California Legislation Targets Unregulated "Stem Cell" Clinics but Not Until Next Year

Legislation that may lead to regulation of dubious stem cell clinics is now before California lawmakers, but it is not likely to result in action until sometime next year at the earliest. 

Assemblyman Kevin Mullin, D-San Mateo, announced the measure (AB617) last week. He said in a news release, 

Kevin Mullin, LA Times photo

“It is clear that more must be done to ensure the proper regulation of for-profit stem cell clinics."

More than 100 unregulated "stem cell" clinics exist in California and hundreds more throughout the nation. They use what they describe as stem cells in untested treatments that cost thousands of dollars. A number of injuries, including blindness, have been reported. (See here, here, here and here.)

Jonathan Thomas, chairman of the $3 billion California stem cell agency, told its governing board last week that the clinics were peddling "snake oil."

Mullin's bill would create an advisory board within the state Department of Public Health to study the problems involving unregulated stem cell clinics and make recommendations to the legislature. 

The panel would also have the power to enact emergency regulations. If passed by the legislature this year, it would not take effect until next January. In addition to requiring hearings, the board could not implement emergency regulations without at least a 90-day waiting period.

Art Torres

Asked for comment on the legislation, Art Torres, vice chairman of the state stem cell agency and a former state lawmaker, told the California Stem Cell Report that he would withhold remarks on the bill until  "we work out final language/amendments before its first hearing in April."

Generally, proposed laws, including Mullin's measure, do not take effect until January of the following year after they are approved by both houses of the legislature and signed by the governor. 

Legislation that has "urgency" status can go into effect immediately, but such measures require a two-thirds vote of both houses instead of a simple majority. Securing a two-thirds vote can sometimes be difficult. 

The problems surrounding unregulated clinics have existed for years, but received little attention at the state or federal level until UC Davis researcher Paul Knoepfler and Leigh Turner of the University of Minnesota documented the scope of the business in 2016.

California's state medical board, which regulates physicians, is also looking into the unregulated clinics.

Stem Cell Agency Seeking Legislative Removal of 50-person Staff Cap

Directors of the California stem cell agency yesterday decided to work with a state legislator on a proposal that would give CIRM much needed relief from an ill-considered limit that caps the agency's staff at 50.

Previously CIRM was moving towards an effort to kill the legislation, at least for the next year or so, because of other provisions it found less than agreeable.

The cap on CIRM staff was written into law by Prop. 71, which created the $3 billion stem cell research effort in 2004. The limit was an obvious attempt to defuse opposition arguments that the ballot initiative would create another large state bureaucracy. However, in a bit of redundancy, the measure also contained a spending limit on administrative expenses.

The personnel limit left CIRM with a staff about the size of that of a 24/7 Burger King to monitor currently more than 300 researchers and more than $1 billion in grants. Another $2 billion will be going out the door over the next four years or so.

Several months ago, CIRM President Alan Trounson warned directors that the quality of the agency's work could suffer as a result. State Sen. Elaine Kontaminas Alquist, D-San Jose, subsequently introduced legislation aimed at reforming CIRM and ensuring affordable access to taxpayer-financed therapies. The bill, SB1064, also would eliminate the 50 person cap.

Yesterday's action by directors marks the first time that CIRM has moved from adamant and successful opposition to any legislation that would change Prop. 71. The agency has had a sometimes stormy relationship with some lawmakers (see here, here and here) but has gradually moved away from abrasive tactics.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., praised CIRM's new position. In an email, he said,

"Instead of the usual stiff arm extended toward the Legislature from within circled wagons, Art Torres is drawing on his political skills to negotiate a deal that satisfies everyone. It's about time.”

CIRM Vice Chairman Torres, former head of the state Democratic Party and a longtime legislator, told directors that he and others were negotiating with Alquist to come up with legislation that would be acceptable to CIRM and remove the personnel cap. Torres said that he was working to add a provision for compensation for CIRM board members who are patient advocates and who serve on various CIRM working groups. The provision would provide pay for days attending the meetings as well as days preparing for them.

The patient advocate directors, seven in all not counting Torres and Klein, are critical to CIRM's operations because many of the other directors have conflicts of interest that prevent them voting on some matters. Some of the patient advocates, such as UC Regent Sherry Lansing, also have significant conflicts, leaving only about four of five relatively free to vote on almost any matter. The patient advocates, however, can lose salary from their jobs when they take time off for CIRM affairs. Such is not the case with other directors, such as medical school deans and executives, who also have staff that they can use to assist on CIRM matters.

Enactment of a bill is not a foregone conclusion. The CIRM legislation requires a 70 percent vote of both houses of the legislature, an unusual and exceedingly difficult hurdle to clear. It effectively ensures minority control over any changes and was written into Prop. 71 by CIRM Chairman Robert Klein, who plans to step down from his post in December.

It is unclear at this point what other provisions will remain in the bill. Torres said he hopes to conclude negotiations in about three weeks.

Simpson noted Torres' legislative effectiveness and deep contacts in Sacramento. “Kudos to the politically savvy vice chairman,” Simpson said. At the directors meeting yesterday, Torres was careful to note that other directors were involved in lobbying legislators including co-Vice Chair Duane Roth, who has Republican contacts; Lansing, a well-connected former head of a Hollywood studio; Michael Goldberg, a venture capitalist, and Leeza Gibbons, an Alzheimers patient advocate and Hollywood celebrity.

Simpson indirectly noted that salaries at CIRM, among the highest in state government, could provide a public relations problem in the State Capitol, where lawmakers have already made draconian budget cuts. In a reference to Torres' salary, Simpson said, “At $225K a year given the state's financial crisis, they're still paying him too much.”

Our take? We disagree with Simpson about Torres' salary but do think that CIRM salaries, whose range tops out at $508,750 for the CIRM president, pose a perception problem that needs to be carefully handled by CIRM.

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.

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.

Stem Cell Watchdog Warns of the Lure of the World Stage

San Diego – The Consumer Watchdog group today sounded a cautionary note on the international agreements involving CIRM (see item below) and warned that they "should be supported so long as they are based on scientific merit, not merely the glamor and glitz of playing on the world stage."

John M. Simpson, stem cell project director for the watchdog group, noted that California law requires that CIRM-funded research be conducted within the state. Prop. 71 also requires that California suppliers be given preference, an issue that is now before the California legislature.

Simpson said in a statement,

"If the collaborations are driven by the science, that’s great. If it’s a matter of saying let’s go international, just to play on the world stage, I would be dubious."

He continued,

"It’s important that applicants for the disease team grants be judged completely on the scientific merit of their proposals,. Decisions cannot be twisted for geographic equity. I would hope that international collaborative efforts would rise to the top, but if they don’t, so be it."

Stem Cell Snippets: Court Appeals, Cheerleading,UC Davis Plans, Pera and Kuehl

Stem Cell Lawsuit Appeal – The time has changed on the oral arguments on Feb. 14 in the appeal of the verdict in the CIRM lawsuit trial. It is now set for 2 p.m.

World's Oldest Cheerleader? – Relentless patient advocate Don Reed says next Friday (when CIRM makes its first research grants) is an "unbreakable date" in San Francisco (actually Burlingame, which is near the airport). In his effort to generate favorable news coverage, he wrote a piece on "StemBlog," which is part of the Stem Cell Action Network. Reed said this about the expected grant announcements, "Worst Scenario: the opposition shows up in full force, which they will– and in support? Old white-haired Don is there by himself, the world’s oldest cheerleader. Best Scenario: a ton of people smiling, including some friends driving wheelchairs, joined in the celebration of a truly historic day, when in the face of seemingly insurmountable odds, a great state led a great nation into a new age."

Losing the Stem Cell Race – The Washington Post and the Sacramento Bee carried an op-ed piece that suggested state efforts to pump up stem cell research are not enough. According to Joseph Fuller and Brock Reeve, the reasons include: "The entry of individual states into the breach left by the federal government has helped drive research activity. But it has also created a patchwork of regulations and funding levels that constrains research collaboration. Expensive and restrictive enabling patents, political controversy and the absence of federal research money, coupled with a long time to market, have made venture capitalists reluctant to invest. In 2005, just over $100 million in venture capital went to stem cell ventures, compared with $500 million in biotech ventures at an equivalent stage."

UC Davis Stem Cell Plans – The campus newspaper at UC Davis has a rundown on $75 million in stem cell research building plans on the campus. Written by Allie Shilin, the piece says: "The newest addition to the center is a 5,160-square-foot Good Manufacturing Practice laboratory to be housed in a 100,000-square-foot renovated portion of the UC Davis Medical Center on Stockton Boulevard in Sacramento."

Reijo Pera – The co-director of the UC San Francisco ESC research center is leaving to join Stanford as director of "human embryonic stem cell research and education for the Stanford Institute for Stem Cell Biology and Regenerative Medicine."

Kuehl's CIRM Legislation – Jesse Reynolds of the Center for Genetics and Society is "encouraged" by State Sen. Sheila Kuehl's proposal to make changes at the California stem cell agency. He writes on Biopolitical Times that her ideas are worthy of support.

Warm-up for a Big Money Week

You could call it the CIRM Round – the wave of meetings surrounding each session of the California stem cell agency's Oversight Committee.

But in this case it is a mini-wave, given the committee's busy, two-day agenda – freshly posted on the Web -- during which it is expected to award its first research grants. Ahead of that is a meeting of the legislative subcommittee Feb. 12. The presidential search subcommittee met last month.

In addition to consideration next week of the recommendations on $24 million in SEED research grants, the Oversight Committee will take up a report (not yet online) from the search group. Overseers are scheduled to consider recommendations from the legislative panel involving federal stem cell legislation. Legislative matters at the state level involve two umbilical cord blood bills (AB34 and AB40) and possibly proposed legislation by Sen. Sheila Kuehl, D-Santa Monica, chair of the State Senate Health Committee.

That proposal is not specifically listed on the agenda, but should be discussed if the stem cell directors want to move off their reactive legislative posture.

Also on tap are federal rules (OMB Circular A-21) having to with determining costs on grants. It is not clear why this is on the agenda based on the online material, but it is likely to involve issues of separation of federal and state grant money, since federal grants must be isolated from non-approved stem cell lines.

Remote locations for the legislative subcommittee are available to the public in California in Palo Alto, Chico, Sacramento, La Jolla and San Francisco as well as Maui in Hawaii. No remote locations are available for the Oversight Committee meeting Feb. 15-16 in Burlingame.

Promoting California's Stem Cell Giveaway

Stem cell advocate Don Reed is beating the publicity drum for the Big Event this month, and it is not the Super Bowl.

Reed, who has a keen sense of PR, is pitching Feb. 16 as an "unbreakable date" in San Francisco. On Jan. 31, he wrote on his blog, stemcellbattles.com:

"There will be lots of reporters… If our friends are not there, who will they talk to?

Hint: the opposition will definitely be there…"

The date is when the CIRM Oversight Committee is expected to conclude its decisions on the first wave of more than $100 million in research grants to be dished out this year.

Reed is well-connected in the patient advocate community. He knows that TV cameras cannot resist sympathetic interviews with persons afflicted diseases or other problems that could be treated with future stem cell therapies. And the TV audience is likely to be much more sympathetic to their concerns than those opposed to ESC research on theological grounds.

Perhaps state Sen. Sheila Kuehl, D-Santa Monica, is also considering being on the scene, which could be an excellent venue to promote her legislation concerning the stem cell agency. TV rarely covers the agency, and it is not likely to become excited about a legislative story unless it becomes truly extraordinary.

Legislators Target California Stem Cell Agency

The California stem cell agency may have believed its difficulties with the California legislature had vanished, but no such luck.

A bipartisan attempt is underway to change the composition of CIRM's Oversight Committee and dictate some terms of its intellectual property policies, among other things. The effort must be bipartisan because a colossal majority of 70 percent of both houses is required to pass a bill affecting CIRM. The governor's signature is required as well.

Reporter Malcom Maclachlan of the Capitol Weekly was the first to break the news about the latest effort to assert legislative influence over CIRM. He said Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley, will author the legislation. Kuehl is the chair of the Senate Health Committee, replacing Deborah Ortiz, who stem cell Chairman Robert Klein once denounced as an "ongoing threat." Ortiz left the legislature because of term limits. Runner is a Republican leader in the Senate, serving as its GOP caucus chair.

Maclachlan wrote that legislation now being drafted would require that two "public interest" representatives be appointed to the 29-member CIRM Oversight Committee. That presumably would mean that two persons now on the board could lose their seats, since the measure does not provide for increasing the size of the committee.

The legislation also "would allow the ICOC to negotiate royalties of 2 percent to 5 percent on any treatments developed via grants to for-profit entities; there would be no cap on the royalties the state could receive."

Maclachan, who has produced a number of stories on the stem cell agency, continued:

"The bill would also force for-profit entities to offer these treatments to the state at the Medicaid prices, rather than the current requirement that they be offered in line with weaker standards under the California Prescription Drug Discount Program. Finally, it would widen the definitions of what state agencies would be eligible for the discounts. Current CIRM regulations limit this to the state discount drug program, while the legislation would open it to any state agency, including prisons and county indigent health-care programs."

Maclachan quoted Dale Carlson, spokesman for CIRM, as saying the agency would have no comment until it had an opportunity to review the bill.

Carlson also said:

"We have benefited greatly from the Legislature's advice and counsel in years past, and we look forward to a continuing cooperative partnership. We are interested in any and all ideas that can bring stem-cell treatments and therapies to fruition."

Winning passage of the legislation would be a remarkable achievement. No other legislation requires 70 percent approval – not even the state budget or tax increases. Negative votes from only 13 senators can kill the bill. But the measure will certainly provide a forum for lawmakers and others to make their voices heard at more length than the three minutes allowed for each public comment at CIRM meetings.

For more on the reasoning behind the legislation see the item below.

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