Modest Approval from Long-time Stem Cell Agency Critic

Of all California's newspapers, The Sacramento Bee, the only daily paper in the state capital, has long been the most critical – editorially – of the Golden State's $3 billion stem cell research agency.

Today, however, the newspaper gave a modest nod of approval to the agency's modest efforts to clean up its built-in conflicts of interest, which have been cited as a major flaw by the prestigious Institute of Medicine.

The headline on the Bee's editorial today said,

“Stem cell agency finally addresses potential for conflicts”

The piece said that Jonathan Thomas, chairman of the agency, “has taken important steps in reducing the potential for conflicts within this agency.”

The editorial continued,

 “He hasn't gone as far as we would like, or that independent outside reviewers have recommended....But he's achieved what's possible, at least for now, and the board may empower him to go further.”

The Bee referred to action last month in which the agency's governing board decided, among other things, that 13 of the 15 board members linked to recipient institutions could not vote on any grants, although they could participate in discussion of applications. Twenty-nine persons sit on the board. In a $700,000 report commissioned by the agency, the Institute of Medicine recommended a fully independent board.

The Sacramento newspaper said, 

“We think Thomas and the oversight board should go further and adopt the Institute of Medicine recommendations. But that is politically unlikely. As is now obvious, it will be up to the Legislature to fully remove representatives of funding-eligible institutions from being involved in decisions about grants that could come back to them.

“Thomas, to his credit, recognizes that his compromise may not be the perfect solution. He wants to test out the new policy for a year, and see how it works. There's a lot riding on the outcome. CIRM is expected to run out of funds in 2017, and while philanthropy and foundation money could extend that for a few years, supporters of California stem cell research clearly want to go back to the ballot to seek additional funding. To make that case, CIRM supporters can't afford any more scandals about insider dealing. The next year will reveal whether it is on the right track.”

San Diego Newspaper Hails Stem Cell Agency and IOM Response

The $3 billion California stem cell agency hit it big in San Diego today, finally scoring an editorial that said “arguably” the agency's largess has made the state “the world leader in medical research.”

The San Diego U-T, the largest circulation newspaper in the area, said the big headline about the eight-year-old agency is “the potential for transformative medical breakthroughs.”

The editorial noted that the agency has long been criticized in connection with conflicts of interest. About 90 percent of the $1.8 billion the agency has awarded has gone to institutions linked to current and past members of its board of directors.

But the agency “is finally taking the criticism seriously,” the newspaper said. It cited proposals that would, if approved later this month, have 13 members of the agency's governing board voluntarily abstain from voting on any grants that come before the board. Twenty-nine persons sit on the board. The thirteen are connected to recipient institutions. Two other board members are linked to recipient institutions.

The stem cell business is no small matter in San Diego, which is one of California's hotbeds of biotech and stem cell research. The stem cell agency has awarded about $338 million to San Diego area institutions and businesses. Four executives from San Diego area institutions sit on the CIRM board.

The newspaper's editorial said,

“There remains a residue of cynicism about CIRM. Critics say the agency board did the minimum necessary to avoid an intervention by the Legislature – and also acted to buff the agency’s image should it seek more bond funding from California voters before its present funding runs out in 2017, as is now projected.

“These views may have some merit. But on balance, we think the California Institute for Regenerative Medicine has – at long last – responded properly to the fair criticism it faced. Instead of being exasperated by CIRM, more people should be excited about the great work it is doing.”

The editorial followed a meeting involving the editorial board of the newspaper, CIRM Chairman Jonathan Thomas and Larry Godlstein, director of the UC San Diego stem cell program. The meeting was part of a CIRM campaign to generate newspaper support for the agency's response to sweeping recommendations from a blue-ribbon study by the Institute of Medicine. The San Diego editorial is the most effusive so far.

The newspaper's biotech reporter, Bradley Fikes, sat in on the meeting and Saturday posted video excerpts from the discussion, including a brief written summary of the content of each clip.

LA Times: Stem Cell Agency Conflict-of-Interest Response Only a Bandage

The Los Angeles Times yesterday modestly praised the $3 billion California stem cell agency for taking some limited steps to deal with its longstanding conflict of interest issues.

But the newspaper, which has the largest circulation in the state, said that was more was needed if the agency plans to have a life after 2017, when funds for new awards run out.

The Times editorial said,

“After years of resisting all criticisms of its operations, the California Institute for Regenerative Medicine is finally listening — a little.“

The editorial continued,

“Yet the agency isn't exactly embracing an ethical overhaul. It's doing just enough to address the criticisms without triggering any oversight from the Legislature. The modifications are more a bandage than a cure. Like a bandage, they will probably do, but only for a limited time.”

The board plans to have 13 board members with ties to recipient institutions voluntarily refrain from voting on any grants that come before the board, not just the ones to their institutions.

The Times said December's blue-ribbon report from the Institute of Medicine identified the make-up of the board as the “single biggest problem” at the agency. The editorial cited figures prepared by the California Stem Cell Report that show that about 90 percent of the $1.8 billion that the board has awarded has gone to institutions linked to current or past members of the board. Fifteen out of the 29 current board members have ties to recipient institutions.

The editorial concluded,

“If the stem cell institute is just a temporary agency that will last until its public funding runs out — it plans to give its last grants with existing funds in 2017 — its planned reforms will probably be enough. But if the institute wants to be a permanent part of the research landscape — and possibly ask for more public funding — voluntary recusals are an inadequate patch. The agency's leaders should admit that the original setup was flawed and seek a true fix. “

San Jose Newspaper Lauds CIRM Chairman Thomas

The California stem cell agency got some good news this week. The San Jose Mercury News ran an editorial yesterday that was headlined,

“State stem cell agency is taking Institutes of Medicine advice”

The 306-word editorial said CIRM Chairman Jonathan Thomas is a refreshing change from Robert Klein, the first chairman of the $3 billion enterprise. The brief editorial said Thomas recognizes that the eight-year-old agency "has to mature." It said Thomas was trying to improve transparency and accountability. The last paragraph declared, “If the stem cell agency can establish a record as a good steward of public dollars to finance brilliant science, it can continue to play a useful role in stimulating and guiding research to bring the potential cures from stem cell research to fruition.”

Riverside Newspaper: 'Ethical Minefield' Still Not Cleared at Stem Cell Agency

The California stem cell agency's attempts to deal with the conflict of interest problems at the $3 billion research program amount to a minor fix that is not a “serious solution,” the Riverside Press-Enterprise editorialized yesterday.

The editorial came as the agency launches a road trip campaign to convince newspaper editorial boards around the state that the agency is worthy of continued financial support. The agency will run out of money for new grants in less than four years.

The Riverside editorial pointed to the blue-ribbon Institute of Medicine report in December that called for creation of a new, independent majority on the 29-member board. None of the current members are independent. The ballot measure that created the agency required board members to be appointed from various constituencies.

The newspaper said,

“That arrangement is hardly a model of objective decision making. The agency so far has distributed about $1.7 billion in grants, with about 90 percent of that money going to institutions represented on the governing board. 

“Voluntary abstentions are not a serious solution to that ethical minefield. Nor would that approach eliminate potential conflicts, because the agency would still allow the abstaining members to take part in the discussions and debate about who should get the grants. 

“The Institute of Medicine instead recommended remaking the board with truly independent members who have no stake in grant awards. The stem-cell agency rejected that step because it would require changing Prop. 71, either through a super-majority in the Legislature or another ballot measure. That excuse should be a vivid warning to Californians about the dangers of passing complex, costly and inflexible initiatives. 

“Agencies handling billions of taxpayers’ dollars should not avoid good government practice or basic fiscal safeguards. The stem-cell institute offers minor fixes when it needs substantial changes — and legislators should not accept that cavalier approach.”

Exploring the Straw Man Argument Against IOM Reforms at California Stem Cell Agency

Constitutional objections to some of the Institute of Medicine's sweeping recommendations for changes at the $3 billion California stem cell agency amount to little more than a straw man, at least based on a legal memo produced earlier by the agency.

The legal objections to structural reforms at the agency were initially advanced in 2009 when the stem cell agency was fighting an unwelcome analysis of its activities by the state's good government agency, the Little Hoover Commission. The objections were voiced again at a meeting earlier this month by some governing board members, particularly Sherry Lansing, who is also chairwoman of the University of California regents. Her comments came within minutes of the start of the Institute of Medicine's (IOM) presentation to the board.

She said directors' hands “are tied” because of requirements in Proposition 71, the ballot initiative that created the stem cell agency, which is formally known as the California Institute for Regenerative Medicine(CIRM). While Lansing did not elaborate, some of the initiative is written into the state constitution, which can only be amended by a vote of the people. However, Proposition 71 can also be amended by a 70 percent vote of each house of the Legislature and the signature of the governor, which is no small task to achieve.

The 2009 legal memo (see the full text below) dealt with the recommendations of the Little Hoover Commission, some of which were cited and echoed by the IOM. The legal memo contended that the legislature was barred from making major changes in the structure of the stem cell agency governing board because the changes supposedly would not “enhance the ability of the (agency) to further the purposes of the grant and loan programs.” The argument was that only the people could make “non-enhancing” changes. The vague “enhancement” requirement was written into Proposition 71 by its authors, one of whom is James Harrison, the outside counsel to the board, who was also the lead author on the 2009 memo. Harrison is revisiting the supposed constitutional issues in the wake of the IOM study.

However, the objections cited in his earlier memo are dubious and easily overcome. The meaning of “enhance” is so vague as to permit wide interpretations. Certainly, removing public suspicion about conflicts of interest would seem to help move the agency forward. Straightening out the muddled management structure of the agency, with its overlapping responsibilities for the chairman and president, would certainly seem to enhance the functioning of the agency. Assuring that the governing board has the full ability to exercise strong oversight over the conduct of the agency would certainly seem to be an enhancement and long overdue.

At least that is what the most prestigious body of its sort says. The Institute of Medicine studied the agency for 17 months under a $700,000 contract with CIRM. The IOM's charge was to evaluate the performance of the agency and make recommendations for improvements. The IOM recommendations echoed findings not only of the Little Hoover Commission, but some in two earlier studies also funded by the agency.

For CIRM directors now to reject the IOM findings and turn away would be to indicate that their earlier admiration and respect for the IOM was something of a sham or, more likely, now inconvenient.

As for removing ambiguity about what does or does not enhance the agency's mission, the 29-member board could simply adopt a resolution declaring that all the IOM recommendations would enhance the CIRM mission.

One of major obstacles to acting on the earlier recommendations for changes was Robert Klein, the first chairman of the agency board. Klein, an attorney and real estate investment banker, also directed the writing of Proposition 71 and wrote portions of it himself. He would often make numerical code citations to the initiative during agency board meetings.

Klein is now gone from the board, leaving in 2011 at the end of his term. He was replaced by Jonathan Thomas, a Los Angeles bond financier, who has ushered in a new and different era at the stem cell agency. Some might say a more reasonable era. He says he and governing board take the IOM study seriously. 

The report is scheduled for discussion Jan. 23 at a public workshop at the Claremont Hotel in Berkeley, Ca., the day before the regular board meeting. .

The IOM's recommendations have won theeditorial endorsement of all the California newspapers that have so far written about them. The newspapers believe that the proposals would indeed enhance the agency's mission and are, in fact, necessary if the agency is to survive beyond 2017, when the money for new grants runs out.

Directors of the stem cell agency are currently mulling the future of their efforts. If they are to be successful in raising additional hundreds of millions of dollars – be they private or public – the directors must confront the findings of the IOM in a forthright manner. And they must move to dispel the cloud that now hangs over the stem cell agency.

(Editor's note: The full text of the 2009 legal memo can be found below. Also below is another related legal memo from Americans for Cures, a stem cell lobbying group sponsored by Robert Klein at the same time he was chairman of the stem cell agency. Despite the language on the Americans for Cures memo, it is a public record. It became a public document when Klein submitted it to the Little Hoover Commission.) 

Legal Memo from California Stem Cell Agency on Little Hoover Recommendations 2009

Legal memo from Americans for Cures regarding the Little Hoover Commission Report 2009 

California Editorial Unamity: Stem Cell Agency Needs Revamp

With the addition of another editorial this week, reaction among California newspapers so far has been unanimous that the $3 billion California stem cell agency should heed the sweeping recommendations of the prestigious Institute of Medicine.

The Riverside Press-Enterprise added its voice yesterday, declaring,

“Good intentions do not justify poor practice.”

Like others, the newspaper said that the agency “needs to revamp its governance structure to avoid potential conflicts of interest and boost public confidence in the agency.”

The Riverside paper focused on the conflicts of interest at the organization, which has seen about 90 percent of its funding go to institutions with ties to directors, but also supported other recommendations, including elimination of the dual executive arrangement at the research effort. 

The editorial said,

“An agency spending Californians’ money has no business being cavalier about good government practice and ethical safeguards — no matter how promising the potential therapies might be. The stem-cell institute is not a private fiefdom, but a taxpayer-supported undertaking. Yet many on the stem-cell institute’s board objected this month to the report’s recommendations.

“The agency also said that Prop. 71’s provisions mean that enacting many of the proposed fixes would require either a supermajority vote of the Legislature or another ballot measure. That prospect should warn Californians about the dangers of voting for complex, costly, politically driven initiatives that have little to do with fundamental state duties.

“Still, the stem-cell agency cannot just sit on these recommendations without damaging its credibility. The search for medical breakthroughs does not justify ignoring vital safeguards for spending taxpayer dollars.”

For a look at other editorials, see here and here.