Eggs and Ethics: CIRM's Proposed Rules

Given the circumspection of our bureaucratic friends, the Korean egg affair may not even be mentioned at a key CIRM meeting on Thursday.

But the matter will still be lingering in the air, a little distasteful but impossible to ignore.

It is just the sort of issue that the panel -- the Scientific and Medical Standards Accountability Working Group – should confront explicitly and directly. In fact, it amounts to a case study for CIRM, albeit one that is a tad fuzzy. But the reality is that such matters are usually less than clear cut. Facts are elusive; memories become weak.

The accountability group consists of five patient advocate members of the Oversight Committee, nine scientists and clinicians "nationally recognized in the field of stem cell research," four medical ethicists and Robert Klein, chairman of the California stem cell agency.

At the meeting in San Francisco, the group is scheduled to consider rules that would prohibit any cash-for-egg programs involving CIRM. The proposed language states:

"No payments, cash or in-kind, have been provided for donating oocytes, gametes, blastocysts, or eggs. Individuals may be reimbursed for expenses incurred as a result of a clinical procedure, as determined by (a review group). Individuals who consent to donate stored gamets, blastocysts or eggs may not be reimbursed for the cost of storage prior to the decision to donate."

Missing from the agenda material posted on the Web is anything other than the technical language of the draft regulations, which are rather intimidatingly labelled "do not cite or quote." But never fear. If you discuss them, you are probably not going to be called before a grand jury a la the Karl Rove case.

Also up for consideration is a report from the task force on intellectual property, another complex and important issue. But there is no clue on CIRM's website concerning the contents of that report.

If CIRM truly desires to fulfill its promise of being responsive, it is going to have to do much better at providing background that is accessible to the public. It should examine the type of work done by the state legislative analyst as well as analyses prepared by legislative staffers in Sacramento. All of which is prepared in a timely fashion and generally available online.

The accountability group is co-chaired by Sherry Lansing, a former Hollywood movie executive and now a cancer patient advocate, and Bernard Lo of UC San Francisco, whose expertise is listed by CIRM as "biomedical ethics related to oocyte, embryo and stem cell research." You can see all of the members the group at this link.

The Korean Lesson: More Sunshine Needed in California

"I am very sorry that I have to tell the public words that are too shameful and horrible." -- Hwang Woo-Suk

"It won't be the first time that a scientist has lied to journalists...." -- Chris Shaw, professor of Neurology at Kings College London

"Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants." -- Louis Brandeis

Can the California stem cell agency learn something from the South Korean cash-for-eggs affair?

The answer is a resounding yes. A few days ago, The Sacamento Bee noted that the whole egg extraction business is a dicey waypoint in the "minefield" of stem cell research. The Bee commended the agency's plans to look more deeply into the issue.

But the story about the Korean researcher and the milieu in which he operates has additional implications. Some involve different cultures – not only Korean and US but those of other societies. The case also involves jingoistic ambitions – here and elsewhere – and economic aspirations.

But we are going to focus on another aspect of the affair – the need for maximum disclosure and transparency on the part of the California stem cell agency. Its unique structure contains built-in conflicts of interest with little direct oversight from any other California governmental entity. "Trust us" says CIRM.

The South Korean stem cell story, however, makes clear what we all know; temptations are great on the cutting edge of science. Prestige, honors and potentially billions of dollars are at stake. Even the high priests of science are not immune from infection.

CIRM's own peculiar governmental DNA is likely to make it more susceptible to abuse. The best vaccine, as Justice Brandeis suggests, is a good dose of sunshine. Open the doors more widely. Do a better job of making records available on the Internet. Be more straightforward about financial affairs. Require more disclosure of financial interests on the part of scientists, contractors and others associated with the agency.

Obviously, transparency is not going to prevent all wrong-doing. The truly crooked are less likely to be deterred. Then there are the well-intentioned, presumably such as the South Koreans who paid cash for human eggs. They will find excuses for what they are doing.

Hwang is the global superstar of stem cells. He will survive this scandal. But the California stem cell agency would be hard-pressed to come through a similar affair.

CIRM should resist its natural, insular tendencies. If its dealings are truly open and transparent, those who are tempted by money or ambition will find it more difficult to operate. The public will have an opportunity to examine the agency's affairs. And when the inevitable scandal – small or large – surfaces, CIRM can say it has done all it could to prevent wrongdoing.

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The quotes from Hwang and Shaw at the beginning of this post are from an article by Stephen Pincock in The Scientist.

Wandering The Seas

We are putting to sea once again. That means that postings will be intermittent on the California Stem Report until we arrive at a location a little later this month that has Internet access. Meantime, feel free to post comments on any subject. Just click on the comments link at the end of each item.

Chopped Mitochondria?

State Treasurer Phil Angelides says tax-exempt financing of stem cell research "may not always offer the lowest-cost choice" for the California stem cell agency, according to the web site, California Politics Today.

Reporter Marc Strassman disclosed the treasurer's position, quoting from an Oct. 26 letter by Angelides to the stem cell agency.

"It is more likely that the Institute will want to pursue a strategy that involves a mix of taxable and tax-exempt financing, as the state will do with the recent housing bond approved by the voters," Angelides wrote to CIRM.

Strassman said Angelides, who is seeking the Democratic nomination for governor, "distanced" himself from other proponents of the Prop. 71 in the October document.

In the letter, Angelides said his staff estimated that if the state were to use taxable bonds to fund the agency, the increased interest costs would be $423 million. Other estimates have placed it as high as $700 million.

Strassman said that under Angelides' scenario, the state would spend $6.5 billion for stem cell research with a net return of $1.1 billion. Strassman continued:

"How many of the venture capitalists clustered on Sand Hill Road in Menlo Park up in the hills behind Stanford, whose investments in existing and future bio-tech start-ups could see triple-digit increases in value as a result of Prop. 71-funded grants, would accept a deal like that....?

"Would Treasurer Angelides be willing to make, or be allowed to stay in office after making, any other investment on these terms with the billions of dollars of taxpayer money under his control as the State's chief financial officer? Would any CFO?

"Why then should the voters and taxpayers of California accept such terms either? What do the folks in and around the Stanford bio-tech venture capital community think the rest of us are, anyway, chopped mitochondria?"

Strassman carried another item that recounted a history of Angelides' statements concerning tax-exempt financing of the agency and expectations of significant returns for the state. Also included was a similar history for state Controller Steve Westly, who is also seeking the Democratic gubernatorial nomination. Look for the material towards the end of the article which leads with the state's bond counsel refusing further comment about conversations with Angelides.

Klein Speaks at Stanford Conference

The Stanford Graduate School of Business is hosting a conference this Saturday that will feature California stem cell chairman Robert Klein and address the "entrepreneurial challenges" that the agency has faced.

The session will also include Philip A. Pizzo, dean of the Stanford School of Medicine; Hank Greely, Stanford law professor, and Amy DuRoss, chief of staff for the stem cell agency.

The session will be at 11:50 a.m. at the Graduate School of Busines, 518 Memorial Drive, at Stanford University. The full agenda can be found here.

Klein Says He Knew about Federal Tax Problem Prior to Election

California stem cell Chairman Robert Klein has confirmed that he knew that Prop. 71 had a $700 million problem prior to last fall's election that created the agency he now heads.

Associate Editor Stu Leavenworth of The Sacramento Bee reported today that Klein confirmed in an interview "that one of the state's bond lawyers - Chas Cardall, of the firm Orrick, Herrington & Sutcliffe - briefed him during the campaign about the IRS complications. (That fact, without the lawyer's name, was reported by the San Francisco Chronicle last week.) Because of advice from Cardall and others, Klein says he purposely wrote Prop. 71 to allow use of both tax-exempt and taxable bonds."

Klein also told Leavenworth that he did not disclose the problem with tax-exempt bonds to analysts who prepared an economic study touting the economic benefits of Prop. 71.

"Why didn't he?" Leavenworth wrote in a column. "Klein equivocated when asked that question. 'I'd want to go back and review this area,' he said, unable to provide more information."

"Laurence Baker, a Stanford University professor who helped write the economic study, said he now wishes he had known that IRS rules could limit the receipt of royalties. Baker's study projected that stem cell research could bring in $537 million to $1.1 billion in royalties over 20 years.

"Now, says Baker, it appears that any royalties might be partly or completely offset by higher interest rate costs(which could run to $700 million).

"'Had we known, we would have factored it into our analysis,' said Baker. 'We worked hard to incorporate as much information as we could into our report.'"

Leavenworth continued:

"The integrity of Prop. 71 is at stake in the royalty debate. During the campaign, advocates of Prop. 71 mentioned royalties repeatedly, with Klein touting it on the PBS NewsHour with Jim Lehrer. This wasn't by accident. California was in the midst of a budget crisis, so Klein needed to create the impression - no matter how tenuous - that Californians would get some direct return on their investment."

Leavenworth described the conduct during the campaign at best misleading. "At worst, it was a cynical ruse," he wrote.
We should note that the interview with Leavenworth is the first time that Klein has publicly said he knew of the issue prior to the election. He would not comment on the question for the Chronicle.

Klein's Silence Ill Serves Stem Cell Agency

California stem cell Chairman Robert Klein remains publicly mum on a $700 million question involving his actions during the Prop. 71 campaign a year ago.

Each day, his continued silence damages his credibility as well as that of the California Institute for Regenerative Medicine.

At issue is a report in the San Francisco Chronicle last week that said Klein knew that there was a federal cloud over the use of tax-exempt bonds during the campaign but failed to disclose the information. At least one neutral observer, Bob Stern from the Center for Governmental Studies in Los Angeles, has said Klein had a moral obligation to disclose the matter.

While it is seemingly a technical tax issue, it could increase taxpayer costs for the stem cell research program by an additional $700 million – close to $7 billion instead of $6 billion.

The Chronicle article came up again at the legislative hearing earlier this week into billion-dollar intellectual property issues involving CIRM, an agency that has taken a "trust us" position on many key matters before it.

"If this report is true, then Mr. Klein knowingly misled the voters of California and the supporters of Prop. 71," said Jesse Reynolds, director of biotechnology accountability for the Center for Genetics and Society in Oakland.

Trust is what is involved here. Klein was the most visible advocate for Prop. 71, carrying its water on television, radio and print media. It would be one thing if he had slipped out of the public limelight following the campaign, as do many electioneers. Instead he took charge of the agency that he is credited with creating. Now he is in a different role – that of a public steward, whose rhetoric must be connected to reality.

It hardly seems in his best personal interest or that of CIRM to let stand unanswered allegations that he deceived the public. How does that reflect on his future promises and plans for the stem cell agency? Can he be trusted on the complex and financially important issues of intellectual property?

One public relations strategy on issues such as this is to ignore them publicly, hoping that they will go away. The public has a short memory, goes the reasoning. In many ways, however, the public may not be the most significant constituency. In this instance, the international stem cell community is probably more important. So are the political and business decisionmakers in California. The questions raised by the Chronicle article are not likely to be forgotten when they evaluate future statements by Klein.

He may want to look at the example of Nelson Rockefeller, the former governor of New York. Rockefeller once had a tough re-election campaign that focused heavily on taxes. During the election, he promised that he would not support a tax hike. Rockefeller won the election and offered up a tax increase the next year. He was asked how he could square that with his election promise. "That was the biggest mistake of my life," he replied.

Penhoet on IP and Stem Cells

Ed Penhoet, vice chairman of the California stem cell agency and chair of the IP task force, did not break a lot of new ground with his testimony earlier this week on intellectual property. Here is the essence of what he had to say. The full text can be found at the CIRM web site.

"Our role is to spur development of new treatments and therapies – science in the service of therapies – in the promising area of stem cell research. To accomplish this, we recognize the importance of partnerships, especially with the private sector, to develop new tools to treat and study disease and injury.

"I believe that the State of California may achieve economic benefits from CIRM-funded research in a number of different ways including:

"• Providing cures as opposed to lifelong therapies for patients

"• Increased economic activity resulting from growth of an industry based on stem cell science: jobs, taxes, and economic development

"• Direct remuneration to the state from arrangements with industry which provide royalties or other forms of revenue-sharing

"• Attracting substantial increases in research and development funding to California by non-Californian entities."

Ability to Deal Calmly Wanted

The California stem cell agency has 72 applicants for its general counsel position despite a hiring freeze at the financially constrained organization.

Writing for Inhousecounsel.com, Petra Pasternak said the job posting has appeared on such Internet locations as craigslist.com and biospace.com.

"The ideal applicant would combine an in-depth knowledge of IP law with a broad business background -- a big job, according to lawyers," Pasternak wrote.

"'It's not quite like searching for a general counsel in a tech company,' said Stacy Taylor a partner in Foley & Lardner's San Diego office. 'I would guess it's more of a hybrid with experience at a tech company, but also experience dealing with essentially publicly funded research.'

"Frederick Dorey, a special counsel in the life sciences group at Cooley Godward (Palo Alto office), said that the position will require good negotiating skills and a cool head.

"'You'll be dealing with activists, people who are passionate about these issues,' he said, adding that a key skill will be the ability to deal calmly with widely divergent views."

Looking for Stem Cell Research Money?

Zach Hall, president of the California stem cell agency, has provided some clues to the direction of upcoming research grants – should CIRM be able to secure funding.

Reporter Rebecca Vesely of the Oakland Tribune carried Hall's comments in her story about Wednesday's meeting of the Oversight Committee.

"Hall said in the short term he would like to start approving innovation grants of several hundred thousand dollars each, with a focus on new ideas and bringing the brightest scientists into the field of stem cell research," Vesely wrote.

"'I think we should not be afraid at this point to try some risky fields,' he said.

"Hall also said the institute should start issuing 'safe haven' grants — those that would fund physical space to do embryonic stem cell research. Federal rules restricting embryonic stem cell research prohibit scientists from using federally funded laboratories for most embryonic stem cell research."

Vesely said the agency is drawing up plans for a one-day conference on the health risks of embryo donation, focusing on the scientific evidence of the risks -- not on the political debate surrounding egg donation.

Marisa Lagos of the San Francisco Examiner quoted Hall as saying, “We believe it is our responsibility to become better informed … to look critically at the evidence. What is the data? What is the best end? What are the best practices to reduce risks?”

Unanswered Questions about Stem Cell Research and IP

We received an interesting and detailed note from a well-informed observer about many of the issues involving California stem cell research and intellectual property. The immediate impetus for his comments was the background paper provided for Monday's legislative hearing on IP issues.

The writer is Terry Feuerborn, formerly Executive Director of Research Administration and Technology Transfer within the Office of the President at the University of California. He currently serves as the Technology Transfer Ombudsman for the Lawrence Livermore National Laboratory and the Lawrence Berkeley National Laboratory. Here are his comments.

"There are a lot of problems with the Background Paper. There is little real understanding of the higher education research environment, academic science, the pros and cons of the Bayh-Dole Act, or the realities of patenting and licensing new technology. It is not possible to deal with all the deficiencies of this report. Much of it is devoted to dealing with aspects of Prop. 71 that present issues. One such issue is the provision that the state "benefit from royalties, patents, and licensing fees that result from the research." This requirement, admirable on the surface, needs more analysis than the report provides.

"The proposition assumed that there would eventually be royalty income and that this should be shared with the state. Where will this royalty income come from and how will it be generated? Let us begin with the total dollars committed to basic research by CIRM. Funds used for buildings, training, and for administration are not likely to produce inventions. For the sake of being very conservative, however, let us say that all $3 billion will go to support basic research. How many inventions will that produce? For many years, technology transfer managers have used various estimates for the number of inventions that can be expected for a given amount of basic research conducted. Realities vary, of course, from institution to institution based on local factors. A handy estimate used a good bit of the time, however, is that you can expect one invention to be reported for every $2 million of funded basic research. Other estimates can be used, but the logic involved is what is important. Accordingly, for $3 billion, there may be 1500 inventions reported--give or take hundreds in either direction. Each invention reported will require a highly specialized technical analysis just to decide whether or not a patent application should be filed. This is necessary because it is too costly to file a patent application for every invention reported.

"There are often legal and scientific reasons for not filing a patent application as well. Who will perform these evaluations and who will bear the cost? CIRM? The State of California? Where will the expertise and funds come from? Most likely it will have to be from the grantees--who already have patenting and licensing offices. How many patent applications will be filed from the pool of reported inventions? If research grants are made with good judgment, to the best scientists, it is possible that patent applications will be filed on 25% to 50% of the reported inventions. The higher estimate would cast a broad net to insure that patent applications are filed on all of the most promising inventions. Accordingly, there could be up to 750 patent applications, give or take hundreds in either direction.
It costs a lot to file and prosecute patent applications in the US. It can cost $200,000 or more to file corresponding patent applications in Europe and Japan. Who will pay these costs? CIRM? The State?
Licensees can be expected to pay for the costs of patenting inventions for which they have a license, but how many patents will be licensed? For that matter, how many patents will be awarded in response to all of the patent applications? In addition, patenting is an extremely litigious activity. There are infringement suits, interferences in the Patent Office, and legal disputes of all sorts--particularly if breakthrough inventions are involved. In other words, patenting and licensing is a very difficult and costly activity for an institution of higher education with a lot of risk involved. To what extent will the State share in those costs and risks if it expects to share in the benefits? If there is to be a state share of royalties, will it come from the grantee institutions or directly from licensees? There are serious practical and legal issues involved in either approach. And finally, what formula for sharing would seem to be appropriate? Until matters such as this are discussed in detail and dealt with in a reasonable and fair way, policies may be put in place that will have unanticipated consequences."

We are always interested in comments from readers. They can be posted directly by clicking on the comments link at the end of each item. It provides for anonymous commentary, although we prefer that writers identify themselves. Or comments can be sent to us at djensen@californiastemcellreport.com.

Stem Cell Training Grant Program Stalls

Many California institutions selected for stem cell research training grants are "holding tight," reluctant to begin their efforts without cash from the California stem cell agency, The Sacramento Bee reported today.

Reporter Edie Lau said that CIRM has backed away from suggestions that the medical schools begin the programs and seek reimbursement later. She also wrote that efforts to raise funds for the program are taking longer than anticipated.

The agency in September approved $39 million in training grants for 16 California institutions. The University of California, San Francisco, garnered one of the larger grants, $3.6 million to train 16 scientists.

"Obviously, we're disappointed," said Dr. Arnold Kriegstein, director of the school's Institute for Stem Cell and Tissue Biology. "We really have it on hold until we're guaranteed or at least assured that there's funding," Kriegstein said.

New Water Fountains for Stem Cell Science

San Francisco city and California stem cell agency officials snipped a red ribbon Tuesday at the official opening of CIRM's new headquarters in Baghdad-by-the-Bay.

Reporter Rachael Gordon of the San Francisco Chronicle wrote that optimism prevailed at the event, the usual course for such ribbon cuttings.

"The mayor's director of economic development, Jesse Blout, said no new stem cell related companies have put down stakes in San Francisco since the decision on where to locate the headquarters was made. But, he said, 'they're circling,'' she reported. "(San Francisco Mayor Gavin) Newsom said he expects some announcements to be made soon."

Noting the ample communal areas in the headquarters, Gordon quoted CIRM president Zach Hall as saying they will foster collaboration. "I'm a great believer in science by the water fountain,'' said Hall.

CIRM staff has not moved into the facility. That will come Nov. 11.

It was interesting decision by the Chronicle to cover the ribbon cutting but skip the legislative hearing into the intellectual property issues involving CIRM, although the Chron has been one of the leaders in coverage of the stem cell agency.

More Reporting from Monday's IP Hearing

The Contra Costa Times and the San Francisco Examiner also carried reports on Monday's legislative hearing into intellectual property issues involving the California stem cell agency.

Here is the lead on the Examiner story by Marisa Lagos:

"Almost exactly a year after California voters approved $3 billion in public funds for stem cell research, it is still unclear who will own the rights and revenue from any research findings — and whether taxpayers will get a return on their investment."

Here is the lead on the Times story by Sandy Kleffman:

"During the campaign for California's $3 billion stem cell initiative, supporters predicted as much as $1 billion would be returned to state coffers through royalties from stem cell therapies. But now, some question whether the state will get a dime."

Whoops! Monday's IP Hearing Generates a Story

The trouble with computer-based automated tools is that sometimes they turn on you.

No sooner had we written that no California newspaper had printed a story on Monday's IP hearing than up popped one from the Oakland Tribune, found by a dilatory search engine that we had working for us.

The article by Rebecca Vesely said, among other things, that we should not expect to see IRS rulings on the tax-exempt status of California stem cell bonds any time soon, according to the state treasurer's office.

Juan Fernandez, counsel in that office, said the IRS will be consulted only after lawsuits against CIRM are settled and a CIRM IP policy is in place. By some reckoning that may push off an IRS opinion well into 2007.

As for the CIRM timetable on IP, Ed Penhoet, vice chairman of the agency, said the Oversight Committee would not make any IP decisions until February. That seems to conflict with a timetable proposed for tomorrow's Oversight Committee meeting, which shows IP policy coming before that body in December. A wild guess is that a December decision is a tad optimistic.

Among The Missing

Even the San Francisco Chronicle skipped the meeting.

No doubt about it. The term intellectual property must be truly odious to California newspaper editors, although it is a $6 billion issue involving the state's newest bureaucracy.

No newspaper – at least one that is published on Web – carried a story on Monday's legislative hearing into the IP issues involving the California stem cell agency. Not even the agency's hometown paper, the Chronicle, covered it for this morning's paper.

Chalk up part of it to this fall's election in California, which is diverting newsroom resources from subjects that might normally be covered. But IP also doesn't have the surface sizzle of many other subjects.

Nonetheless, old newspaper editor once told me, "There are no dull stories, only dull reporters."

New Report: Too Soon To Tell About CIRM?

A new report on the California stem cell agency concludes that "it is too soon to tell whether the state’s effort is the right way, or even a good way, to support research the federal government will not."

At least that is the conclusion drawn by the organization that sponsored the study, entitled "Prop. 71: A Model for State Involvement in Biomedical Research?"

“California’s bold stroke to pursue stem cell research free from federal restrictions – and federal dollars – has been slowed by the debate over how to assemble a governing structure for the new institute," said Greg Simon, president of FasterCures, which commissioned the report.

"They’ve come a long way. But the real question is whether they can quickly resolve these debates in a way that allows them to fund the kind of high risk, high reward research that the public expects in order to make progress in the fight against disease,” Simon said.

Kathi E. Hanna oversaw and wrote the study on behalf of FasterCures, an offshoot of the Milken Institute that works for faster development of medical therapies. Hanna is a science and health policy consultant and once served as research director and senior consultant to President Clinton’s National Bioethics Advisory Commission.

Hanna wrote that four lessons can be drawn from the experience so far of the California stem cell agency.

1. "The passing of Prop. 71 did not insulate embryonic stem cell research from political risk. Even after California voters gave the go-ahead to Prop. 71, opponents in Sacramento and around the state found ways to challenge its very existence as well as its policies and nascent procedures."

2. "An initiative that promises success and preaches optimism can have far-ranging impact.(CIRM President) Zach Hall says he is reminded every day that 'a message of hope' is what propels him and supporters of the initiative to keep at it, despite the daily challenges of bureaucracies and politics."

3. "There are dangers in overselling the potential benefits of such an investment. High expectations that cannot be met, either in the form of cures or intellectual property revenues, will result in heightened scrutiny and dwindling political support. This requires educating policymakers and the public about what they can reasonably expect. In addition, tying complex social
goals, such as affordable healthcare, to a research program imposes an unreachable standard."

4. "There are advantages and disadvantages to creating a new research infrastructure from the ground up rather than using existing infrastructure and institutions. One advantage is that the program is relatively free from the political and administrative constraints of entrenched bureaucracies. On the other hand, CIRM has had to re-create an administrative infrastructure that in essence replicates that which is already in place in California agencies and academic institutions or in the federal research environment, but is inaccessible because of the requirement for CIRM’s independence. On the other hand, once established, CIRM will be able to leverage existing infrastructure as it makes awards to California researchers and institutions. (California Stem Cell Report Publisher David) Jensen doubts that the measure would have passed if the recipient institutions—University of California schools, for example—had been named at the outset. 'It would have brought out the usual enemies of the University of California, complaints about its lack of transparency, its past failures, for example, oversight of the Livermore Lab, and so forth,' said Jensen. 'What helped to make Prop. 71 attractive is that the new agency carried no baggage.'”

Hanna concludes:

"The true measure of whether Prop. 71 is a success will be in the science conducted and the results translated, not in how well CIRM operates administratively. There will continue to be conflict between those who expect efficiency and streamlining as a measure of wise public investment and those who understand that science is imprecise and unpredictable, that it cannot aim for efficiency as a goal. And one can expect that other measures of success, such as patents, royalties, and revenue streams will continue to create conflicts between those who want to fill state coffers and those who want to spur commercialization."

No IP Debate in South Korea?

While Californians are debating this Halloween about how to share the stem cell "treats," South Koreans are expecting to have therapies from embryonic stem cells within a decade.

According to a news story about a government report in that country, 110 clinical tests of adult stem cells are underway and three companies are already at commercial stages.

The story written by Wohn Dong-hee and carried on the Joongangdaily web site also said, "Provided laws on such medication allow, treatment developed from adult stem cells would be available as early as 2007. It (the study) said treatment drugs from embryonic stem cells would probably be on the market by 2015."

Ortiz: CCST IP Report Tilted by Insiders

An influential California state legislator today sharply criticized an earlier report on stem cell intellectual property, declaring that the state was not "well-served" by a "premature" study that "glosses over" important issues.

Sen. Deborah Ortiz, D-Sacramento, released the statement at the beginning of the hearing by the Senate and Assembly Health Committees into IP issues involving the California stem cell agency.

She targeted a stem cell IP report this summer by the California Council on Science and Technology, which she said was prepared by industry insiders.

“We need very clear and strong standards to ensure that the state’s interests are protected and that the state receives a meaningful economic return on its investment,” said Ortiz, who is chair of the Senate Health Committee and the Capitol's most influential legislator on stem cell issues.

"We’ll hear significant concerns today that that report was premature, and that it glosses over many important issues that we should be spending time deliberating, including important unintended effects of the Bayh-Dole Act that have become apparent over time, the special constraints posed by the use of tax-exempt bonds as a source of financing for the research, as well as viable opportunities we may have to ensure that the stem cell therapies and treatments that ultimately result from Prop. 71, which we are all hoping for, are accessible and affordable to lower as well as upper income Californians.

"The bottom line is I don’t believe the CCST report provides either an objective or comprehensive analysis of the full array of options that are available to us to draw on in developing an IP policy for stem cell research grants.”

Ortiz said California must manage IP rights so that they provide for affordable access to any therapies that result and also do not "impede the rapid and broad dissemination of basic research findings and tools."

She additionally addressed the issue of using tax-exempt bonds for stem cell research, declaring that her proposed constitutional amendment would make that more likely.

“If we are not able to use tax-exempt bonds, the $200 million annual cost of paying off the bonds becomes even larger in five years when the state begins paying off the bonds, potentially forcing us to make cuts in other vital programs. Given that we are unlikely to see any real economic benefits from the research for 10 years or more, it becomes imperative that we use tax-exempt financing to the greatest extent possible.

“That’s why my SCA 13, currently on the Senate floor, requires the Independent Citizen’s Oversight Committee when it is negotiating intellectual property agreements, to seek to ensure that treatments, therapies, and products resulting from Prop. 71-funded research are accessible and affordable to low-income residents, an approach that is more likely to be possible using tax-exempt bonds for the research.”

Below is the text of Ortiz' excerpted remarks, which are not yet available on her web site.

Text of Sen. Ortiz IP Remarks

Here is the text of Sen. Deborah Ortiz' excerpted remarks on IP issues, as released by her office.

“The important questions of who owns the rights to research findings and inventions coming out of Prop. 71- funded research, what they can do with them, and most importantly, how we ensure that California residents receive a significant and direct return on their investment in stem cell research are among the most perplexing that we face in implementing Proposition 71.”

“Our task is complicated by the fact that some options for obtaining economic benefits, particularly those that involve the state receiving benefits in the form of royalty or other direct payments, may not be possible if we want to use tax exempt bonds to pay for the research.”

“If we are not able to use tax-exempt bonds, the $200 million annual cost of paying off the bonds becomes even larger in five years when the state begins paying off the bonds, potentially forcing us to make cuts in other vital programs. Given that we are unlikely to see any real economic benefits from the research for 10 years or more, it becomes imperative that we use tax-exempt financing to the greatest extent possible.”

“That’s why my SCA 13, currently on the Senate floor, requires the Independent Citizen’s Oversight Committee (ICOC) when it is negotiating intellectual property agreements, to seek to ensure that treatments, therapies, and products resulting from Proposition 71-funded research are accessible and affordable to low-income residents, an approach that is more likely to be possible using tax-exempt bonds for the research.”

“My own position has been and continues to be that we need very clear and strong standards to ensure that the state’s interests are protected and that the state receives a meaningful economic return on its investment.”

“We also need strong policies to ensure that the way we manage IP rights do not in and of itself impede the rapid and broad dissemination of basic research findings and tools.”

“Finally, in 2005, at a time of escalating problems with the affordability of prescription drugs and therapies, we would be remiss if we didn’t attempt to ensure that the issue of the ultimate accessibility and affordability of stem cell therapies and treatments relying on Proposition 71 – funded research is addressed. As we’ll hear today, that goal is not addressed very well by the prevailing model of IP management that we have, the federal Bayh-Dole Act, but we have an opportunity to do so with the policy that we develop here in California.”

“Personally, I don’t think the ICOC or Californians generally have been well-served by the one report that has been issued on this topic, the report of the California Council on Science and Technology. I think we’ll hear significant concerns today that that report was premature, and that it glosses over many important issues that we should be spending time deliberating, including important unintended effects of the Bayh-Dole Act that have become apparent over time, the special constraints posed by the use of tax-exempt bonds as a source of financing for the research, as well as viable opportunities we may have to ensure that the stem cell therapies and treatments that ultimately result from Proposition 71, which we are all hoping for, are accessible and affordable to lower as well as upper income Californians.”

“The bottom line is I don’t believe the CCST report provides either an objective or comprehensive analysis of the full array of options that are available to us to draw on in developing an IP policy for stem cell research grants.”

“I am perhaps most distressed that, despite legislative admonition that the CCST broaden its study group and solicit broader representation of Bayh-Dole critics and public interest groups, they chose to ignore that request. Instead, what we have before us is the product of thinking by technology transfer insiders, who despite their expertise, may be missing the broader issues of public interest.”

“I know I speak for many in saying that we are less interested in seeing the state adopt a status quo policy for management of intellectual property rights than we are in seeing the state adopt a policy that makes sense and serves the public, which is footing the bill for the research.”

“This hearing is the first of what will probably be many forums for discussion of this issue. The ICOC’s subcommittee will be meeting throughout the fall and hopefully this hearing will spur debate and broad consideration of the options that are possible in this complex, but vitally important, issue.”


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