Consumer Watchdog Says Klein Should Resign Because of Personal Attack on Lawmaker

The Consumer Watchdog organization today called for the resignation of Robert Klein as chairman of the $3 billion California stem cell agency after his private lobbying group called a respected state senator "dumb" and "craven."

John M. Simpson, stem cell project director for Consumer Watchdog, a nonprofit Santa Monica, Ca., organization, said the attack was an inappropriate "over-the-top, hysterical call to battle."

Writing on the group's blog, Simpson referred to the Internet posting Thursday by Americans for Cures, Klein's stem cell lobbying group, on the Daily Kos, a widely read and influential political blog.

Americans for Cures targeted Sen. Sheila Kuehl, D-Santa Monica, and her legislation – SB 1565 – which is designed to ensure affordable access to any therapies that result from taxpayer-financed stem therapies. Simpson wrote:

"One can oppose the bill without launching personal attacks and suggesting the sky is falling. For the most part, the board members and agency's staff have followed that policy. But Klein insists on wearing two hats: ICOC(CIRM's board of directors) chairman and president of his advocacy group.

"The positions are incompatible. Since Klein refuses to give up the advocacy role, he must step down from his public position as head of a state agency. Failure to do so undermines the stem cell agency's credibility and ability to do its vital work."

Simpson summarized the legislation:

"It puts in statute regulations CIRM itself developed governing access to drugs by the uninsured; it lowers the vote of the scientific working group necessary to recommend funding non-embryonic stem cell research from a two-thirds majority to a simple majority; and it asks the state's non-partisan Little Hoover Commission to study the governance structure of the agency."

Kuehl's aides have been working with CIRM staffers to deal with the agency's official objections. Earlier this week, Kuehl amended her measure to deal with CIRM concerns. But Klein's lobbying group says the bill is unacceptable in "any form."

We have asked CIRM and Kuehl's office if they have any comment on the posting by the Klein group. We have not received a response, but will carry their comments should they make any.

CIRM Directors Nix Kuehl Legislation

SAN FRANCISCO -- The California stem cell agency is preparing to oppose legislation designed to ensure that Californians have affordable access to therapies developed with taxpayer funds.

Too restrictive and premature. That was the sentiment at today's meeting of the Legislative Subcommittee of the board of the directors.

They were talking about SB1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley. The measure has passed the Senate and faces a hearing in the Assembly Judiciary Committee. No lawmaker has voted against the bill.

Directors pointed out that they already have an affordable access plan in place in their regulations for CIRM-financed therapies. They argued that the legislation would require each product to go before the legislature to determine a price.

Kuehl's measure is a response in part to widespread consumer unhappiness with the high cost of health care and industry pricing of therapies. But Claire Pomeroy, a CIRM director and dean of the UC Davis School of Medicine, said that CIRM's policy "cannot overcome the dysfunction" of the healthcare system. She said the legislature should give CIRM "the opportunity to do the right thing."

CIRM President Alan Trounson said that locking affordability provisions into state law would cripple CIRM's ability to negotiate prices and drive the industry away from developing therapies for diseases with small numbers of patients.

CIRM directors also reacted sharply to a provision in the Kuehl/Runner bill that would make it easier for CIRM to finance research that does not use human embryonic stem cells. The provision seems to play into the hESC vs. adult stem cell debate. CIRM Chairman Robert Klein said that Runner said the change was "very important" to Republican members of the state Senate.

Presumably, recent research developments that demonstrated that adult stem cells can be reprogrammed to take on the pluripotent characteristics of hESC lie behind the proposed change. However, directors said much more work needs to be done before that method can be shown to provide cells that truly match the characteristics and usefulness of embryonic stem cells.

Kuehl's bill also would request a study of CIRM by an independent body that would report back to the legislature next year at this time with recommendations for changes, including dealing with the built-in conflicts of interest at CIRM. One CIRM director is currently under investigation for violating the state's conflict of interest laws. And the board of directors is dominated by members from institutions that are benefiting to the tune of hundreds of millions of dollars in research grants.

Directors said that they understood that the state's Little Hoover Commission has already indicated it is going to perform the inquiry, regardless of the fate of the Kuehl bill.

Directors did not have a quorum at today's meeting and thus could not vote on a position on the legislation. However, their sentiments will come before the full board of directors next week, which is certain to oppose the Kuehl measure.

Here is the latest legislative staff analysis of the measure and the CIRM staff analysis, which we should note was well done.

We will have more later on other legislation discussed today by the Legislative Subcommittee.

CIRM Legislation on Affordable Access Moves Forward

Legislation aimed at ensuring affordable access to California-financed stem cell therapies easily cleared the Assembly Health Committee on Tuesday and is headed for a hearing next week in the Assembly Judiciary Committee.

Meanwhile the California stem cell agency has posted its own analysis of the bill, SB 1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley, setting the stage for CIRM directors to take a position on the proposal.

The vote Tuesday on the bill was 16-0. No lawmaker has voted against the bill as it has moved through the Senate and now in the Assembly. If it clears the next committee, it will go to the Assembly floor, but it will have to return to the Senate for concurrence in Assembly amendments.

The CIRM analysis of the measure did not make a recommendation on approval or support. But it said, among other things,

"SB 1565 appears to tie the price for any and all commercialized products to the lowest pricing based on the current benchmarks of the CalRx program in effect at this time. Any change to that price over time, given any new circumstances, need for flexibility in order to leverage commercialization on products for “orphan diseases” or even for time itself would require a change in statute with more than 70 percent vote of both houses of the Legislature as well as approval by the governor. Any change would further be delayed by a minimum of one year in order to enact authorizing statute."

The analysis also took note of another change in the bill since it cleared the Senate. That amendment would delete a Prop. 71 provision that requires a two-thirds vote of the CIRM grants working group to fund research that does not involve pluripotent or progenitor cells. The Prop. 71 provision is aimed at giving a priority to hESC research.

The bill has also been altered to request, instead of mandate, a study of CIRM by an independent commission with an eye to preparing recommendations for changes in its structure, including its built-in conflicts of interest on its board of directors (ICOC).

According to the Assembly staff analysis of the legislation, its authors believe that "given the ICOC/CIRM's unique formation as a public entity, the public's investment of $3 billion in bond funds, and the close-knit nature of the scientific community, the ICOC and CIRM warrant a high level of scrutiny by an independent body...to ensure public trust and confidence and protect the integrity of the ICOC and CIRM from real or perceived conflicts of interest."

The CIRM Legislative Subcommittee will discuss the bill at its meeting on Friday. Its analysis also discusses two other state measures and links to their text and analysis. However, the CIRM link to the analysis for SB1565 is for an older version of the bill. Here is the link to the latest analysis.

CIRM Affordable Access Bill Easily Clears Senate

On a unanimous 40-0 vote, the California State Senate has passed legislation to ensure affordable access to CIRM-financed stem cell therapies and to require a study that could lead to reforms in the agency's complex and unique structure.

The measure (SB 1565) by Sen. Sheila Kuehl(see photo), D-Santa Monica, now goes to the Assembly for further action.

The bill was on a "special consent" calendar Thursday, indicating that no controversy existed concerning it. There is no indication that there was any debate on the measure. The California stem cell agency has taken no position on the legislation.

For more on the bill, see the "patient advocate" item below.

Affordable Access to CIRM Therapies: A Patient Advocate's Position

For a patient advocate's take on legislation aimed at ensuring affordable access to CIRM-financed therapies, take a gander at the May 13 posting by Don Reed on his blog, stemcellbattles.com.

Earlier this week, Reed (see photo) was the only person to testify before the state Senate Appropriations Committee on the measure, aside from the bill's author, Sen. Sheila Kuehl, D-Santa Monica.

Reed's view is that CIRM's regulations, which can be easily changed unilaterally by CIRM, are sufficient to provide affordability. He also contends that an outside study of CIRM's structure is unnecessary and that its built-in conflicts are only a "convergence of expertise." We should note that last week most of the experts on the panel were barred by law from even discussing -- much less voting on -- $271 million in grants because of their conflicts of interest.

Reed is a regular at meetings of the board of directors of the stem cell agency and is vice president for public policy for Americans for Cures, the private advocacy group directed by CIRM Chairman Robert Klein.

Kuehl's bill, SB 1565, was approved 14-0 by the committee and is now on the Senate floor. In addition to codifying in state law affordable access, the measure would require an independent study of CIRM by a state agency known as the Little Hoover Commission with recommendations for reform.

A note on the analysis from the Appropriations Committee says that the Little Hoover staff contends that the legislature does not have the legal authority to direct its work. An opinion as been requested from the Legislative Counsel's office on the question. However, the Legislative Counsel works for the legislature and is inclined to find ways for lawmakers to do what they want.

Here is a link to the floor analysis available to California state senators as they consider the measure.

(Editor's note: After this item was posted, we learned that the bill passed the Senate on Thursday on a 40-0 vote. It nows goes to the Assembly.)

CIRM Legislation Hearing Scheduled for Early April

The latest legislation to target the California stem cell agency is set for its first hearing April 2 in Sacramento before the Senate Health Committee.

The bill is aimed at ensuring affordable access to stem cell therapies financed by public funds in California. It would also require a study of the agency with an eye to correcting some of the difficulties it has had with such problems as conflicts of interest.

The lead author on the measure, SB1565, is Sen. Sheila Kuehl, D-Santa Monica, who is chair of the Health Committee. She is not expected to have difficulty in winning approval of her bill and sending it to the Judiciary Committee.

CIRM has not taken a position on the measure, but has opposed similar efforts in the past. Last month, one stem cell activist, Don Reed, opposed the measure, calling it "another distraction, another delay." Reed also said that CIRM is "squeaky clean" although one of its directors. John Reed (no relation to Don Reed), is under investigation by the state for violating CIRM's conflict-of-interest rules. Five other directors also violated conflict policies last year by writing letters on behalf of grant applicants.

Don Reed is vice president for public policy for Americans for Cures Foundation, which is the private, nonprofit stem cell lobbying group run by CIRM Chairman Robert Klein. It was Klein, an attorney, who advised John Reed to lobby CIRM staff on behalf of a grant to his institution.

CIRM Conflict Problems Behind Latest Stem Cell Bill

A state lawmaker says her new legislation aimed at the California stem cell agency was triggered in large part by breaches of the agency's own conflict-of-interest policy by the agency's directors.

Reporter Terri Somers of the San Diego Union-Tribune today reported that Sen. Sheila Kuehl, D-Santa Monica, said that the bill's requirement for a review of CIRM by the state's Little Hoover Commission was aimed at finding possible solutions to some of the problems that have generated a separate state investigation and audit.

The Little Hoover Commission is a nonpartisan state agency aimed at improving efficiency and performance of state government. In addition to studies, it can conduct public hearings and offer up legislative solutions.

Somers wrote:

"'Those (reviews) are directed at things that have happened,' Kuehl said yesterday. 'What I want to do is look ahead to see if there are necessary fixes.'"

Somers continued:

"Kuehl said her decision to look at the potential for conflicts of interest arose after learning that several grant applications to the institute had to be disqualified because members of the institute's board had written letters in support of the applicants."

The conflict cases involve John Reed, president of the Burnham Institute, and the deans of five medical who intervened on behalf of potential grants to their organizations, which is a violation of CIRM ethics policy.

Kuehl told Somers that a Los Angeles Times editorial urged reconfiguration of the CIRM board, but that following discussions with CIRM, she agreed that directors with expertise brought "the best understanding." Kuehl said,

"I'm really looking for solutions that will protect the public interest but not throw the baby out with bathwater in terms of expertise."

Late yesterday, CIRM released a statement from CIRM Chairman Robert Klein concerning the Kuehl bill, SB1565. It said,

"Last week we had highly productive discussions with Sen. Kuehl and similar discussions with Sen. (George) Runner and we believe we should be able to arrive at satisfactory language that advances the mission of Prop. 71."

CIRM directors have adamantly opposed legislation similar to SB1565 in the past. Klein's statement was carefully crafted to avoid saying anything directly about the latest bill and leave open the possibility of defusing it with some sort of action by CIRM itself.

Here is a link to the text of the bill, which is not yet available online through the legislature. The Foundation for Taxpayer and Consumer Rights put up the copy.

Lawmakers Target California Stem Cell Agency

One of California's more powerful legislators today introduced a bill aimed at the state's $3 billion stem cell agency and designed to ensure that "the state’s neediest residents will have access to therapies and drugs" developed as a result of taxpayer-financed research.

The measure would also require the state's Little Hoover Commission to study the structure of CIRM and report to the legislature by July 1 of next year with recommendations.

The legislation, SB1565 by Sen. Sheila Kuehl, D-Santa Monica, comes only a few days after CIRM attracted unwanted attention (see item below) with its proposal to boost the top pay ranges of its key executives by as much as $200,000 a year or 50 percent. The salary proposal received an unfriendly reception from some of CIRM's directors on Wednesday.

Kuehl(see photo), chair of the Senate Health Committee, said in a statement that the bill, co-authored by Republican George Runner of Antelope Valley, would maintain "the public’s trust by identifying ways to increase public accountability and reduce conflicts of interest."

CIRM watchdog John M. Simpson of the Foundation for Taxpayer and Consumer Rights said in a news release:

"The stem cell agency’s oversight board was designed with built-in conflicts of interest and it’s too big to be effective. They always have difficulties mustering a quorum. An outside analysis by unbiased observers can only be good. A hard-nosed look by the Little Hoover Commission is just what’s needed.”

Simpson also said,

"We need a provision that allows the State Attorney General to intervene if drugs or therapies funded by the stem cell agency are priced unreasonably. We’ve seen too many cases where companies benefit from publicly funded research and then set prices at obscene levels. They act like socialists when seeking research funding but are greedy capitalists when there are profits on the table."

No comment was immediately forthcoming from CIRM.

The text of the bill was not available online at the time of this writing, but Kuehl's office said the legislation would

"...require that grantees and licensees submit for CIRM's approval plans that will afford uninsured Californians access to drugs and cell therapies resulting from CIRM-funded research. The bill also ensures that publicly funded programs get the best prices for stem cell therapies and drugs by requiring grantees and licensees to sell them to publicly funded programs at a price that does not exceed one of the benchmark prices in Cal-Rx, the state’s prescription drug discount program."

The measure requires a super, super-majority vote – 70 percent of both houses – to pass. The requirement was created by Prop. 71 to make it extraordinarily difficult for lawmakers to make changes in the operation of the agency.

Passage would require a consensus from lawmakers that is rare in the Capitol. However, it is probably fair to say that the this week's pay proposal by CIRM will certainly contribute mightily to building that consensus.

(Here is a link to Ron Leuty's story on the bill in the San Francisco Business Journal.)

Lawmakers: CIRM Proposal for Affordable Access Not Good Enough

Thirteen California state lawmakers are calling on the California stem cell agency to tighten its proposed requirements for grants to business to ensure affordable access to state-financed therapies.

The lead authors on the letter are the influential chairs of the Health Committees in their respective chambers, Sen. Sheila Kuehl, D-Santa Monica, and Assemblyman Mervyn Dymally, D-Los Angeles. They criticized the intellectual property policy to be considered by CIRM directors Wednesday for having a "a weak and vague standard that is unlikely to result in any meaningful access for the uninsured to new stem cell drugs and therapies."

In a letter to CIRM Chairman Robert Klein, they urged that any access plans require CIRM approval and that CIRM regulations spell out specific access standards.

The lawmakers also said that the mechanism for affordable pricing should not be linked to a state law that can be repealed, "leaving no pricing requirement whatsoever in place."

The full text of the Dymally-Kuehl letter is below.

Text of Lawmakers Letter

Here is the full text of the letter from Sen. Sheila Kuehl and Assemblyman Mervyn Dymally and 11 other state lawmakers concerning affordable access to state-financed stem cell therapies.

Dear Mr. Klein:

Recent proposed regulations pertaining to intellectual property and revenue sharing requirements for for-profit grantees, dated November 24, 2007, contain some notable improvements over previous versions of the regulations but still have a number of troublesome provisions that we urge you to correct before these regulations are finalized.

We are pleased that the most recent regulations propose to require grantees to share 25 percent of the net licensing royalties they receive, the same percentage as is applied to grantees that are non-profit organizations. We are also pleased that the regulations have broadened the definition of “drugs,” for which grantees or their licensees would be required to meet benchmark pricing requirements, to include articles intended for use in the diagnosis, treatment, or prevention of disease or components thereof, including products such as blood, blood products, cells, and cell therapies. We are also encouraged that provisions dealing with blockbuster revenue sharing requirements for for-profit grantees have been made more flexible, to include cases where either prior or current CIRM funding and CIRM-funded patented inventions contribute to the creation of net commercial revenue in excess of $500 million.

We are disappointed, however, that the access requirements continue to require that access plans for uninsured Californians meet “industry standards at the time of commercialization.” This is a weak and vague standard that is unlikely to result in any meaningful access for the uninsured to new stem cell drugs and therapies. The proposed regulations actually take a step backwards from previous iterations, by allowing the access plans, themselves, to account for the “resources of the grantee or licensee”, an undefined phrase that will encourage grantees and licensees to limit access to these vital, but expensive new drugs and therapies.

Related to this, we see no provisions in the regulations requiring CIRM or the ICOC to actually approve the proposed access plans that are submitted, meaning that there would be no effective enforcement of the access requirements, vague and weak as they are. We think the regulations must spell out specific access standards, taking into account the best industry practices that currently exist, and to require CIRM and the ICOC to approve the access plans, with opportunity for public comment.

In addition, while we would prefer the benchmark pricing requirement for grantees and licensees to be the Medicaid price, we understand the desire of the CIRM and ICOC to link the pricing requirement to a California-based standard. While requiring that prices for stem cell drugs and therapies purchased with public funds must meet one of the three benchmark prices required by the California Discount Prescription Drug Program (Cal Rx) fulfills this, there is no guarantee that this particular program will exist in the future. As you know, the Governor blue-penciled start-up funding for the program in signing the 2007-08 budget. If the program were to be repealed, there would be no pricing requirement whatsoever in place. We strongly urge that the regulations deal with this potentiality by stating the benchmark prices will be those required by Cal Rx, or if it is no longer in effect, on the last day it was in effect.

We wish to commend you on the work the CIRM and ICOC have done to date on this important policy, and we strongly urge you to go further to ensure that the state, and the public, broadly, benefit from the patents, licenses, and royalties created as a result of the state’s funding, while at the same time promoting the development of stem cell therapies.

Sincerely,

SHEILA J. KUEHL
Chair, Senate Health Committee
MERVYN DYMALLY
Chair, Assembly Health Committee

Assemblymember Karen Bass
Senator Negrete McLeod
Assemblymember Patty Berg
Senator Darrell Steinberg
Assemblymember De La Torre
Senator Leland Yee
Assemblymember Noreen Evans
Assemblymember Mary Hayashi
Assemblymember Hernandez
Assemblymember Dave Jones
Assemblymember Sally Lieber

New CIRM Director No Intellectual Shrinking Violet

Consider the following from Floyd Bloom, the latest appointee to the board of directors of the largest single source in the world of funding for human embryonic stem cell research.

"A growing problem of major proportions has been staring us in the face for many decades. Until solved, this long-neglected problem presents a gigantic obstacle to the application of the discoveries flowing from biomedical research into deliverable standards of medical practice that could benefit all of society, both in the United States and globally. This problem is the imminent collapse of the American health system. Unless steps are taken soon to undertake a comprehensive restoration of our system, the profound advances in biomedical research so rapidly accruing today may never be effectively transformed into meaningful advances in health care for society.

"Today's term for such evolutions of discovery into application has been dubbed 'translational research'. The appealing notion that research advances travel from bench to bedside is laudable, but conceptually flawed."

Bloom made the statement in 2003 when he was was president of the American Association for the Advancement of Science. While some on the Oversight Committee of the California stem cell agency may share his sentiments, few have expressed them so publicly and eloquently. Indeed, Bloom's views seem, in many ways, a departure from the standard operating procedure at CIRM, which is somewhat wary of flying in the face of established scientific and medical culture.

Bloom (see photo) was appointed this month by state Treasurer Bill Lockyer to fill a vacancy on the 29-member CIRM Oversight Committee. Lockyer said that Bloom has "dedicated his life to biological science research and is responsible for numerous breakthroughs in neuroscience understanding."

Bloom retired in 2005 as chairman of the Scripps Research Department of Neuropharmacology in La Jolla, Ca. At the time, he said he planned to devote more time to Neurome, Inc., a La Jolla biotechnology firm involved research into human neurodegenerative diseases. Bloom co-founded the firm in 2000.

At one stage in his youth, according to an article on Molecular Interventions, Bloom was encouraged to go into journalism because of his penchant for telling stories. In 2002, he became editor-in-chief of Science, the AAAS journal. He spoke with Molecular Interventions about his views on running a magazine:

"The best thing is to have controversy in an intellectual manner because people read it. They like to see the Christians fight the lions, right? And so if you can engage in an intellectual discussion, then you attract readers and at the same time people get informed from the debate because they'll learn parts of alternative arguments."

Bloom, who also served both as president and chairman of the AAAS, carried his views beyond the pages of scientific media. A few years ago, he told the New York Times:

"I'd like for us to consider health care to be regarded as something like a public utility. To me, if we agree that universal coverage is something to be desired, is that really much different than the fact that we've all agreed that everyone in the country is entitled to have electricity, water, telephone connections, if they can pay for it. We have all kinds of ways to help people get those basic provisions of life.

"And health benefits could be viewed in exactly that same utilitarian way. It could be a corporate network like water power and electricity, with regulatory agencies that set the rates for profit."

Kuehl Legislation Up for Hearing This Afternoon

Legislation aimed ensuring a return on California's $3 billion stem cell research effort and affordable access to state-financed cures is scheduled to be heard this afternoon in a state Senate committee hearing that can viewed live on the Internet.

The measure by Sen. Sheila Kuehl, D-Santa Monica, is on the agenda of the Judiciary Committtee, its last stop before it could move to the Senate floor. The session begins at 1 p.m. PDT today. It can be seen on Calchannel.com. We recommend that you check in earlier to be sure your computer is properly configured to see the action.

The Foundation for Consumer and Taxpayers Rights Monday said the legislation is laudatory but falls short in guaranteeing affordable access to stem cell therapies funded by CIRM research. The measure is opposed by CIRM and the biotech industry.

The foundation said in a letter to legislators written by John M. Simpson, its stem cell project director:

"Foremost among the positive aspects, the bill clearly establishes that the Legislature has an appropriate role in oversight of the state’s stem cell institute, the California Institute for Regenerative Medicine. It requires intellectual property regulations that provide for a fair and reasonable financial return to the state on any discoveries made as a result of state financing. It also requires price discounts for drugs, therapies and diagnostics purchased with public money and that organizations receiving licenses provide reasonable access to therapies, drugs and diagnostics for uninsured Californians.

"However, SB 771 contains no provision ensuring that all Californians will gain affordable access to the results of the research they have funded. No one begrudges a company a reasonable profit. What must be prevented is egregious profiteering when public funds have been used to develop a therapy, drug or diagnostic.

"I wish this were only a hypothetical issue; it is not. Genentech’s lifesaving cancer drug Avastin was launched with the benefit of $44.6 million in public funding. Nonetheless, the company originally priced the drug at $100,000 for a year’s supply. Only after months of outrage has Genentec capped Avastin’s price at $55,000 a year.

"SB 771 needs a provision that would prevent this sort of abuse when public funds help produce important drugs and therapies. The Attorney General must have the power to intervene and reduce prices in similar cases."

CIRM Lending Plan Resurfaces, State Pension Funds Eyed

California stem cell Chairman Robert Klein Tuesday said $3 billion for stem cell research is not enough and touted a loan plan to leverage the state's investment.

Klein proposed lending a portion of CIRM's funds, which, when they were paid back with interest, could either be loaned once more or used as grants. He also suggested that the mammoth California state employee and teachers pension funds could be tapped for additional investments in stem cell companies and research.

Declaring that CIRM's goal is to develop cures, Klein said, "Three billion dollars is not going to get us there."

Some time ago, a CIRM committee briefly addressed the issue of making loans but put off any additional discussion to deal with more pressing matters.

Klein addressed the loan issue in the context of providing financial assistance for clinical trials, which can be very expensive. He said loans allow money to be "recycled" and increased through collection of interest. He suggested that they would be issued in the form of subordinated debentures to make them more palatable to the businesses involved.

Klein appeared at the Burrill & Company stem cell conference on a panel discussion that was entitled "The CIRM Strategic Plan: Corporate Perspectives."

The panel was chaired by David Gollaher, president of the biomedical industry group, the California Healthcare Institute. The group has expressed displeasure with CIRM's efforts concerning intellectual property, declaring that they threaten commercialization of stem cell therapies.

Gollaher did not specifically cite the CIRM rules or related legislation (SB771 by Sen. Sheila Kuehl, D-Santa Monica) but he warned against placing barriers to development of products. Klein said it was important to provide economic incentives. He said that "preferential pricing has to be modulated and balanced against the primary mission" of the agency, which is to develop cures.

Bruce Cohen, president of Cellerant Technologies, said CIRM's royalty rules are "painful but we can live them." He described them as "measurable and capped." But he said rules dealing with pricing make businesses "very, very frightened." He said they could have a "chilling effect" on a decision whether to take CIRM funds. Cohen noted that many medical firms already have plans to provide access to their products by low income persons.

Legislature Posts Text of CIRM Legislation -- SB771

The text of legislation aimed at ensuring a return to the state on cures developed as a result of research funded by the California stem cell agency was posted officially today on the Internet.

The measure did not contain any surprises. However, it did contain a necessary provision that has not been mentioned previously. That language declared that the proposal would enhance CIRM's ability to carry out the purposes of Prop. 71. The initiative stipulates that legislative changes in the act must enhance its purposes. That is on top of the unprecedented requirement for a super, supermajority vote (70 percent) to approve such bills.

The "enhancement" requirement was presumably inserted into Prop. 71 to provide another weapon to battle legislative changes under terms authorized by the initiative. Since this is the first such attempt, its effectiveness as an opposition tool is yet to be tested. Previous legislation concerning CIRM used different legal approaches.

The number of the bill, SB771, was also picked to resonate with Prop. 71, according to the office of Sen. Sheila Kuehl, D-Santa Monica, chair of the Health Committee, who authored the proposal along with Sen. George Runner of Antelope Valley, the leader of Senate Republicans.

Here are the key elements of the bill, which is not likely to be heard in committee for some time:

"The standards that the ICOC develops shall do all the
following:

"(A) Require every recipient of a grant or loan award for research
to provide to the state 25 percent of the net licensing revenues it
receives associated with any institute-funded patented invention
beyond a reasonable revenue threshold that the ICOC may establish.
Net licensing revenue shall include all forms of financial
consideration from licensing and shall be defined as gross licensing
revenues, less patent expenses and reasonable payments to inventors.

"(B) Require every recipient of a grant or loan award for research
to grant exclusive licenses involving institute-funded patented
inventions relevant to development of therapies, drugs, and
diagnostics only to organizations that have plans which the institute
determines will provide substantial access to the resultant
therapies, drugs, and diagnostics to uninsured Californians. In
addition, the licensees shall agree to provide to patients whose
therapies, drugs, and diagnostics will be purchased in California
with public funds, the therapies, drugs, and diagnostics at the
federal Medicaid price.

"(C) Require any recipient of a grant or loan award for research
that commercializes any product that it develops using institute
funds to agree, as a condition of accepting the funds, to make
royalty payments to the state equal to 2 to 5 percent of the revenues
over the life of the product, depending on the level of funds
provided and contribution of institute-funded patented inventions to
the development of the product."

Rationale Behind Kuehl's Stem Cell Legislation

The new chair of the California State Senate Health Committee will "push the CIRM to live up to its promises," including insuring that all Californians will have access to any therapies developed as the result of state-funded stem cell research.

So says the January newsletter put out by Sen. Sheila Kuehl, D-Santa Monica. The newsletter carried a piece by Peter Hansel, staff director of the Senate Health Committee, that discussed the California stem cell agency at some length, including needed changes. Hansel, it should be noted, also served as a Health Committee analyst when it was chaired by Sen. Deborah Ortiz, who is now out of office.

Hansel wrote that Kuehl disagrees with arguments that CIRM should should go easy in terms of royalty requirements and affordable access to cures and therapies. He noted that CIRM has adopted some IP rules that respond to legislative concerns. Hansel continued:

"However, regulations governing the pricing of stem cell therapies in California run counter to assurances given to the Legislature. While at first proposing that grantees and licensees sell such therapies to publicly funded programs at the federal Medicaid price, the CIRM has recently reduced that to a requirement to sell at the same prices they offer them to the state’s new California Prescription Drug Discount Program, a significantly less favorable price. Similarly, the regulations for grants and loans to commercial entities propose to cap the amount of revenues coming back to the state associated with most products developed with Prop. 71 funds, as opposed to giving the state an open-ended return commensurate with its investment. By contrast, New Jersey, which also allows commercial entities to receive grants under its stem cell research program, requires such grantees to share a percentage of revenues—one percent—on an open-ended basis from licensing or commercialization of inventions (two other states that fund stem cell research, Illinois and Connecticut, do not allow for-profit entities to receive funding while another two, Maryland and Illinois have yet to develop policies for grants to for-profits). Capping returns from joint research ventures also appears to run counter to the practices of most universities who co-fund research with commercial entities and the venture capital industry.

"In addition, recent changes require grantees to grant exclusive licenses for inventions they develop to entities that agree to have plans at the time of commercialization to provide access to resultant therapies and diagnostics for uninsured patients, consistent with 'industry standards,' The current industry standard, the patient assistance programs that have been developed by the major drug companies, have been shown to be woefully inadequate in encouraging access to free or reduced price drugs for uninsured persons. Thus, it is incumbent on the CIRM to develop a more meaningful standard than this."

calif legislation, IP, affordability, access, skuehl, phansel

'Fair Cures,' Lab Construction and CIRM

The Greenlining Institute, a longtime activist community group in California, has come up with a series of recommendations on stem cell research in California, including suggestions that biotech companies receiving state grants set goals for directing some of the money to minority and women-owned businesses.

The proposals stem from a Greenlining conference earlier this year on stem cell issues. They have been compiled in a report, called "Fair Cures," prepared by Joe Araya Tayag, health program manager for Greenlining. The group has been around for decades and has litigated and agitated successfully on a wide range of issues involving minorities. The organization's name stems from its position opposed to the practice of redlining.

Currently CIRM is preparing a proposal to fund $47.5 million million in lab facilities. The grants are expected to be awarded in June. The agency has generally indicated support for diversity efforts, but it is not clear how that might be reflected in its grants for labs.

Here are excerpts from Greenlining report. It can be found on the website from the conference, which includes video of the presentations:

"...(R)esearchers and firms that obtain patents on health care technology, such as stem cell advancements, have virtually no incentive or authorization to ensure fair access to innovations in medical treatment. Without an adjustment in patent law, the cost of patent licenses in the stem cell industry will impact costs of any potential products. Because researchers have to recoup the costs of licenses, prices are driven up, with the greatest burden ultimately falling on disadvantaged communities of color. The CIRM currently includes provisions for affordability in their intellectual property policies that may be used as models for future state-funded research programs."

"Conference participants also voiced their concerns over how the tens of thousands of employment opportunities to be created with the state’s investment into stem cell research will be distributed fairly among all Californians. These jobs take the form of research positions, CIRM career staff, and supplier contracts. In his presentation, Joe Tayag from the Greenlining Institute showed that there were over 60 different types of supplier services used by a large biotech company. These jobs range from advertising, to catering, to furniture manufacturing. Audience members such as Ernie Baker from the Covenant on Health in San Francisco stressed that these jobs may empower economically underserved communities if employment rates reflect the diversity of the state. Conference participants agreed that these jobs need to be recognized as essential to stem cell research and should be accounted for in any discussion of the fair implementation of stem cell research."