Stem Cell Agency Chair Pressing for Consensus on IOM Recommendations

The chairman of the $3 billion California stem cell agency, Jonathan Thomas, yesterday outlined how he intends to proceed next week when the agency's governing board considers the far-reaching recommendations of a blue-ribbon Institute of Medicine panel.

Writing on the agency's blog, Thomas said,

“While some of the IOM’s recommendations are administrative in nature and can be implemented, others are much more complex and would require changes in (governing) board policy or legislative changes.” 

Jonathan Thomas, chairman of CIRM governing board at far right. Art
Torres (center), co-vice chair and former state Democratic party chairman,
who would  play key role in dealing with lawmakers. Robert Klein is at the
 left in this 2011 meeting, Klein's last as chairman of the agency and the one
 in which Thomas was elected chairman. 

He continued,

“My goal is to strive to reach consensus on a course of action on the 23rd. However, if the board isn’t able to choose a course of action at this time we will continue the conversation and bring it up at future board meetings until we reach agreement.”

It is worth noting that Thomas did not mention the possibility of having to ask the people of California to amend the state constitution, which would require a statewide election. Opponents to change at the agency have used that possibility to discourage action. (See here and here.) An election would be costly, politically difficult and could open the door to additional unwelcome changes at the eight-year-old research enterprise.

Thomas' desire for a consensus among the 29 board members – instead of a simple majority – could be a stumbling block as the board becomes snarled internally, perhaps for months or more. The board normally meets only about once a month and has a full slate of regular business on those occasions. The agency will run out of money for new grants in less than four years, and action on the IOM recommendations seems a necessary prelude to winning continued financial support.

While four years would appear to an ample period of time, making the sort of changes the IOM recommends would require legislative action, which probably would take a minimum of a year. Timing is important as well. The current leaders in the state Senate and Assembly will be termed out in 2014. Starting all over with novice leadership, changes in key committee chairmanships and so forth would make the task even more difficult. Then there is the need to address strategies for continued financial support. Should the agency seek a new statewide bond measure (the current funding mechanism)? If so campaign committees need to be formed, electoral strategies planned and tested and tens of millions of dollars raised for campaign expenses. If private funds instead are to be raised to the tune of hundreds of millions of dollars(the agency spends about $300 million a year), such an effort would also require considerable time. To keep the funding pipeline full, all of this should be completed well before the money runs out in 2017.

Dilly-dallying this year in drawn-out, fruitless debate over the IOM proposals would be an unfortunate beginning should CIRM directors actually want to continue the existence of the organization.

In his blog item, Thomas sounded this final note.

“It’s likely the debate will be passionate – everyone involved in this work cares deeply about it – and there will undoubtedly be disagreements, but ultimately we all share the same goal, a desire to make sure that whatever we decide helps make the stem cell agency even stronger and more effective, and is in the best interests of the people of California.”

IOM Report: Many Major Changes at Stem Cell Agency Require Legislation

As the Institute of Medicine began its presentation today to the governing board of the $3 billion California stem cell agency, one of its key directors, Sherry Lansing, pointed out that some of the IOM recommendations require legislative action and perhaps a vote of the people.

Her essential point was that the agency is hamstrung by the very measure that created it in 2004. She did not elaborate on her comment, but here is a look at some of matters she was talking about. (Lansing is chairwoman of the UC board of regents and former CEO of a Hollywood film studio.)

The ballot measure locked in management minutia and more, and then slapped on tight restrictions that make it nearly politically impossible to alter even such matters as who is in charge of production of the annual report. (By order of law, the chairman, in case you are wondering.)

And if the 29-member governing board -- so sized and specified to every nit and nat by the ballot measure -- wants to make the sweeping changes recommended by the IOM, agency directors face a formidable task in California's Capitol.

Many of the most important recommendations for the California stem cell agency require a vote of the California legislature and signature of the governor. The IOM's choice of words – that these proposals “may” need legislation – is conservative. There is little doubt that legislative action would be needed to fully implement the recommendations below.

The vote needed is no simple majority. It is a rare, super, super-majority (70 percent) of each house. The requirement was also written into state law by Proposition 71, the 10,000-word ballot initiative that created the stem cell agency. The 70 percent requirement gives extraordinary power to minority viewpoints that must be dealt with to win passage of legislation. In the state Senate, for example, it would take only  13 senators to block a bill.  

With that background, here are direct quotes from the IOM report on its legislative recommendations.

Separate Operations from Oversight

The board should focus on strategic planning, oversee financial performance and legal compliance, assess the performance of the president and the board, and develop a plan for transitioning CIRM to sustainability. The board should oversee senior management but should not be involved in day-to-day management. The chair and the board should delegate day-to-day management responsibilities to the president. Each of the three working groups should report to management rather than to the ICOC.

Change the Composition and Structure of the Board and Working Groups

CIRM should put systems in place to restructure the board to have a majority of independent members, without increasing the size of the board. It should include representatives of the diverse constituencies with interests in stem cell research, but no institution or organization should be guaranteed a seat on the board. Consideration should be given to adding members from the business community. The terms of board members should be staggered to balance fresh perspectives with continuity.

The chair and other ICOC members should be prohibited from serving on the working groups. During the reconstitution of the working groups, the current level of representation of disease advocates should be maintained, such board members being replaced with other disease advocates who are not board members.

Revise Conflict of Interest Definitions and Policies

CIRM should revise its definitions of conflict of interest to recognize conflicts arising from nonfinancial interests, such as the potential for conflict arising from an individual’s interest in a specific disease, and should reassess its policies for managing conflict of interest in light of this broader definition.

Restructure the Grant Review and Funding Process

CIRM should restructure the grant review and funding process to separate oversight and strategic planning from day-to-day operations. The ICOC should remain responsible for oversight and articulation of an overall strategic plan. However, grant management, funding recommendations, and grant administration should be the responsibility of the CIRM scientific staff, reporting to the president. This restructuring would help mitigate concerns related to conflicts of interest and would also put the review and funding process in the hands of those best equipped to make those decisions.

The committee recommends several changes pertaining to the development and approval of RFAs, composition of the Grants Working Group, reordering of rankings by CIRM staff, notification of applicants, and process for making final decisions.

Enhance Industry Representation in Key Aspects of CIRM Organization

Industry representation on the ICOC, the Scientific Advisory Board, the Standards Working Group, and the Grants Working Group should be enhanced to leverage industry’s expertise and resources in product development, manufacturing, and regulatory approval in support of the ultimate goal of bringing therapies to patients.

Consider Harmonizing Intellectual Property Policies with Policies of Bayh-Dole Act

 As other sources of funding for stem cell research become available and as the field of regenerative medicine advances from the laboratory to the clinic, the ICOC should reconsider whether its goal of developing cures would be better served by harmonizing CIRM’s IP policies wherever possible with the more familiar policies of the Bayh-Dole Act.  

Move to Allow Stem Cell Agency More Staff Advances in Legislature

The magic number now for CIRM in the California state legislature is 56.

That's the number of votes required in the 80-member state Assembly for passage of legislation that would remove the 50-person cap on the size of the staff at the $3 billion agency.

The bill, SB1064 by Sen. Elaine Kontominas Alquist, D-San Jose, cleared the Senate on a 33-0 vote on Thursday. The vote was pretty much a foregone conclusion, given that the bill has the support of Senate leadership. It now goes to the Assembly where it faces two committee hearings before reaching the floor. Approval is likely in the committees, but it is a bit trickier on the Assembly floor.

It only takes 15 lawmakers, either not voting or voting no on the measure, to block the bill. That's because Prop. 71, which created CIRM, enshrined in state law a requirement for a 70 percent vote to change the law concerning the stem cell agency. The rare and ill-considered super, super-majority provision gives a handful of persons extraordinary control over the fate of the bill. It would take only a couple of loopy lawmakers to reject the legislation, given the customary voting patterns in the Assembly.

CIRM dearly wants the employee cap removed. CIRM President Alan Trounson has warned that the quality of the agency's work will suffer without its removal. The limit was written into the 10,000-word initiative by CIRM Chairman Robert Klein.

Klein and 29-member CIRM board of directors have endorsed the Alquist bill, the first time they have given the nod to legislation that would affect the agency.

Here is a link to the analysis provided to lawmakers for the vote on the Senate floor.

CIRM Directors Okay Compromise Legislation

Directors of the California stem cell agency today endorsed legislation that would remove the 50-person cap on its staff and which is also aimed at ensuring affordable access to stem cell therapies financed by taxpayers.

In response to a question from the California Stem Cell Report, Don Gibbons, chief communications officer for CIRM, said the vote was unanimous. No further details were disclosed.

It is the first time that CIRM directors have endorsed legislation that would modify the agency's operations.

The legislation, SB1064 by Sen. Elaine Kontominas Alquist, D-San Jose, is now set for approval on Thursday by the Senate Appropriations Committee. Then it will go to the Senate floor.

Here is a link to an earlier item on the bill with more details on its current provisions.

Bee Carries Article on Stem Cell Agency and the State's Financial Crisis

The Sacramento Bee today carried an op-ed piece by yours truly dealing with the California stem cell agency and ballot-box budgeting.

It is a slightly altered version of the item – “Folly of Ballot-Box Budgeting” – that appeared last week on the California Stem Cell Report.

Players in the Negotiations on the CIRM Cap Removal Legislation

Art Torres, co-vice chairman of the California stem cell agency, sent along the following regarding the negotiations on the legislation to remove the 50-person cap on CIRM staff.

Torres, who was a key figure in the process, said,

"Please credit our chief counsel James Harrison and counsel Scott Tocher as our chief negotiators and Duane Roth and Bob Klein, who all played significant roles in our efforts with Senator Alquist and her staff, and Senators Steinberg, Florez and Senator Kehoe and their staffs, who were all very helpful in these negotiations and the input of our president, Alan Trounson, and our scientific staff."

Compromise on Legislation Removing CIRM Staff Cap

Legislation to remove the 50-person cap on staff at the California stem cell agency and ensure affordable access to taxpayer-funded therapies was modified Thursday with the intent of winning the support of the CIRM board of directors.

CIRM Co-Vice Chairman Art Torres and others negotiated the changes in SB1064 by state Sen. Elaine Kontominas Alquist, D-San Jose. Torres is expected to seek the endorsement of the full CIRM board at a special telephonic meeting Tuesday. The measure is expected to come before the Senate Appropriations Committee on Thursday.

CIRM dearly wants the 50-person cap removed. CIRM President Alan Trounson has warned that the quality of CIRM work could suffer if it doesn't have more help. The agency has awarded more than $1 billion in grants and loans to more than 300 researchers. Another $2 billion will be handed out over the next several years. The cap is a bit of redundancy in Prop. 71 since the measure also includes a limit on CIRM's operational budget.

Eliminating the provision, however, is not a trivial legislative matter, also because of Prop. 71. The ballot initiative wrote into law a stipulation that the legislature can only make changes in CIRM with a rare, super, super-majority vote (70 percent) of both houses. As a result, both Alquist and CIRM have compromised on the legislation.

As the legislation now stands, in addition to removing the staff cap, the bill would:

• Write into law provisions aimed at ensuring affordable access to CIRM-financed therapies. Some flexibility for exceptions would be permitted for CIRM under controlled and public processes.
• Assure that potential profits from the taxpayer-funded therapies would go to the state's general fund. Prop. 71 was vague on where such cash would go, raising the possibility it would go to CIRM directly. Any such revenue is far, far down the road given the slow nature of research and federal approval of new therapies.
• Require performance audits of CIRM every three years, beginning in 2010-11, at CIRM's expense
• Permit the expansion of the grant review committee beyond 23 members and 15 scientists
• Require leadership succession planning at the agency. Its first and only chairman, Robert Klein, has said he will be leaving his post in December. Klein has been the dominant and driving force at the agency, even leading the electoral campaign that won approval of Prop. 71 in 2004.
• Require creation of a financial transition plan to address issues that CIRM faces when its current bond funding expires several years from now.

Earlier provisions were removed from the measure that would have changed the selection of chairman and vice chairman of the agency and altered the roles of the chairman and president. The role of the chairman is likely to redefined by the board as it deals with Klein's departure.

Much of the original measure had its origins in the findings of the Little Hoover Commission study of the stem cell agency. The commission recommended a wide range of changes at CIRM, some of which remain in the Alquist bill.

Alquist's bill declared,

“Since its inception, questions and concerns have been raised about the institute's practices, its governing board, and how the state directly and financially benefits through this sizeable investment. These criticisms divert the attention and focus of the institute to drive transformational scientific research and find cures.

“It is the intent of the Legislature to further enhance the ability of the institute to manage this investment made with public funds by addressing public concerns regarding oversight and transparency.”

The bill also said that it was intended to maximize state revenues that might result through CIRM grants.

The public may attend the CIRM board meeting on Tuesday at a number of locations throughout the state. Individuals may also comment on the bill and any action by the board. Specific addresses can be found on the agenda.

IOM Study of California Stem Cell Agency Proposed

A directors subcommittee of the California stem cell agency next week will consider commissioning a blue-ribbon, outside study of its work, ranging from its organizational structure to its scientific performance.

The study would be conducted by the prestigious Institute of Medicine and be paid for by CIRM. The proposal comes as legislation is being considered in Sacramento that would require peformance audits of CIRM. The agency has also scheduled a three-day review in October of its strategic plan by a panel of outside experts.

The new Science Subcommittee of CIRM directors will take up the IOM proposal at its meeting on Tuesday. The agenda contains no detailed justification for the proposal. It simply says,

“Consideration of commissioning IOM study regarding CIRM, including organizational structure, financial structure, conflicts policies, operations, scientific performance, and best practices, to enhance operations and scientific performance and identify critical scientific opportunities in the near term.”

Jeff Sheehy, chairman of the subcommittee, supports the proposal. In an email, he said,

“If you look at what the IOM does (and I have seen a couple of IOM reports--they were spectacular in their rigor and thoroughness, along with being absolutely objective), and what we should be providing in the way of a progress report to the people of California, it makes a lot of sense to have the gold standard IOM look at us.”

The institute is extremely well-regarded in science circles and regularly studies scientific issues. More than 600 reports are listed on its Web site, mostly dealing with scientific as opposed to public policy matters, although there is considerable overlap on those concerns when public financing is involved.

One longtime observer of the California stem cell scene, who must remain anonymous, said,

“What is probably true is that the IOM would not be so concerned about closed reviews and public disclosure of financial information from reviewers, but will focus on whether the money has been given out in a fair way and what has resulted from it.”

The IOM did produce a report in 2009 on conflicts of interest in medical research and educational institutions. In the case of CIRM, Prop. 71 built into the agency a wide range of conflicts of interest. The IOM study did not examine CIRM or the NIH, but it said,

“(T)here is growing concern among lawmakers, government agencies, and the public that extensive con­flicts of interest in medicine require stronger measures. Responsible and reasonable conflict of interest policies and procedures will reduce the risk of bias and the loss of trust while avoiding undue burdens or harms and without damaging constructive collaborations with industry.”

An IOM study would not be the first involving CIRM. It asked the group to put together a one-day workshop in 2006 on the risks of human egg donation. CIRM approved a $124,185 contract with the IOM. The report from the workshop is now being sold on the Internet by the IOM for $26.78.

Another IOM study would be expensive and could take possibly as much as a year to complete, one source told us. The performance audits proposed in the state legislation are estimated to run about $400,000 each.

The IOM proposal is not being offered as alternative to the audits and was being discussed prior to the legislation, we understand. However, the possibility of such an evaluation could become part of the ongoing negotiations on SB1064 by state Sen. Elaine Kontominas, D-San Jose. A special telephonic meeting of the full CIRM board is also scheduled for next Tuesday if an agreement is reached on the measure, which includes removal of the 50-person cap on CIRM staff. CIRM is eager to see that limit revoked.

Earlier CIRM scheduled and then cancelled a meeting on the Alquist legislation. The one next week could also be cancelled if negotiations are not successful.

Members of the public can sit in on both the full board meeting and the Science Subcommittee session at a variety of locations around the state. Specific addresses can be found on the agendas.

The Folly of Ballot Box Budgeting and Stem Cell Research

California Gov. Arnold Schwarzenegger last week inadvertently highlighted one of the fundamental flaws in the nature of the state's $3 billion stem cell agency.

The action came when the governor released his revised budget for the state of California, which is floundering in a years-long budget crisis. The Golden State is at least $19 billion in the hole, and prospects for clambering out of that financial pit are bleak. Meanwhile, California's debt is climbing, requiring the state to allocate more cash for interest costs. California has the lowest credit rating of any state in the nation and is sometimes compared to Greece.

To deal with crisis, Schwarzenegger wants to eliminate the state's main welfare program for families, making it the only state in the country without one. Nearly one million children would lose state support as a result. State employees would continue see their salaries reduced by 15 percent. In-home health care for the elderly and disabled would be slashed by $750 million. Childcare would end for 142,000 youngsters. All to take care of a deficit so large that it exceeds California's combined spending on prisons and its four-year universities, as Daniel Weintraub of HealthyCal.org pointed out.

Contrast that to California's $3 billion stem cell agency, which is providing whopping, multi-million dollar grants to many already comfortable researchers (more than 300 in all). Hundreds of millions of dollars more will be handed out over the next 18 months, regardless of the state's money woes. And CIRM salaries, among the highest for state employees, will continue to top $500,000. More debt to do all this will be piled on California, which has seen its interest costs soar in the last few years.

However, that does not mean that CIRM's stem cell research is not worthwhile. And it does not mean that the spending by CIRM does not have something of a beneficial economic impact. What the disparity illustrates is the folly of ballot-box budgeting and locking minutia into state law, which is precisely what Prop. 71 did when it was approved in 2004, creating the California stem cell agency.

One can support the goals of the California Institute for Regenerative Medicine, as we do, and still deplore the process by which it was created along with the less than salubrious results of Prop. 71, which in some ways is one of CIRM's worst enemies.

We have written more than once about problems that have been created by inartful language in Prop. 71 and dubious mandates. One requires a rare, super, super-majority legislative vote (70 percent) to make any changes in laws affecting CIRM. Currently, the agency is bedeviled by a foolish, 50-person cap on the number of its employees, a provision in the 10,000-word measure. The cap is redundant; another also exists on its operational budget. The agency has constant problems gathering enough of its 29 directors so that they can take legal action. That's the result of another super-majority requirement – this one for quorums of its governing board. The board itself is ungainly. The size, which impedes CIRM's work, was dictated by Prop. 71 authors to give all stakeholders a seat at the money table and thus win their political support in the 2004 election. The list can go on and on.

In a perfect world or even a not-so-perfect world, lawmakers would examine all state spending and weigh the immediate benefits of feeding hungry children, not to mention schooling them, against the desire to find cures for horrendous diseases, a process that can take decades or more. But Prop. 71 froze out the governor and the legislature. The folks in the Capitol cannot touch CIRM's cash, a situation that weakens thoughtful state budgeting. If such restrictions were limited to CIRM, the situation would not be so dire. But other cases of ballot-box budgeting have also hampered the elected representatives who are supposed to keep California's 37 million residents out of this sort of sorry financial mess.

So far, CIRM's cushy cash position and largess have not drawn public attention or even come under serious, visible scrutiny in the Capitol. But they could become a liability – one that could damage CIRM's public support – should an unfortunate event surface or an unfriendly, publicity-savy lawmaker seize on the situation.

All that can be done short-term is to work with legislators on the measure (SB1064) that would remove the 50-person cap and make other needed changes. At the same time, CIRM should carefully manage expectations and avoid the hyberbole that marked the 2004 campaign and that still surfaces from time to time from some of the agency's leadership.

Over the long-term, changes are also overdue in the ballot initiative process. But that is battle for another time and place.

CIRM Staff Cap/Reform Legislation Hanging Fire

With less than two weeks remaining before a key deadline, directors of the California stem cell agency have cancelled a meeting on legislation to remove the 50-person cap on its staff, and no additional sessions have yet been scheduled.

In response to a query, CIRM Vice Chairman Art Torres told the California
Stem Cell Report that a final agreement had not yet been reached on the terms of the legislation by state Sen. Elaine Kontominas Alquist, D-San Jose. He hopes to reach a compromise that CIRM directors could support.

The bill, SB1064, must clear the Senate by May 27 if it is to be enacted this year. CIRM is eager to remove the staff cap and has warned that the quality of its work is likely to suffer without more employees. The agency has approved more than $1 billion in grants and loans to more than 300 researchers. Another $2 billion or more is scheduled to handed out over the next four years or so.

As Alquist's bill now stands, it contains provisions that the agency has vigorously opposed. The legislation is aimed at ensuring that taxpayer-financed therapies are affordable and accessible. It would also reform management and accountability provisions at CIRM with the intention of creating more transparency and openness.

Negotiations Underway on CIRM Reform Legislation; Staff Cap Removal Included

Legislation to remove the 50-person cap on staff at the $3 billion California stem cell agency comes before the organization's directors next Tuesday morning as negotiations on the bill appear to be reaching a critical stage.

The proposal must clear the state Senate by May 27, or CIRM will have to wait a year to make another attempt. That would pose difficulties for the agency, which is trying to administer more than $1 billion in grants to more than 300 recipients. CIRM President Alan Trounson warned earlier this year that the quality of CIRM work will suffer without the ability to hire more staff.

Removal of the cap is part of a bill, SB1064 by Sen. Elaine Kontaminas Alquist, D-San Jose, chair of the Senate Health Committee. While CIRM would like to see the cap removed, other provisions in the current measure are not viewed with pleasure by the agency. They include an effort to guarantee affordability of taxpayer-financed stem cell therapies and proposals to improve transparency and management at the five-year-old organization, which is unprecedented in state history.

In the case of the staff cap, CIRM is hoist on a petard of its own making. The cap was written into law by CIRM Chairman Robert Klein and others in an effort to defuse potential arguments against Prop. 71 that it would create a huge new state bureaucracy. Also written into law by Prop. 71 was a unusual requirement that makes it nearly impossible to change such things as the staff cap. Such alterations require a rare, super, super-majority vote of 70 percent of both houses and the signature of the governor. That means that CIRM will have to do some horse-trading to get what it wants.

CIRM Vice Chairman Art Torres, a former state legislator and head of the state Democratic Party, is leading the closed-door negotiations on a possible compromise on the bill. On Tuesday, he hopes to be able to recommend that the CIRM board support a revised bill. In response to a query on Monday, he told the California Stem Cell Report via email that no final agreement had been reached on the legislation. Torres said that the negotiators were awaiting specific language. He said it is possible that no agreement will have been reached by next Tuesday. Another source said, “We're hopeful to have something soon.”

The legislation is now before the Senate Appropriations Committee. If the bill clears that committee, it will go to the Senate floor.

The staff of the committee this week released its analysis of the bill. Among other things, the analysis by committee consultant Katie Johnson said the bill would create additional costs ranging from $400,000 to possibly millions. The $400,000 would be for each of new performance audits of CIRM and its board of directors. The audits would be required every six years, beginning this year. The millions would come into play for additional staff salaries, although that would not affect the state's general fund. The cost would be borne by CIRM, which is financed directly by state bonds(money borrowed by the state).

Johnson wrote,

“Although CIRM is currently under the (staff) cap with 43 employees, it is reasonable that as they make more grants and further develop the loan program, more staff would be needed. CIRM's administrative expenses, including salaries, are capped at 6 percent of bond funds: 3 percent for research and research facilities, including the development, administration, and oversight of the grant making process and the operations of the working groups and an additional 3 percent for the costs of CIRM general administration. CIRM is within their administrative cap, and while paying salaries for new employees would put expenses closer to the cap, it is unlikely to exceed it.”

Members of the public who would like to tell the CIRM board what they think of the legislation will have that opportunity at a host of locations around the state. The specific sites, which range from Healdsburg to Irvine, can be found on the agenda. If you plan to attend, it would be advisable to tell CIRM in advance so there are no glitches in gaining entrance. All of the locations are open to the public by law, but some are in businesses or other locations that may not be accustomed to admitting the general public. The list of locations currently on the agenda is short and more are likely to be added in the next few days, including sites in Sacramento and San Diego.

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

Accountability and Umbilical Cord Blood Legislation: CIRM's Positions

As expected, directors of the California stem cell agency moved last week to attempt to sidetrack legislation aimed at ensuring affordable access to taxpayer-funded stem cell therapies and to improve accountability and transparency at the $3 billion enterprise.

The real question is what horse will CIRM have to trade in order to send the bill off to interim study, which would, in effect, kill it for the next year or so. A case can be made that CIRM genuinely needs the bill, or least one of its major components. CIRM already has expressed an urgent need for removal of the 50-person cap on its staff, which the legislation (SB1064) by Sen. Elaine Kontominas Alquist, D-San Jose, would provide. CIRM has said that it is examining non-legislative ways to sidestep the legal ban on more than 50 staffers, but nothing has surfaced publicly.

CIRM says its interim study plan is a move that welcomes legislative oversight. However, the tactic has been long used by foes of legislation to kill bills without appearing to be publicly truculent. That said, the tactic is more sophisticated than some of the agency's previous stonewalling.

All this is going on against the backdrop of a California gubernatorial election, not that CIRM will even be a footnote in the campaign. But a new governor next January – whether it is Jerry Brown or a Republican – could be less friendly towards the agency than the current one, who has obliged it with vetoes on bills and a life-saving $150 million loan.

Meanwhile, patient advocate Don Reed once again has weighed in against the Alquist bill or any legislation that would make changes in the California stem cell agency. On his blog, stemcellbattles.com, he recently cited some personal examples of the need for stem cell therapies. Basically, his pitch is that anything that impedes the stem cell agency or what it wants to do is not to be supported. Reed's comments were also carried on the Huffington Post. Reed is vice president of Americans for Cures, the personal lobbying organization of CIRM Chairman Robert Klein.

The first legislative hearing on Alquist's measure is yet to be scheduled. It is expected to be in the Senate Health Committee, which she chairs.

CIRM directors are also doing their own interim study, so to speak, of legislation that would give the agency more cash and broaden its scope. On the table is a proposal that would be embodied in a bill (AB52) by Assemblyman Anthony Portantino, D-Pasadena, to increase fees for copies of birth certificates and send the money to CIRM, which then would run a public umbilical cord blood banking program.

Directors ordered an internal study of the complex matter, including the science, logistics and “liabilities” of such a move. It appears that much of the study will be performed by outside experts, which is entirely appropriate since the agency is short-staffed and has more important priorities, such as the oversight of more than 300 researchers and institutions that have been given more than $1 billion in state cash.

Consultants interested in that contract should watch the RFP section of CIRM Web site closely or call the agency directly to be sure to be notified about any sort of competition for the work.

CIRM Moves Adroitly in Attempt to Sidetrack Legislation

The California stem cell agency is taking a different tack concerning unwanted legislation that would alter the way it does business.

In the past, CIRM directors have opposed all legislation that would affect it. While measures have passed both houses with more than 70 percent votes, the governor vetoed them at the behest of the agency.

However, last week the directors' Legislative Subcommittee decided to ask that legislation by state Sen. Elaine Kontominas Alquist, D-San Jose, be sent to interim study. The move is politically adept. It serves the same purpose as outright opposition. If the agency is successful in sending the bill to interim study, it effectively kills the bill for the next year or so but CIRM does not appear to be stone-walling legislative and other critics. The move instead would put CIRM in the public position of appearing to be listening carefully to those who are raising questions.

The agency's new tactics came to light in response to a question last week that we posed to Don Gibbons, chief communications officer for CIRM, concerning what action the subcommittee had taken.

He said the directors subcommittee acknowledged CIRM is “not perfect.”

Gibbons said,

“Moving the bill to interim study not only involves allowing CIRM to educate the legislature on our progress but also allows the committee chair to call a hearing after the legislature adjourns to provide substantive oversight to review the progress that CIRM has made on all the issues raised by the Little Hoover Commission and the Controller’s Financial Accountability Committee and verify the transparency we all support.”

Alquist's bill, SB1064, is aimed at ensuring affordable access to therapies financed with taxpayer funds and providing for more accountability and openness from CIRM.

Gibbons also said the directors subcommittee voted to seek further study of an umbilical cord blood banking bill that would provide birth certificate fees to CIRM for that purpose.

The full text of Gibbons' statement can be found in the item below.

Text of CIRM Comments on Alquist Legislation

We asked Don Gibbons, chief communications officer for CIRM, last week about action by the CIRM directors' Legislative Subcommittee on legislation concerning the agency. Here is the full text of his response.

“The Legislative Subcommittee expressed concerns about SB1064, introduced by Sen. Elaine Kontominas Alquist of San Jose. The bill would alter the management structure of CIRM in ways the subcommittee suggested the Senator and her staff did not fully understand. Acknowledging that CIRM is not perfect the committee did not recommend embracing or rejecting the bill, but rather to seek a vote in the legislature to move the bill to 'interim study' to give CIRM staff time to educate members of the legislature and their staffs about the related issues.

“Moving the bill to interim study not only involves allowing CIRM to educate the legislature on our progress but also allows the committee chair to call a hearing after the legislature adjourns to provide substantive oversight to review the progress that CIRM has made on all the issues raised by the Little Hoover Commission and the Controller’s Financial Accountability Committee and verify the transparency we all support. In short, we are welcoming legislative oversight and looking forward to the outside scientific review that President Trounson has been putting together for later this year.

“The subcommittee also voted to seek further study of the impact of  AB52, introduced by Assemblyman Anthony Portantino of Pasadena. That bill would move from the Department of Public Health to CIRM the previously legislated authority to receive fee surcharges from birth certificates to fund the  collection and oversight of public banking of umbilical cord blood in California. This study would be internal with the CIRM Science Office directed to look at issues around the science, logistics, and liabilities of such a service with the help of appropriate outside experts.”

Stem Cell Agency Launches High School Education Effort

The California stem cell agency this week announced its online high school study program, which is aimed at helping to provide workers for the biotech industry.

Art Torres, co vice chairman of the stem cell agency, said that California is "a fertile ground for stem cell science," but added that to "realize the full potential of this burgeoning field" requires development of "an educated workforce."

In a news release, CIRM said the high school science program provides “a robust source of educational materials with a wide variety of teaching formats and levels of presentation.” Four units were provided on the CIRM Web site. The agency said the program can be taught in a day or fill a week. Another component is in development.

The program is tied to legislation that requires the state Department of Education to post on its Web site the model curriculum launched by CIRM.

In response to a question, Don Gibbons, chief communications officer for CIRM, said the program cost $45,500 to produce, including the component under development.

We also asked about CIRM's outreach to promote use of the program and whether the agency had an email list for all high school science teachers in the state.

Gibbons replied,

“We previewed it (the program) at the Nat. Bio Teachers Assoc. last November in Denver. The California chapter of that group is just forming and we will ship materials to their organizing meeting in two weeks in Roseville. We developed a list of county science coordinators around our school outreach for Stem Cell Awareness Day and will be reaching out to them, as well as the 50+ teachers who asked for a CIRM researcher guest lecture that day. The state has a master site for high-speed access to on-line resources and we will be posted there. We will be seeking to present at the Cal Sci Educ Conf this October. Etc.”

The CIRM announcement was covered Thursday by the San Francisco Business Times in a brief article by Ron Leuty.

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.

State Lawmaker Says CIRM 'Accountable to No One'

A leading California state senator said today that the state's $3 billion stem cell agency is “essentially accountable to no one” and declared that more accountability and transparency are needed.

Sen. Elaine Kontominas Alquist, D-San Jose and chair of the Senate Health Committee, made the statement in a news release touting her legislation to help ensure that Californians receive a “fair return” on their investment, which will total $6 billion with interest.

Alquist said,

“I was an early supporter of California’s groundbreaking stem cell initiative, and know that our public investment on behalf of the State of California will lead to new frontiers of treatment to heal people with chronic diseases.

“However, CIRM is essentially accountable to no one given the way the initiative was written. Californians entered into a partnership with CIRM when they approved Proposition 71 in 2004, a partnership that was meant to be mutually beneficial. By accepting public bond dollars, CIRM also accepted public accountability, public transparency, and a public return on their investment.”

She continued,

“If a cure or life-saving medicine is discovered using taxpayer dollars, we must be sure that all Californians benefit from that research. Californians are the shareholders of this venture. In this economic environment, the Legislature has a duty to ensure that every public dollar is accounted for and spent wisely."

The news release highlighted three key provisions of her bill, SB1064:

• Ensuring Californians have affordable access to drugs developed by Prop 71 funds.
• Ensuring intellectual property revenue made from Prop 71 funded grants and loans return to the state’s General Fund.
• Requiring the Citizen’s Financial Accountability Oversight Committee and the Controller’s Office to conduct performance audits.

The bill would also lift the 50-person cap on CIRM staff, a change that the agency dearly desires. However, Alquist did not mention that proposal in the news release. (We should note that the cap is redundant because Prop. 71 also imposes a limit on administrative expenses.)

We asked CIRM on Wednesday for a response to the legislation, but nothing has been forthcoming. We will carry the agency's comments when we receive them.

For more details on the measure, see the “stem cell agency reform” item.

California's Stem Cell Education Bill Comes Before CIRM and Senate on Wednesday

The board of directors of the California stem cell agency on Wednesday will discuss newly strengthened legislation to push stem cell research training and education into California public schools.

The bill, SB 471 by Sen. Gloria Romero, D-East Los Angeles, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, will now require state schools to establish and promote as a state priority a stem cell and biotech education program. Previously the legislation said such an effort "should" occur.

The bill is now dubbed the "California Stem Cell and Biotechnology Education and Workforce Development Act of 2009." It is supported by the BIOCOM industry group and opposed by the California Catholic Conference. CIRM has not yet officially taken a position on the measure, but has been working with the measure's authors.

The measure was added Monday afternoon to the board's agenda for its meeting that begins today in Los Angeles. Remote, interactive teleconference locations for the meeting are available in Sacramento, Pleasanton and at Stanford. Specific sites can be found on the board's agenda.

The bill is now before the Senate Education Committee, where it is certain to be approved on Wednesday. The legislation is likely to move easily through the Senate because the top Senate leader, Steinberg, is one of the authors.

Here is a link to the legislative staff analysis of the measure.

Hearing on Stem Cell Education Measure Coming Up

Legislation designed to make stem cell education a part of California's state public school curriculum will be considered on April 29 by the state Senate Education Committee.

The measure, SB 471, cites the California stem cell agency and its research efforts as the impetus for for the proposal.

The bill by Sen. Gloria Romero, D-East Los Angeles, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, says that the state Board of Education as well as the community colleges, the state college system and the University of California "should collaborate to help CIRM advance its education initiatives." The Board of Education controls matters in grades kindergarten through 12. Romero (pictured) heads the Senate Education Committee.

Her bill was discussed at a meeting of the CIRM directors' Legislative Subcommittee on March 31.

No transcript of the meeting is yet available, but a spokesman for CIRM, Don Gibbons, said recently that no position was taken on the bill, along with another measure aimed at ensuring affordable access to any therapies developed with CIRM-funded research.

Gibbons said,

"They just felt the bills were not sufficiently fleshed out to have a formal position taken."

The affordable access bill, SB 343 by Sen. Elaine Alquist, D-San Jose, is a somewhat altered version of a measure opposed by CIRM last year and vetoed by the governor. The bill is now before the Senate Health Committee but no hearing date has been scheduled. Alquist is chair of the Health Committee.

As to whether the full CIRM board will consider the legislation at its meeting April 28-29, Gibbons said,

"Who knows if the full board will take it up at the end of the month. "