders of the California stem cell agency today said new legislation aimed at making it more accountable and ensuring affordable access to taxpayer-funded therapies would instead jeopardize the agency's accomplishments.

In a word, they said, the measure is unnecessary.

Their opposition was delivered in a five-page letter to Democratic state Sen. Elaine Kontominas Alquist of San Jose, chair of the Senate Health Committee. She introduced the legislation earlier this week, declaring that CIRM was “essentially accountable to no one.”

The opposition letter was signed by CIRM Chairman Robert Klein, a Palo Alto real estate investment banker, and vice chairmen Duane Roth, a San Diego area businessman, and Art Torres, formerly head of the state Democratic Party and retired legislator.

They noted that the full, 29-member CIRM board of directors had not yet taken a position on the legislation. But they said in a letter on CIRM stationery that they wanted to “express our individual concerns regarding the bill’s potential economic impact on the state’s new tax revenues and new jobs created by CIRM.”  They declared,

“More importantly, we are concerned about the bill’s potential impact on finding treatments and cures for diseases and traumas that Californians struggle with everyday.”

Perhaps the key section of the letter, which was highlighted in boldface, said,

“In what is a model for all of state government, CIRM operates within a 6 percent cap on expenses – efficiency unrivaled even in the private sector. CIRM has placed California at the forefront of international breakthroughs in medicine without any net state general fund appropriations or debt service expenditures through December 2009. CIRM continues to serve Californians by advancing research and therapies, creating thousands of jobs, fostering the growth of the biotech industry, and generating over $100 million in new state revenue.”

The CIRM trio did not even endorse the legislation's removal of the 50-person cap on CIRM staff, which agency officials have said they sorely need. The three acknowledged that the restriction "poses challenges.”

But they said the board is “actively exploring other alternatives to address this and remains committed to the 6 percent cap on administrative expenses.” The letter did not elaborate on those alternatives and none have been discussed publicly. The cap was imposed by voters when they approved Prop. 71, which Klein often says he wrote.

The letter described CIRM as “California's most accountable state agency.” It said CIRM has given away more than $1 billion, mostly for research grants, and generated “tens of thousands of job years.”

The letter said that CIRM is already engaged in some of the activities that the legislation would mandate. That includes planning for changes at the top in December when Klein says he is going to leave, as well as planning for the time when the agency's remaining $2 billion will run out. So far, CIRM has handed out $1 billion in less than three years. The money comes from cash that the state borrows via bonds and flows directly to CIRM, untouched by the normal controls of the governor or legislature.

The letter said that the CIRM directors'  Legislative Subcommittee, chaired by Klein and including Roth and Torres, will meet soon to consider Alquist's legislation, SB1064.  The 10-member panel will make recommendations to the full board, which could take a position as early as its March 11 meeting in Sacramento.

Interested parties and members of the public will have a chance to personally address the board then. Individuals can also write or email the members of the board concerning the legislation.

The full letter, which is not on the CIRM Web site, can be found here.

California Lawmakers to Weigh Stem Cell Agency Reform

Just a few weeks after a key state panel recommended more accountability and transparency at the $3 billion California stem cell agency, a leading California lawmaker has proposed far-reaching changes in  the five-year-old organization.

The measure – SB1064 by Sen. Elaine Alquist, D-San Jose – would require performance audits and thorough financial and leadership transition planning at CIRM. It would alter the selection of CIRM's top leadership, ban pre-judging grant proposals and funnel any royalty revenue away from CIRM.

The proposal may well avoid the dismal fate of past legislative efforts involving CIRM. Gov. Arnold Schwarzenegger vetoed those bills after stiff opposition from the agency. However, the measure by Alquist(left), chair of the Senate Health Committee, contains a large carrot for CIRM: removal of the 50-person cap on the size of the organization. The cap was written into Prop. 71 in an effort to make it more appealing to voters. But now CIRM says the restriction could endanger the quality of work at the agency and wants it changed.

CIRM had no immediate reaction to the legislation. It said a formal response was being prepared and would be available later today or tomorrow. Alquist's office also had no immediate statement available.

Asked for comment, John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., said,

“Sen. Alquist's bill makes sensible adjustments to the California Stem Cell Research and Cures Act including requiring transition plans for leadership changes and the end of the current bond financing. The ICOC (the CIRM board) would be wise to embrace it. I hope I'm wrong, but I predict the wagons will be circled and this will once again be portrayed as threat to CIRM's very existence.”

The measure embodies many of the recommendations of the Little Hoover Commission, the state's good government agency. The Citizens Financial Accountability and Oversight Committee (CFAOC), a sister to CIRM, last month recommended adoption of some of the Hoover suggestions, declaring that the agency needed to be more open to the public. (Both CIRM and the CFAOC were created by Prop. 71 in 2004). The CFAOC action also appeared to have triggered two newspaper editorials and a column in the Los Angeles Times deploring CIRM's lack of transparency and accountability.

Among other things, the legislation would:

• Require grant recipients and their licensees to submit to CIRM a plan to assure affordable access to therapies developed using CIRM funding.
• Require that all revenues resulting from CIRM's intellectual policy agreements go into the state's general coffers instead of possibly into CIRM's treasury.
• Require development of a financial transition plan to be submitted to the governor and legislature. (CIRM has already committed one-third of its $3 billion in bond funding with another $300 million or so expected to be committed by the end of this year.)
• Require the state controller, the state's top fiscal officer, to commission annual, independent performance audits of CIRM at the agency's expense.
• Change the duties of the chair and president of CIRM, specifying that the chair does not engage in day-to-day management. The CIRM board would be given authority to decide the chair's responsibilities.
• Remove nomination of candidates for chair from statewide constitutional officers, such as the governor.
• Require CIRM to formulate a succession plan to deal with changes in its leadership. (The current chairman, Robert Klein, says he plans to leave his post in December.)
• Reduce the terms of the CIRM chair and vice chair from six to four years.
• Require all grant applications to go through CIRM's grant review group, which would end a pre-application triage that CIRM has been using.
• Require that meeting minutes include voting records of each member of the CIRM board.

The Alquist bill is likely to be changed as it wends its way through the legislature. It requires a 70 percent vote of both houses, a rare and difficult requirement for any piece of legislation.

We will carry CIRM's response and statements from Alquist when we receive them.

CIRM Backs Public Option in Health Care Reform

The board of the California stem cell agency has endorsed a public option as part of the national health care insurance reform effort, a move that a backer said would help with affordable access to any stem cell therapies developed with taxpayer funds.

The board took the position last week on a motion by director Jeff Sheehy, a communications manager for UC San Francisco. He sits on the board as a patient advocate. Sheehy said,

"It's a way to keep private insurance companies honest and is essential to holding down costs in insurance."

The action was praised by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca. In an item on his organization's blog, he said,

“I certainly haven't agreed with everything the ICOC has done, but they sure got this one right. Let's just hope they expend as much effort making this action known in Washington, D.C., as has gone into touting their biotech-friendly, anti-consumer position on biosimilar drug legislation.”

CIRM Rolls Back its Effort to Undercut Affordable Access

SAN FRANCISCO – A move that would have undercut efforts to provide affordable access to stem cell therapies financed by California taxpayers has been thwarted.

The effort was dropped after John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., brought it to light.

Simpson reported on his organization's blog tonight that CIRM Chairman Robert Klein telephoned him to say that regulatory language proposed by CIRM that would have created a “tremendous loophole” for biotech companies has been scrubbed.

Klein confirmed that action to the California Stem Cell Report at its meeting here tonight. Simpson and his organization are to be commended for bringing the move to public attention.

More details of what transpired can be found on Simpson's blog.

Federal Lobbying and the CIRM Mission

The California stem cell agency opened a huge door earlier this spring when it decided to back industry legislation in Washington to protect biotech therapy patents against development of generic equivalents.

Now marching across that portal is a bid to have the directors of the $3 billion state research institute engage in even broader lobbying efforts. Specifically they are being asked to take a position on one of the most sweeping and controversial parts of the national health care legislation -- the public health care option.

Why not, ask some?

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., said,

“CIRM should never have hired a lobbyist; it should never have taken a position on biosimilar (patent) legislation. But now that the board has gone down that ill-conceived route, the only responsible position is a full endorsement of a public option in health insurance reform. Anything else would demonstrate that the ICOC listens to industry, but ignores consumers.”

The public option question will come before the CIRM directors' Legislative Subcommittee on Aug. 6. It was placed there by Art Torres, vice chairman of the board of directors and chairman of the subcommittee, at the request of director Jeff Sheehy, a communications manager for UC San Francisco.

Sheehy brought up the subject following a report on the patent legislation during a subcommittee meeting on July 16. He noted that the patent legislation is part of the healthcare reform act.

According to the transcript, Sheehy said,

“Since that is now on the table, I would like to ask that the board formally consider supporting the adoption of a public plan as part of that measure since we've already opined on one element of that plan....”

Sheehy continued,

“Given that basically the biosimilars bill was a sop to industry in order to get buy-in (on health care reform) to make sure that everybody in America can have access to care, we should have support as a board for the key element of ensuring that people won't be excluded for prior conditions.

“I know as a person living with HIV, I'm basically trapped within my job because I could never be insured. The only way to guarantee that I would have access to insurance and access to these therapies as we develop them -- and I'm perfectly fine letting industry get all that they need for biosimilars for stem cell research -- but we need a public plan as part of the health reform act to ensure that there is a guaranteed access plan for all Americans, including all Californians.”

Torres promptly replied,

“Well put.”

He said he would place Sheehy's proposal on the agenda for the next meeting.

CIRM Chairman Robert Klein did take issue with Sheehy's description of the patent legislation as an industry sop. Here is how the dialogue went.

Klein:

“I'd just like to say that it's important to remind everyone that ours was not a political judgment, but rather one committed to our mission.”

Sheehy:

“And I agree, but I think ultimately none of this means a thing if patients can't get access to these therapies."

Torres:

“Hear, hear.”

Klein:

“I think that's a very, very important debate that Mr. Sheehy is bringing us to focus on. And thank you, Jeff.”

The public can participate in the subcommittee meeting at teleconference locations in San Francisco, Los Angeles, Healdsburg, Mountain View, Irvine, Palo Alto, La Jolla and Sacramento. You can find the specific addresses on the agenda.

California Lawmakers Make Stem Cell History

Another first has been scored in the brief history of California's unique and unprecedented, $3 billion stem cell research effort.

For the first time, California lawmakers have passed legislation that would affect the California Institute of Regenerative Medicine, a tiny state agency that functions largely outside of the control of both the governor and the state Legislature. CIRM was deliberately created that way through an initiative measure passed by voters in 2004. No lawmakers or other elected officials had a say in its contents.

The complex proposal, Prop. 71, set an extremely high bar against tinkering in its operations by the legislature. The ballot measure required a 70 percent vote of both houses to pass legislation that would affect CIRM – a super, supermajority vote that does not exist for any other bill. Even the state budget requires only a two-thirds vote. That hurdle has been so difficult to clear that California is now deadlocked in a record-setting, two-month long budget crisis.

Nonetheless, lawmakers last week sent to Gov. Arnold Schwarzenegger a bill – SB1565 – by Sens. Sheila Kuehl(see photo), D-Santa Monica, and George Runner, R-Antelope Valley, designed to ensure affordable access to stem cell therapies developed as a result of state funding. The bill was opposed by CIRM, industry and some patient advocates. They complained about its lack of flexibility, economic impediments and a change that would make it easier to fund research that was not based on human embryonic stem cells.

Kuehl said the bill is needed because Prop. 71 "lacks any provisions" to ensure that poor and uninsured Californians will be able to receive state-funded therapies at "the best available prices." She is joined by a raft of supporters included health access groups, retired persons, nurses and others.

The governor has until Sept. 30 to act on the bill. Otherwise it will go into effect without his signature. He could veto it. An override of the veto would seem remote even though the bill passed overwhelmingly. No negative votes were recorded until the measure hit the Assembly and then only a handful. It finally went to the governor after the Senate on Aug. 29 concurred, 37-1, in Assembly amendments.

Schwarzenegger has been a good friend of the stem cell agency and has garnered considerable favorable publicity touting it as a model for a way to get things done. Our bet is that he will veto the bill, but we could be wrong.

(Editor's note: The governor has pledged to veto any bill that comes his way until the budget crisis is resolved. However, he has breached that promise several times already. But his pledge could be good political cover for a veto if he chooses to use it. That also assumes no budget will be in place by Sept. 30.)

Stem Cell Affordability Legislation Changed to Meet CIRM Objections

The California lawmakers behind legislation to ensure affordable access to taxpayer-financed stem cell therapies moved last week to ease the concerns of the state's $3 billion stem cell research agency.

The changes were made prior to a scathing, national Internet attack on the bill's lead author by the private lobbying group run by Robert Klein, who also serves as chairman of the state stem cell agency. One consumer advocate has called for Klein's resignation in the wake of the assault by Americans for Cures, the Klein organization. The group used such terms as "ignorant," "dumb" and "craven" in connection with Sen. Sheila Kuehl, D-Santa Monica.

Late Friday, Klein's group apologized. Klein told the California Stem Cell Report he was unaware of the Internet attack by his group and said he had "great personal respect" for Kuehl. Our understanding is that he intends to personally apologize to Kuehl.

CIRM last month officially opposed Kuehl's bill, SB 1565, on the grounds that it would discourage biotech firms from developing therapies and limit the agency's flexibility to negotiate affordability issues, among other things.

In response, Sens. Kuehl and George Runner, R-Antelope Valley, made changes that appear to go a long ways in dealing with the objections. But in a letter Thursday to Kuehl, Klein expressed the agency's continued opposition. The letter, dated the same day as the Internet attack on Kuehl, was also signed by CIRM President Alan Trounson and Ed Penhoet, vice chairman of the CIRM board of directors.

Below are key sections of the latest amendments to the measure, as provided by Kuehl's office. The actual bill, however, will not be available online via the Legislature’s website until Tuesday. The measure comes up for a hearing in the Assembly Appropriations Committee on Wednesday. The full text of CIRM's letter to Kuehl follows in a separate item.

Here are the amendments in SB 1565.

"Any plan subject to subdivision (a) shall include a requirement that each grantee and any licensee of the grantee that sells drugs that are, in whole or in part, the result of research funded by CIRM shall provide those drugs to publicly funded programs in California at one of the three benchmark prices in the California Discount Prescription Drug Program."

"Notwithstanding subdivision (c), the ICOC may waive the requirement that grantees and licensees of the grantee provide drugs that are, in whole or in part, the result of research funded by CIRM at one of the three benchmark prices in the California Discount Prescription Drug Program (Division 112 (commencing with Section 130500)), as it exists on January 1, 2008, only when the following conditions are met:
"(1) Either of the following conditions is met:
"(A) The drug shall be used for the diagnosis, cure, mitigation, or prevention of a rare disease or condition, as recognized by the federal Food and Drug Administration under Section 360bb of Title 21 of the United States Code, by individuals who would not otherwise have access to the drug through private insurance or public programs, the number of individuals who will have increased access to the drug represent a significant proportion of the individuals in California who have that rare disease or condition, and the ICOC has made a determination that, in the absence of the waiver, development of the drug will be impeded.
"(B) The grantee commits, in writing, to provide expanded access to a drug under its access plan to a class of patients who would not otherwise receive access to the drug, including working uninsured individuals who do not qualify for any public program or private health plan or policy that provides coverage of the drug, and the ICOC has made a determination, before granting a waiver and based on the number of individuals who will have access to the drug and the likely costs of the drug, that the waiver will provide significant benefits that equal or exceed the benefits that would otherwise accrue to the state through the pricing requirements set forth in subdivision (c).
"(2) The ICOC has conducted a public hearing prior to adopting any waiver pursuant to this subdivision. The ICOC shall provide findings and declarations and documentation to the Legislature substantiating the need for, and benefits of, a waiver adopted pursuant to this subdivision at least 30 days prior to the public hearing and shall post these documents on its Internet Web site at the time of submission to the Legislature and provide notice to the public that these documents have been posted."

CIRM Letter Opposing Kuehl Legislation

Here is the text of the CIRM letter stating the agency's continued opposition to SB 1565.


SB 1565: OPPOSE UNLESS AMENDED

July 10, 2008

Dear Senator Kuehl:

Thank you for the opportunity to comment upon the potential amendments to Senate Bill No. 1565. While the Independent Citizens’ Oversight Committee (the “ICOC”), the governing board of the California Institute for Regenerative Medicine (“CIRM”), has taken a position in opposition to the bill on the grounds that is it premature and unnecessary, we appreciate your willingness to engage in a dialogue regarding the potential amendments.

Section 1 of the bill, which would remove the two-thirds vote requirement for funding “vital research opportunities” was added in early June and it has caused a powerful reaction of unanimous opposition from CIRM’s governing board. Proposed subparagraph (E) makes clear that the goal of Section 1 is to eliminate the priority that Proposition 71 places on human embryonic stem cell research. As long as Section 1 remains in the bill, we must strongly oppose SB 1565.

At a time when opponents of stem cell research are arguing that recent developments obviate the need for human embryonic stem cell research, a position we believe to be incorrect, the proposed amendment to Proposition 71 would send the wrong message to Californians and to the nation at large. It would also thwart the will of the more than seven million Californians who voted for Proposition 71 in order to address the federal funding gap for human embryonic stem cell research, a gap that continues to exist to this day. By removing the two-thirds vote requirement, the amendment would undermine the very purpose of Proposition 71 – to provide a priority for funding human embryonic stem cell research. Finally, eliminating the two-thirds vote requirement would be inconsistent with the requirement that Proposition 71 may only be amended to further its purposes. For all of these reasons, which are discussed in greater detail in the attached addendum, we are strongly opposed to the removal of the two-thirds vote requirement.

With respect to Section 2 of SB 1565, we share your view that California state and local government purchasers should have access, at the lowest possible price, to the therapies and drugs derived from CIRM-funded research. Indeed, our regulations include provisions very similar to those set forth in SB1565. Given the complexities of our healthcare system and the uncertainty regarding the types of therapies and drugs that will be developed as a result of CIRM-funded research, we must retain the flexibility to address issues specific to particular diseases and particular therapies. We appreciate your offer of alternative language, including a waiver process. However, we offer our suggestions below in an effort to reduce the risk of unintended consequences. If you are willing to remove the amendment to the two-thirds vote requirement and to accept our proposed amendments, we would be willing to consider taking a “neutral” position on the bill.

Proposed Addition of Subdivision (e)

We believe it would be preferable to give CIRM greater discretion to establish a waiver mechanism pursuant to the Administrative Procedure Act. The addendum to this letter addresses this issue in more depth. This would permit CIRM to assess changes in medical technology and in the health care sector prior to defining the scope and contours of the waiver and it would provide an opportunity for the Legislature and the public to comment upon the proposed waiver mechanism before it is adopted. Therefore, rather than trying to anticipate the circumstances pursuant to which a waiver may be justified, we recommend replacing subdivision (e) with the following language:

(e) Notwithstanding subdivision (c), CIRM may waive the requirement for grantees, and licensees of the grantee, to sell drugs that are, in whole or in part, the result of research funded by CIRM, at one of the three benchmark prices in CalRx, based on a finding that a waiver is necessary to protect the health of Californians whose lives or quality of life is at risk. CIRM shall adopt a regulation or regulations pursuant to the Administrative Procedure Act to implement the waiver provided in this subdivision after notifying the Legislature and conducting a public hearing.

Proposed Amendments to Subdivision (c)(1)

Your proposed amendments to subdivision (c)(1) clarify what we understand to be the original intent of SB 1565. We believe that further refinements, however, may sharpen the expression of the Legislature’s intent. For example, we understand that you intend SB 1565 to apply only to therapies or drugs purchased in California by California state or local government funded programs. The current language, however, would appear also to apply to federally funded programs, including programs funded and administered entirely by the federal government without regard to need. Similarly, we are concerned by the provision that specifies that CalRx, as it exists on January 1, 2008, shall apply regardless of any subsequent changes in the law. While we share your concern about the unintended consequences that could flow from designating a successor program, we believe these concerns could be addressed by incorporating a successor program only if it covers CIRM stem cell-derived therapies or drugs. We therefore propose the following changes to subdivision (c)(1):

(c)(1) Any plan subject to subdivision (a) shall include a requirement that each grantee and any licensee of the grantee that sells drugs that are, in whole or in part, the result of research funded by CIRM shall sell those drugs in California to publicly California state and local government funded programs in California at one of the three benchmark prices in the California Discount Prescription Drug Program (Division 112 (commencing with Section 130500)), as it exists on January 1, 2008, or a successor program to the extent that the program applies to California Institute for Regenerative stem cellderived therapies and drugs.

Conclusion
CIRM is committed to working with the Legislature to address the important issues raised by SB 1565 and to ensure that Californians have access to therapies and drugs derived from CIRM-funded research. Placing these provisions in statute, however, may hinder our efforts rather than help, because we cannot anticipate all of the challenges we will face in the future.

We recognize that the Legislature could amend the law in the future through urgency legislation, but we are concerned about the potential political opposition to changes that may be required to ensure that Californians have access to a therapy derived from human embryonic stem cells. Given the 70 percent vote requirement in Proposition 71, such opposition could prevent the Legislature from passing an amendment that is essential to ensure access. CIRM’s ability to amend its regulations pursuant to the Administrative Procedure Act, on an emergency basis if necessary, does not pose the same risk.

While well-intentioned, SB 1565 is premature and unnecessary. Nonetheless, if you are willing to amend the bill to remove Section 1 and provide for a waiver directive regarding the public pricing policy as described above, we are prepared to recommend a neutral position to the ICOC.

We appreciate your support of CIRM and your willingness to work with us to address these critical issues.

Sincerely,
Robert N. Klein, Chairman, ICOC
Alan O. Trounson, President
Edward E. Penhoet
Vice –Chairman, ICOC