Conflicts of Interest, CIRM and Transparency

Do conflicts of interest exist among the scientists who make the de facto decisions on hundreds of millions of dollars in California grants for research related to embryonic stem cells?

The answer? Yes.

Even the California stem cell agency acknowledges that fact. Because of conflicts, the agency regularly excuses some of the scientists who review the grant applications from participating in specific cases.

But CIRM stoutly maintains that the financial and professional interests of reviewers are not suitable for release to the public or applicants. The agency contends the reviewers are only making recommendations. However, the reviewers' decisions are almost never rejected by CIRM's board of directors. The agency also has turned down a recommendation by the state auditor that it seek an opinion from the state attorney general on whether it should publicly disclose the reviewers' interests.

Trust us, the agency says. We will police the conflicts and assure that no abuses occur.

Rarely do rejected applicants raise conflict issues publicly. No one wants to offend the world's largest source of funding for human embryonic stem cell research. In August, however, one scientist brought up the question of conflicts at a meeting of the CIRM board of directors.

Steven Kessler, a scientific director at Advanced Cell Technology of Los Angeles, was not happy with the response he received from CIRM staff on a letter he wrote concerning what he said was a conflict of interest on the part of a unnamed reviewer.

According to the transcript of the meeting, here's how Kessler summarized his position for CIRM directors:

"If a grant reviewer has a financial relationship with company "X"...that is, he's receiving funding from that organization or he's expecting royalty income from some company by virtue of having licensed technology to that company and that reviewer is sitting in on reviews from other for-profit organizations...and doesn't recommend those for funding, to us, from a business perspective, that's a conflict of interest."

Kessler said he had cited "numerous instances" of conflicts on the part of the reviewer, where there would be "every incentive to help impede the competition for the company that he has a relationship with.".

Kessler said,

"I was told that the way CIRM interprets its own conflict of interest policy, the example I gave you was not a conflict of interest."

At that point CIRM Chairman Robert Klein cut off Kessler, declaring that the directors needed to discuss the names for CIRM-funded labs before going to lunch.

Kessler's comments followed a discussion in which Klein and other directors expressed concern about reviewers quitting if they were subject to public complaints.

Klein said,

"To the extent that (applicants) are criticizing peer reviewers, which is sometimes common, we're going to lose our peer reviewers."

On Sept. 14, we asked CIRM for a copy of Kessler's conflict-of-interest letter. On Oct. 22, more than five weeks later and after repeated follow-up queries, the agency declined to release the letter.

Initially, Don Gibbons, chief communications officer for CIRM, said there was a question of redaction of material from the letter. Then he said our inquiry was lost by CIRM's interim general counsel. Ultimately, on Oct. 22, Gibbons said,

"Our interim general counsel has determined that the Kessler letter is part of the grant application process and as such is not a public document."

We asked for the legal reasoning behind that statement. On Oct. 29, Gibbons quoted interim counsel Ian Sweedler as saying,

"Applicants need to know that they can contact CIRM with information about potential conflicts, and that they can do that without leveling public allegations against a professional colleague."

Obviously conflicts of interest can at times involve judgment calls. CIRM also places a burden on its reviewers, all of whom come from out-of-state and cannot apply for CIRM grants. Marie Csete, now CIRM's chief scientific officer, commented last year on the situation when she was a reviewer prior to her employment at CIRM. Among other things, she said that she and the other reviewers were being asked to fund the work of their competitors.

CIRM's overriding concern has been the care and feeding of reviewers. We acknowledge that they need considerable attention. However, the main issue here is the stewardship of public funds and the integrity of a state government process involving billions of dollars. From its birth, CIRM has wrestled with problems spawned by the ballot initiative that created the research program. CIRM was deliberately cobbled together with built-in conflicts starting at the very top. The chief beneficiaries of CIRM's largess sit on its board of directors and set the rules for grants and control the process.

The bounty from CIRM is huge. Here is a list of CIRM recipient institutions (with grant totals) which have or had employees or representatives on the CIRM board of directors: Stanford, $94 million; UC San Francisco, $82 million; UCLA, $51 million; UC Irvine, $51 million; USC, $48 million; Sanford (San Diego) Consortium, $43 million; UC Davis, $36 million; UC San Diego, $33 million; UC Berkeley, $29 million; UC Santa Cruz, $17 million; Burnham, $18 million; Salk Institute, $16 million; Scripps, $9 million; UC Merced, $8 million; UC Santa Barbara, $7 million; UC Riverside, $6 million; Caltech, $2 million, and City of Hope, $2 million.

The built-in conflicts at CIRM are not likely to change, short of another ballot measure. They are enshrined in the state Constitution, a move by Prop. 71 writers who wanted to make CIRM immune to normal government oversight.

However, handing out billions behind closed doors with no outside scrutiny is a recipe for abuse. State ethics officials are already looking into the attempt by one CIRM director to influence CIRM staff on behalf of his institution. Should a major scandal erupt, it would ill serve the agency, the people of California and the cause of science.

If only to protect itself, the agency should comply with its repeated promise to adhere to the highest standards of openness and transparency and publicly release the statements of the economic and professional interests of its reviewers.

(Further note: Kessler also declined to release his letter to us. The CIRM grant review committee meets next Wednesday and Thursday in San Francisco to review applications for $66 million in public funds. The review sessions are closed but the public may comment on Wednesday morning.)

Text of Kessler's Conflict-of-Interest Comments

Steven Kessler, a research director with Advanced Cell Technology Inc., of Los Angeles, last month raised a question about a conflict of interest on the part of one unnamed CIRM scientific grant reviewer.

Kessler also addressed the issue of reviewer bias and proposed restrictions on the length of an appeal letter.

Here is the text of his remarks at the August CIRM directors meeting, including comments from CIRM Chairman Robert Klein.

Kessler:

"It's my understanding that for the new cell lines awards, that there were 58 proposals overall, that 12 came from for-profit organizations, none of those were recommended for funding, compared to presumably 18 of 38 from not-for-profit organizations. To me, that's clear evidence of bias.

"I've had – we formally appealed this on June 26th. The appeal -- I was the PI on one of them -- was two and a half pages describing for CIRM what a conflict of interest is from a business perspective, and another seven and a half pages specifically rebutting point by point all the reviewers' criticisms. I don't see how we can do this (in less length). We can certainly condense the letter, but what we did was cite the reviewers' comments and what our proposal actually stated that factually contradicted that. It would be more difficult, I think, for the board to understand what actually took place if we didn't do it in that type of a sequence.

"But just to come back to the conflict of interest issues, I've had discussions with CIRM staff just this week following up, citing CIRM's own conflict of interest policy to them on specific issues. One issue was:...If a grant reviewer has a financial relationship with company 'X,'...that is, he's receiving funding from that organization or he's expecting royalty income from some company by virtue of having licensed technology to that company. And that reviewer is sitting in on reviews from other for-profit organizations, companies 'A,' 'B' or 'C' and doesn't recommend those for funding. To us, from a business perspective, that's a conflict of interest.

"This is a bit different from the situation in academia where people quibble about technicalities on papers.... For-profit organizations...invest millions of dollars building up their patent estate because they won't proceed down the development path, which incurs...tens of millions of dollars in expenses, unless they have a clear patent path. So it is really a serious issue if...somebody, some reviewer with conflicts -- and we cited numerous instances (and) in our view there's no reason to recite those right now – where...a reviewer would have every incentive to help impede the competition for the company that he has a relationship with."

Klein:

"Well, I very much appreciate those comments. We do have an existing separate policy for conflicts. We treat them very seriously. We have a separate policy in place for re-review in the event of conflicts. And the staff does a thoughtful analysis. They have gone through and found a conflict in a particular -- potential -- even if they find a potential for a conflict, they look at potentially re-reviewing it. They're trying to err on the side of equity and justice here."

Kessler:

"I realize that. And I was told that the way CIRM interprets its own conflict of interest policy, the example I gave you was not a conflict of interest. So -- "

Klein:

"Okay. So we'll have the opportunity between now and the next session to look at that as well, but we appreciate your comments. Thank you very much."

CIRM Grant Review: Questions About Fairness, Conflicts and Accuracy

Here is the text of article by yours truly concerning questions about fairness in the CIRM grant review process that ran Sept. 18, 2008, in BioWorld Perspectives.
Following this item, you can find related posts, including the text of responses we received from businesses that we queried and links to related CIRM and other documents.

CIRM Grant Controversy Continues with Publication of Biotech Company Names

By David Jensen

BioWorld Perspectives Contributing Writer

Editor's note: David Jensen publishes the California Stem Cell Report and has written nearly 2,000 items on the California stem cell agency since 2005. Jensen's Perspective last month, "Red Flags Remain in Plan to Help Biotechs," dealt with the controversy surrounding CIRM.

Questions are being raised about the fairness, conflicts of interest and even the accuracy involved in the grant review process of California's $3 billion state stem cell research program, the San Francisco-based California Institute for Regenerative Medicine (CIRM).
While nearly all of the rejected applicants remain silent, a handful of stem cell companies have publicly discussed their concerns.
Complaints About CIRM Add up in 2008
One California stem cell company, Advanced Cell Technology Inc., of Los Angeles, has complained about a financial conflict of interest on the part of one unnamed reviewer. Others have complained about inaccuracies in reviews, the failure to provide an opportunity to rebut reviewers and the lack of a grant resubmission process like the National Institutes of Health. Privately, more complaints are aired about reviewer conflicts and a tilt at CIRM toward funding "big guns," well-established senior scientists.
Last month, Alan Trounson, president of CIRM, told the agency's directors that "large numbers" of rejected applicants have contacted the agency concerning reconsideration of their rejected applications or related issues. But when asked more recently for specifics, a spokesman for the agency minimized the number, saying it amounts to no more than 10 on any round of grants.
CIRM acknowledges its review process is not perfect. It is working on a formal procedure for requests for reconsideration, which will come before directors on Sept. 24 or 25. But basically, CIRM sees no fatal flaws in the making of its grants, which now total $614 million over three years. When CIRM's review process came under fire last month, Trounson told directors, "Scientists, like other people, kind of believe [if] they live in California [they] should get a grant, [that] CIRM was set up to give them grants."
The agency first had to deal with public complaints from a rejected applicant last January. Questions of fairness surfaced more visibly later in the year, the first time that businesses have been permitted to apply for CIRM cash.
Out of the 18 applications from the private sector only one business, Novocell Inc., of San Diego, has received a grant. In the case of Novocell, it amounted to $50,000 to help plan for a much larger disease team grant.
Watchdog Publishes Names of Biotechs That Likely Applied for Grants
Until recently, the names of the rejected business applicants were unknown. CIRM's policy is to withhold the identities of all rejected applicants. But last month, Consumer Watchdog, of Santa Monica, Calif., a nonprofit group that has followed CIRM for nearly three years, disclosed on its website the names of the 18 businesses that filed letters of intent (LOI) to apply for grants.
The list reads like a Who's Who of California biotech companies. According to John M. Simpson, Consumer Watchdog's stem cell project director, firms that filed an LOI to apply for the Disease Team Planning Grant were: Advanced Cell Technology; BioCardia Inc., of South San Francisco; DNAmicroarray Inc., of San Diego; Genomics Institute of the Novartis Research Foundation, of San Diego; International Stem Cell Corp., of Oceanside; Novocell; Panorama Research Inc., of Mountain View; RegeneMed Inc., of San Diego; StemCyte Inc., of Covina; and Stemedica Cell Technologies Inc., of San Diego.
The companies that filed an LOI to apply for New Cell Lines Grant were: Advanced Cell Technology; BioTime Inc., of Alameda; California Institute of Molecular Medicine, of Ventura; Cascade Life Sciences Inc., of San Diego; DNAmicroarray; Gene Security Network Inc., of Redwood City; International Stem Cell.; Raven Biotechnologies Inc., of South San Francisco; RegeneMed; the Supercentenarian Research Foundation, of Inglewood; VistaGen Therapeutics Inc., of South San Francisco; and WaferGen Biosystems Inc., of Fremont.
Simpson noted that some companies earlier had "groused" about their treatment. And he asked, "Did the companies get a fair shake or not?"
We queried all 18 concerning the grant reviews. Fifteen did not respond to the questions. One said it was satisfied, one said anonymously it was quite dissatisfied, and one was withholding judgment until the next round of grants. At least three additional companies, however, have publicly told CIRM directors that they have issues with the agency's review process.
Alan Lewis, CEO of Novocell, responded to our query, saying he was pleased with the process. Lewis said his company has "developed a relationship with CIRM" and tried to help it in formulating the grant process. He noted that "very few" industry representatives often attend CIRM meetings.
At the August meeting of CIRM directors, Steven Kessler, a scientific director at Advanced Cell Technology, said that his company had filed information that one of the reviewers had a financial conflict of interest as the result of ties to another company. Kessler did not identify the individual or spell out the exact nature of the conflict. He told directors that he was told by the agency "the way CIRM interprets its own conflict of interest policy, the example I gave you was not a conflict of interest."
Kessler also cited the low success rate of business applications as "clear evidence of bias."
At the same meeting, William Adams, chief financial officer of International Stem Cell, indicated that CIRM directors were excessively worried about "ticking off" scientific grant reviewers with public criticism of the quality of their reviews.
At the June directors meeting, Kenneth J. Woolcott, chief business officer of Cascade LifeSciences, commented on the process but did not seek an appeal, having been told none was available. Shortly after Woolcott left the meeting, a reconsideration letter from an applicant from a nonprofit was read by a director, resulting in the approval of that grant.
Woolcott was not pleased when he learned about the situation. He then sought reconsideration of the Cascade application, alleging that its review included factual errors involving a "fundamental oversight." He also said reviewers did not adhere to the published review criteria. CIRM rejected Cascade's request. (See links below for more information.)
In response to our query, another California company researcher, who asked for anonymity, said reviewers' comments on his application were "ridiculously incomplete" and "misinformed." "You can tell when people really didn't read it," this scientist said.
Leading to Positives for Future Stem Cell Grants?
Consumer Watchdog's Simpson said that the publication of the names of rejected businesses has had a healthy impact. (In fact, BioWorld Today reported last month that the biotech industry is poised to receive more CIRM funding in the future.)
"I'm not advocating that anybody be required to divulge proprietary information, but the application process needs to be more transparent," he said.
"My publishing the names of the applicants has enabled them to communicate with one another, compare notes and figure out how to voice what appear to be very legitimate concerns about the grant-making process.
"I'm by no means a big fan of the biotech industry, but I think this is a case where awards have been tilted toward academia. There ought to be a level playing field."
Interested in reading more? Here are some links to documents relating to the California stem cell agency and complaints about fairness in its grant review process:

• Consumer Watchdog Identifies Businesses Rejected for CIRM Grants
  
• CIRM's August Proposal for a Reconsideration Procedure (this draft is likely to be modified before CIRM's meeting later this month)
  
• Transcript of August 13, 2008, CIRM Meeting
  
• Cascade LifeSciences Seeks Reconsideration
  
• Text of Cascade's Reconsideration Letter
  
• CIRM Response to Cascade Complaints
  
• Transcript of June 26, 2008, CIRM Meeting Involving Cascade