Multi-Billion Dollar Ballot Measure for California Stem Cell Agency in 2018?

California's $3 billion stem cell research effort is scheduled to run out of cash in three short years, but the likelihood seems to be increasing that voters will be asked again to come up with additional billions for the state's stem cell agency.

In fact, the chairman of the stem cell agency, Jonathan Thomas, is saying flatly this week that his predecessor, real investment investment banker Bob Klein, intends to place a funding measure on the November 2018 ballot.

Klein led the ballot initiative campaign in 2004 that created the unusual -- for a state -- stem cell research program, officially called the California Institute for Regenerative Medicine (CIRM). The agency is financed with cash that the state is borrowing. increasing total costs to roughly $6 billion because of the interest expense.

Jonathan Thomas, left, with Don Reed,
vice president of public policy, Americans
for Cures, Klein's advocacy group --
CIRM photo

Thomas' statement was contained in a letter to the governing board that recapped his work since he was elected by the board in 2011 to replace Klein. One section of the letter dealt with funding of the agency.

Thomas wrote,

"Bob has already announced that he intends to put a measure on the November 2018 ballot. We keep him updated on CIRM's progress so that he is fully informed."

Thomas added that he and two key CIRM staffers have "initiated discussions with a number of philanthropists and foundations interested in medical research who could be potential sources of funds to keep CIRM going in the event Bob's measure is not successful."

The California Stem Cell Report has queried Klein about his plans. The full text of his response will be carried when it is received.

Robert Klein, Americans for Cures
photo

Klein has publicly mentioned a possible bond measure in the past, most recently in 2014, including a figure as high as $5 billion. It is unclear whether he has spoken more specifically on the matter since then.

Klein maintains a stem cell advocacy group, Americans for Cures, which has an active web site and an impressive list of scientific advisors, including Irv Weissman of Stanford, Rusty Gage of the Salk Institute and Owen Witte of UCLA.

Klein's 2004 stem cell campaign cost $34 million to convince California voters that the state needed to begin its own human embryonic stem cell (hESC) research effort in the wake of then President Bush's restrictions on federal funding in that area. The campaign created the impression that cures were close at hand, according to opponents and media observers. The agency is yet to back a therapy that is available for widespread use.

The election of Donald Trump as president is widely expected to trigger new, Bush-like restrictions on human embryonic stem cell research that could create the same sort of climate that helped lead to the success of the 2004 ballot initiative in California. 

CIRM's Klein Deserves a Salary

In February 2006, Robert Klein, chairman of the $3 billion California stem cell agency, testified in court that he did not consider himself a state employee.

The justification appeared to be that he did not accept a salary and has not since beginning his state stem cell work in December 2005.

That appears to be ready to change. Next week, he is going to seek a salary that could run upwards of half-million dollars a year. The move raises anew questions about his role with his private lobbying stem cell lobbying group. It also raises questions about whether it is possible for him to devote sufficient time to his state responsibilities and also continue to run his real estate investment banking firm in Palo Alto, Ca.

As of this morning, CIRM has yet to post on its agenda for next Tuesday and Wednesday any supporting material concerning the salary request or the conditions under which it would be granted.

Klein holds his post as chairman as the result of a vote of the 29-member board of directors, who may want to establish some clear ground rules for Klein along with approving a salary. Technically he may not even need a vote of the board to draw a salary since he is entitled to one as chairman. However, it would be impolitic to take a salary without running the matter by the board of directors.

Klein's salary move has drawn some reaction from longtime CIRM observers. John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., told the California Stem Cell Report:

"If Bob Klein is working full-time as chairman of the ICOC(CIRM's board of directors) he deserves a salary. The question is how much. A sensible benchmark would be what the director of the National Institutes of Health makes -- $191,300. Round it off to $200,000. More than that is inappropriate and, in fact, would be outrageous in these economic times.

"Klein at his own choice donated his time since CIRM was launched. Californians owe him thanks for that gesture. However, it also allowed him to say he was not a state employee. If he takes a salary, he clearly is a state employee and needs to act accordingly in every respect. Receiving a salary should prompt a close look at Klein's non-CIRM activities and just how much time he spends on the job."

Jesse Reynolds, director of the Project on Biotechnology in the Public Interest at the Center for Genetics and Society in Oakland, Ca., said,

"Chairman Klein's large proposed salary, making him the second highest state employee, is symptomatic of the CIRM's exemption from California's civil service laws - a provision that Klein himself wrote into the state's constitution via Proposition 71. What's gone less examined is that he quietly dropped his promise to serve only the first three years of his term, a promise made when he first assumed office to assuage concerns of potential power-mongering."

The news about Klein's salary has drawn little media attention. The only item we have seen came on the Capitol Alert section of The Sacramento Bee's website. Two readers filed extremely hostile comments in connection with the item.

Klein, who is a multimillionaire, is to be lauded for working without pay for the state of California for nearly four years. He has brought considerable energy and talent to a worthwhile endeavor. In decades of following California state government affairs, I cannot recall another case that comes close to Klein's example. If he will be working fulltime in his role as chairman, he merits a salary and should be well paid.

Patient Advocate Reed's Relentless Effort Against SB1565

Patient advocate Don Reed sent along the following concerning legislation aimed at ensuring affordable access to taxpayer-financed stem cell therapies in California.

He focuses on another element of the bill, which changes voting requirements on research that is not directly related to human embryonic stem cell inquiries.

Reed, vice president of Americans for Cures, has been campaigning vigorously against the bill, SB1565 by Sens. Sheila Kuehl, D-Santa Monica, and George Runner, R-Antelope Valley. Many of Reed's efforts surface on the Internet at his blog, stemcellbattles.com. Among other things, Reed is drumming up a letter-writing campaign (better than emails, he says) against the bill.

We checked into his blog recently and saw his account of the hearing last month on SB1565 in the Assembly Appropriations Committee. He noted that CIRM Chairman Robert Klein testified against the measure. It was Klein's first public appearance as chairman of CIRM before a legislative committee. Klein refused to appear before a committee in 2005 and instead launched a national effort among patient advocate groups against those proceedings, triggering a certain amount of unhappiness among some state lawmakers.

The Americans for Cures lobbying group was created by Klein and operates out of the same Palo Alto, Ca., address as his real estate investment banking firm. SB1565 is now on the Assembly floor. If it passes as expected, it will go to the Senate for concurrence in Assembly amendments and then to the governor.

Here is Reed's letter:

"SB 1565 UNCONSTITUTIONAL? Open Letter to the California Assembly and Senate

"Dear Senators and Assembly members:
 
"As the father of a paralyzed young man, (Roman Reed, who inspired the Roman Reed Spinal Cord Injury Research Act, source of America's first state-funded embryonic stem cell research) I strongly oppose Senate Bill 1565 (Kuehl,Runner).
 
"Please be aware that the bill has changed since you first saw it. The bill now contains a poison pill amendment, offered by Senator George Runner, a known opponent of the California stem cell research program. The Runner amendment not only defies the will of the voters, but may violate the California Constitution.
 
"First, here is our stem cell program’s current law, which was enacted by the electorate, and written into the California State Constitution:
 
"'(C) … a high priority shall be placed on funding pluripotent stem cell and progenitor cell research that cannot, or is unlikely to, receive timely or sufficient federal funding…Other research categories…shall not be funded by the institute.'
--Article XXXV of the California Constitution: Section 5, Chapter 3. California Stem Cell Research and Cures Bond Act, Article 1. 125290.60.
 
"As you know, our stem cell program may only be amended  to '…enhance the ability of the institute to further the purposes of…the measure…'—Section 8, Amendments.  
 
"And Senator Runner’s amendment, recently added to SB 1565?
 
"'(D) “Notwithstanding paragraph (C), any other scientific and medical research and technologies and/or any stem cell research proposal not actually funded by the institute under subparagraph (C) may be funded by the institute...'
 
"This turns our program upside down! Proposition 71 was enacted by the voters to give priority to forms of stem cell research not likely to be funded by the federal government.  The Runner amendment removes that priority, and would instead allow precious research dollars to be spent on 'any other scientific and medical technologies'.  That could be almost anything; a bedpan is a piece of medical technology.
 
"How can such a complete reversal be said to “further the purposes” of our stem cell program? Such seeming violations of the Constitution are almost certain to invite legal actions; have we not had enough lawsuits, enough delays?
 
"The original intention of SB 1565, to guarantee access of stem cell therapies to the uninsured, has already been achieved, and without the need for this bill. Bill author Senator Sheila Kuehl, a highly respected legislator, has publicly stated that she and CIRM (California Institute for Regenerative Medicine) are 'on the same page' regarding how low-income residents could receive benefits from CIRM-developed products.
 
"But the Runner amendment could gut the California stem cell program.
 
"Those who know, oppose. SB 1565 is opposed by the Coalition for the Advancement of Medical Research, which is a board of more than 80 medical, educational, and disease advocacy groups: as well as every other stem cell research support group which has taken a position on the issue.
 
"On behalf of every California family with a loved one suffering from chronic disease or disability, I urge your 'NO' vote on Senate Bill 1565, when it comes before you for concurrence.
 
"Thank you.
 
"Don C. Reed
Co-chair, Californians for Cures
Sponsor, Roman Reed Spinal Cord Injury Research Act
Vice President, Public Policy, Americans for Cures"

Bee 'Flabbergasted' by Klein's Actions

The Sacramento Bee has not been pleased with Robert Klein virtually since he became chairman of the $3 billion California stem cell agency more than three years ago.

Earlier this week, the newspaper fired off another editorial lambasting Klein, this time accusing of him of misusing his office.

The case in point involves Klein's personal stem cell lobbying group, Americans for Cures, which recently publicly excoriated an offending state legislator in a posting on a widely read, national political blog.

The Bee wrote,

"Through his connections with the governor and other state leaders, Klein effectively directs who is appointed to the institute's 29-member oversight board, which includes university deans dependent on research funds that Klein controls.

"That should be enough power for any one public official. But not for Klein.

"Up until last week, Klein also served as president of Americans for Cures, an advocacy group that works out of offices he owns in Palo Alto. That linkage provides Klein with a nongovernmental agent with which to go after his opponents and further his institutional power."

The Bee continued:

"Government officials shouldn't be affiliated with special interest groups that lobby on issues that affect their agencies. After three years, it remains flabbergasting that Klein doesn't recognize that conflict and the injury it causes to the state's stem cell program. Even more curious is why the institute's 'oversight' board continues to condone it."

The Bee's editorial was written before the disclosure that Klein plans to spend 88 days traveling out of state this fiscal year at taxpayer expense. We are certain that the newspaper would have been even more exercised if that had been known at the time the editorial was written.

As far as Klein's reported resignation as president of Americans for Cures, so far no official announcement has been forthcoming. One report had it that the resignation would be announced after he told Sen. Sheila Kuehl, the object of his group's ire, about it. But her office said that Klein did not mention resigning in their conversation following the offending Internet post.

The delay in announcing his resignation may indicate that the earlier resignation reports amounted to something of a trial balloon effort by Klein in which Klein expected supporters to rally around him. Meanwhile, he is still listed as president on the Americans for Cures website.

The Media Mustard and Meaning of Klein-Kuehl Flap

The Klein-Kos-Kuehl Affair has drawn no attention in the mainstream media and almost none on the Internet – surprising to some deeply involved in the California stem cell scene.

Especially given the history of high profile verbal snafus that have publicly plagued scores and scores of public figures. In a totally different context than stem cell research, the Klein flap recalls presidential aspirants who have been given serious media fits as the result of misguided rhetoric, either from themselves or associates. One only has to look at the Obama-Clinton race to see major political figures wrestling with verbal gaffes.

But the reality is that the comments from Robert Klein's lobbying group, Americans for Cures, concerning an influential state lawmaker's intelligence, knowledge and political fortitude are not even close to making the front page of any newspaper. They may be outrageous, an incredible display of bad judgment and reflect poorly on California's $3 billion stem cell research program, but they do not cut the media mustard.

We cannot find even a single story on the comments in any newspaper in California, much less a current story dealing with the underlying conflicts of interest posed by Klein's dual roles as head of a stem cell lobbying organization and chairman of the leading source worldwide of funding for human embryonic stem cell research. Only two Internet sites that we know of have picked up on the matter, The Niche stem cell blog of Nature magazine and Larry Ebert's IPBiz blog. Monya Baker of Niche largely provided a neutral summary of the events. Ebert made reference to what he called ongoing bungling at CIRM.

We asked one mainstream media reporter about the reasons for the lack of coverage, promising anonymity to guarantee candor. The response:

"It was an easy call that it was not as important as the many other stories on my plate. You know how it goes: Mainstream media has to deal with many more topics than most blogs, including the California Stem Cell Report. For instance, Dave Jensen doesn't have to worry about sharing space on his blog with stories on the price of oil, or failing banks, or city council meetings and murder trials. Blogs also are not expected to meet the same journalistic standards as newspapers, which means they can run items with one source and lots of opinion. And they can touch on the same topic in many different posts, giving incremental developments.

"Meanwhile, newspapers try get several sources and views into one story. We are also dealing with budgetary, staffing and news hole cuts. That means reporters in mainstream media are covering much, much more than just CIRM and stem cells. (CIRM is just one small piece of my very broad and complicated beat.) All that means that I must be much more selective in what I write about."

We also asked John M. Simpson, stem cell project director of Consumer Watchdog, for his views on the media coverage. Simpson had a long career as a newspaper editor prior to holding his current position. He said,

"The news business is in a terrible state. Newsroom staffs have been slashed. Every news organization is trying to do more with less and that's simply impossible.

"Complex ongoing stories, like CIRM and its governance structure, get short shrift in the face of the current crisis in journalism.

"Until somebody figures out a new viable financial model to support quality journalism, we going to see less and less coverage of issues like this. I don't want to sound hysterical, but I think good democratic government is seriously threatened by the sorry state of the mainstream media."

With 30 years experience in journalism, we do not disagree with either our anonymous reporter or Simpson. But we can also add that coverage of state agencies has traditionally been given short shrift in California. It is easier to cover the governor, political activities and only the highest profile legislative issues.

CIRM is off the current agenda for the mainstream media. Does that mean that the issues or specifics involved in the Klein-Kos-Kuehl affair are not important? Far from it. The posting by Americans for Cures was destructive of CIRM's goals. Ironically, the action increased the likelihood that the bill will pass. The vitriol demonstrated indirectly that CIRM is not to be trusted in sensitive dealings. It showcased once again flaws in Klein's leadership that surfaced as long ago as 2005. And it highlighted one of the conflicts that pervade CIRM's board of directors.

The California stem cell experiment is a remarkable endeavor. It has achieved much. But much more remains to be done. CIRM directors should look to finding ways to foster cooperation – not only with the international stem cell community – but here in California, where the home fires are now in need of some renewed and careful tending.

Stem Cell Affordability Legislation Changed to Meet CIRM Objections

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

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

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

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

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

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

Here are the amendments in SB 1565.

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

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