Fresh Comments

John M. Simpson has posted a comment on the "secrecy" item from Monday. Lawrence Ebert has posted a comment on the "NY Times" item, also from Monday.

Ruling Endangers $3.2 Million WARF Cash Stream

One commentator said that the WARF patent ruling "marks a welcome turning point in the battle against the unnecessary and unproductive privatization of mankind's quest to understand the natural universe."

Another called it a "victory for the patent law freedom fighters."

But in the Wisconsin State Journal, reporter David Wahlberg, said it could cut off the spigot that has poured $3.2 million into the Wisconsin Alumni Research Foundation. He was the only reporter to identify the cash flow from the ESC patents.

It was all part of the news coverage today of ruling by the federal Patent Office concerning WARF's ESC patents. (For coverage of the issue on Monday see the earlier items below.)

Wahlberg quoted Dan Ravicher, executive director of the Public Patent Foundation, as saying,

"Although these patents aren't dead, they have been diagnosed with severe cancer."

Ravicher's group and the Foundation for Taxpayer and Consumers Rights were the two organizations that challenged the WARF patents, which remain in place pending an appeal by WARF.

Walhberg said,

"The patents have brought in at least $3.2 million to WARF and could net much more money before they expire in 2015. Companies wanting to study the cells must buy licenses costing $75,000 to $400,000, though since January, WARF waives the fees if the research is conducted at universities or by nonprofit groups."

Merrill Goozner, writing on the Huffington Post, called the patent ruling a "turning point." Goozner, who is with the Center for Science in the Public Interest, continued,

"Discovering human embryonic stem cells, which have been around since man first walked the earth, is more like Isaac Newton discovering gravity than the Wright Brothers building the first airplane.

"The Public Patent Foundation and the California Foundation for Taxpayer and Consumer Rights, which challenged the Thompson patents, have provided a valuable service for the entire science community. Unfortunately, the PTO ruling relied on the traditional tenets of patent law. The examiners, upon reexamination, claimed the patent was obvious based on previous papers that had appeared in the literature. Obviousness and previous publication are cause for rejecting a patent application.

"WARF's top officer immediately restaked their claim on those grounds.

Goozner continued:

"Basic science that may ultimately lead to useful products should be free and open to all who would build those useful products. Its inventors should not be allowed to become toll collectors on the road to innovation. Hopefully, the PTO decision yesterday is the first step on the road back to a reasonable standard for establishing where basic science ends and commercial invention begins."

Andrew Leonard, writing on Salon.com, declared that the "patent law freedom fighters" had won.

Terri Somers of the San Diego Union Tribune quoted Cathryn Campbell, an intellectual-property lawyer with Needle and Rosenberg, as saying it is significant that the patent office went beyond the cases cited by the challengers and found two more examples of prior science in the area.

Steve Johnson of the San Jose Mercury News touched on the impact on Geron, a California stem cell company that helped finance the research. Johnson wrote:

"If the patents are rejected permanently, Geron wouldn't have to pay license fees to use the technology, said David Greenwood, Geron's executive vice president and chief financial officer. And while Geron would lose its exclusive right to the technology, the company has other stem-cell licensing rights and patents that give it an edge on other stem-cell companies, Greenwood said."

Geron's stock dropped 3.64 percent on Tuesday, closing at $7.15 in above average volume. The stock has ranged from $5.66 to $10.00 over the last 12 months.

Missing from today's coverage was the Wall Street Journal, which only carried a blog item based on the New York Times story (see the item below from Monday on that.)

Here are links to other stories: Associated Press, Ipbiz blog, Los Angeles Times, Milwaukee Journal Sentinel, Sacramento Bee. The San Francisco Chronicle carried the AP story.

Geron Statement on WARF Patent Rulings

Here is the full text of Geron's statement on the ruling on the WARF ESC patents.

"Geron Corporation (Nasdaq: GERN) supports the position of the Wisconsin Alumni Research Foundation (WARF) that  U.S. patents  covering Dr. James Thomson’s pioneering work with human embryonic stem cells were properly granted. Thomson’s success in isolating human embryonic stem cells is recognized by the scientific community as a significant breakthrough, and the scope of the patents granted to WARF is commensurate with that achievement.  Three patents issued to WARF based on Dr. Thomson’s research are being reexamined by the U.S. Patent and Trademark Office (USPTO).

"It is routine for the USPTO to grant patent re-examination requests.  Furthermore, it is common for the USPTO to issue preliminary rulings that reject patent claims, only for the USPTO to terminate re-examinations and uphold patent claims in later stages of the review and appeals process.

"As the world leader in the development of human embryonic stem cell-based therapeutics, Geron holds a broad portfolio of intellectual property rights.  This portfolio includes the WARF patents in re-examination, additional WARF patents that are not subject to the re-examination proceedings and patents exclusively licensed from the University of California and the University of Oxford.  In addition, Geron’s portfolio includes patents and patent applications filed by Geron to cover technologies developed internally by Geron scientists for the production and differentiation of embryonic stem cells."

NY Times On WARF Patent Case

The New York Times has posted a piece by Andrew Pollack on the rulings in the WARF ESC patent case.

The story generally covers much of what you have read on the California Stem Cell Report, but also says:

"It is now much more likely, however, that the patents will be narrowed or revoked, and some scientists or companies might become more confident in undertaking research that would infringe the patents."

Pollack continues:

"Companies are charged $75,000 to $400,000, depending on their size and the terms of the license.

"The Geron Corporation, which financed some of Dr. Thomson’s research, has exclusive commercial rights to heart, nerve and pancreatic cells derived from the human embryonic stem cells. So if the patents remain in effect, any company wanting to market a treatment for heart attacks, Parkinson’s disease or diabetes using human embryonic stem cells would eventually have to come to terms with Geron. "

WARF's Gulbrandsen Holds Federal Patent Advisory Post

The managing director of WARF currently sits on an advisory committee to the federal Patent and Trademark Office, which will hear WARF's appeal of an unfavorable ruling on WARF ESC patent claims.

Carl Gulbrandsen was appointed to the Patent Public Advisory Committee by the secretary of commerce in February 2005.

John M. Simpson, stem cell project director for Foundation for Taxpayer and Consumers Rights, said that Gulbrandsen should resign from the advisory committee. Simpson's group challenged the patent claims.

We have queried WARF and the Patent Office for comment.

(Editor's note: One reader suggested the first sentence of this item is ambiguous. To be perfectly clear, the committee in question is an advisory body. The patent office is the agency directly involved in the patent dispute.)

Links to WARF ESC Patent Rulings

The Foundation for Taxpayer and Consumer Rights has posted the rulings of the Patent Office on the WARF ESC patents. Here are the links:

www.consumerwatchdog.org/resources/780rejected.pdf

www.consumerwatchdog.org/resources/806rejected.pdf

www.consumerwatchdog.org/resources/913rejected.pdf

WARF Staying the Course on ESC Patents

WARF said today that it is confident that its ESC patents will ultimately be upheld despite rejection of its claims Friday by the U.S. Patent Office.

The organization released the following press release:

"With regard to the preliminary denial of the existing claims, WARF Managing Director Carl E. Gulbrandsen issued the following statement:

"'WARF has absolute confidence in the appropriateness and legitimacy of these patents. It is inconceivable to us that Dr. Thomson’s discovery, which Science Magazine heralded as one of the greatest scientific discoveries in history, would be found to not be worthy of a patent. This discovery captured the imagination of people all over the globe from every discipline.'

Gulbrandsen pointed out that the former director of the National Institutes of Health predicted the discovery would change the face of medicine.

"'We are confident that, when all of the facts are known and the process runs its course, our patents wil be upheld,' he said.

"The PTO granted the reexamination request and issued a preliminary ruling rejecting the patent claims in question, which is not at all unusual, according to Gulbrandsen, who pointed out that the patent reexamination process provides for multiple layers of review. This first rejection, for example, gives WARF the opportunity to respond directly to the examiner, a response in which WARF will vigorously defend its patent claims. That response could persuade the examiner to sustain the patents and terminate the reexaminations. If the examiner maintains the rejection, WARF could, and most probably would, appeal the examiner’s decision to the PTO Board of Patent Appeals. And, if that body fails to sustain the patents, WARF can then appeal to the courts.

"This process can take many months, or even years. But while the review is underway, all of WARF’s patents remain in place and are legally viable."

WARF Stem Cell Patent Claims Rejected

The federal government has rejected three embryonic stem cell patent claims by the Wisconsin Alumni Research Foundation, upholding a challenge led by a California watchdog group, the Foundation for Taxpayer and Consumer Rights.

The challenge to the work done by the University of Wisconsin scientist James Thomson was upheld by the U.S. Patent and Trademark Office, the FTCR group said Monday.

John M. Simpson, stem cell project director for FTCR, said, "This is a great day for scientific research." Numerous groups and scientists had complained that the WARF patents placed roadblocks in the way of research.

WARF had no immediate comment. The organization has two months to respond to the ruling, which came more quickly than expected. Geron, a California company that has an exclusive license involving the patents, had no immediate comment. The California stem cell agency also had no comment on the case, a position it has maintained since it began.

The decision said,

"It would have been obvious to one skilled in the art at the time the invention was filed to the method of isolating ES cells from primates and maintaining the isolated ES cells on feeder cells for periods longer than one year. A person skilled in the art would have been motivated to isolate primate (human) ES cells, and maintained in undifferentiated state for prolonged periods, since ES cells are pluripotential and can be used in gene therapy."

The Public Patent Foundation was a partner in the challenge to the WARF patents. Dan Ravicher, executive director of that organization, said,

“Now that the PTO has ruled, WARF should simply drop all its claims."

Jeanne Loring, a stem cell researcher at the Burnham Institute in California, had filed documents in support of the patent challenge. She was once quoted as saying,

"WARF's stance that Thomson's work is worthy of patents, 'is like saying that just because heating in water works for cooking a chicken egg, it's novel to consider using heating in water to cook a duck egg.'"

Loring also wrote last spring in Science magazine that Geron funded the patented HES cell derivations and "received an exclusive license for broad therapeutic use in the United States of HES cell–derived cardiac, nervous system, and pancreatic cells."

More background on the WARF patents can be found by searching on "WARF patents" in the "search blog" window in the upper left hand corner of this page.

Secrecy and California's $100 Million in Stem Cell Grants

More than two years ago, a legal expert on California's "sunshine" laws said the state's $3 billion stem cell agency should open its doors wider and fulfill its then fledgling promise to meet the highest standards of openness and transparency.

Terry Francke, general counsel for Californians Aware, zeroed in on the manner in which CIRM decides which scientists are selected to receive millions of dollars in public funds. Francke said the task should be performed mostly in public, which would provide "vital insurance" that public needs are met and no mischief is afoot.

CIRM's Oversight Committee rejected that position, and today we are beginning to see the impact. It comes in the form of a lack of vital information about how the agency has handed out more than $100 million in research grants. It involves the failure of the agency to keep minutes or transcripts of key sessions of its grant review committee, compliance with the state's constitutional guarantee of the "people's right to access" governmental information and the role of the chair of the agency during one closed-door grant review.

The case in point is a $2.6 million grant to CHA RMI, a 15-month-old nonprofit subsidiary of CHA Health Systems of Korea. Like 28 other applications, the Los Angeles-based RMI went through review and approval earlier this year. But the grant has now risen to higher visibility because of what one watchdog group called "troubling questions" about plagiarism allegations concerning Kwang-Yul Cha, president of CHA RMI's parent company, and alleged ethical breaches involving the medical director of RMI's allied fertility clinic.

How did the CHA RMI application come to be in the top tier of grants approved for funding, setting it up for no-questions-asked approval by CIRM's 29-member Oversight Committee? What can the public learn about the process that does not involve the closely protected scientific details of the grants or proprietary information? For example, can the public learn what the key vote was on the CHA RMI application during the initial review? Can the public learn if other votes were taken that would have affected CHA RMI's possible approval? Can the public determine whether the organization's reputation was discussed by grant reviewers, much less what was said?

Using CHA RMI as an example, here is a look at the grant review process, what the public is allowed to know and what is kept secret by the California stem cell agency.

In January during a closed-door session, the CIRM grant review committee (14 out-of-state scientists and seven patient advocate members of the CIRM's Oversight Committee, including its chair) placed the CHA RMI grant in the top tier of those to be funded. The names of all applicants, however, were secret at the time. On Feb. 18, the Los Angeles Times carried its story about the plagiarism allegations and other issues involving Cha, the top executive of the parent company of CHA RMI. On Feb. 23, the Los Angeles Times carried another story about the CHA fertility clinic. Neither story specifically mentioned CHA RMI. On March 15, CIRM's Oversight Committee, approved the CHA RMI grant with little discussion as part of a block of other top-ranked grants. Under CIRM rules, Oversight Committee members (with the exception those who served on the grant review panel) did not know the name of any of the recipient organizations before they voted. So it was impossible for most Oversight Committee members to connect the CHA RMI application with either of the Times' stories. After the vote, the names of the winners were released by CIRM. The names of the other applicants remain secret. Public linkage of the Times reports and the CHA RMI grant came only on March 17 on the Bodyhack blog on Wired.com and on March 21 in the California Stem Cell Report. Other media followed the March 21 report.

What the public knew about all the grants prior to its approval can be seen on the CIRM web site, which carried, in advance of the Oversight Committee meeting, a summary of each application and reviewers' assessment of its strengths and weaknesses – minus names of the applicant. That summary and assessment surpasses the information disclosed about grant applications by the National Institutes of Health, the federal agency for making most scientific research grants, and other grant-making organizations with the exception of Connecticut's stem cell research effort, according to CIRM.

What is not known publicly is also significant. Here are questions that remain unanswered.

-- Did California stem cell Chairman Robert Klein, who met Cha in October 2005 in Korea on trip financed by a Korean trade organization, take part in the discussion of the CHA RMI application during its review by the grant committee?

-- What was the vote by the grant review committee on the CHA RMI application, a vote that is required by the grant review committee's bylaws?

-- Were other votes taken that would affect the placement of CHA RMI grant in the top tier? Such as a vote on the cutoff score for placing applications in the top tier? The CHA RMI application received a scientific score of 77, nine points above cutoff line and 18 below the top score.

-- Did any grant reviewers raise questions about CHA RMI's reputation or that of its allied organizations?

CIRM would not disclose the vote on the CHA RMI application. The agency declined to disclose whether the CHA RMI grant was considered separately or together with other grants. CIRM declined to disclose whether there was a vote on the cutoff score for tier one grants. No transcripts, minutes or audio tapes exist from the meeting, although notes were taken by CIRM staff to prepare the public summaries of the grants.

Dale Carlson, chief communications officer for CIRM, said at one point said via email, "We think the public summaries of the discussion speak for themselves." He later added, "From the ranked list of Comprehensive Grant applications...anyone can see that it's clear the CHA application made it into Tier I on the strength of its scientific score."

Responding to a general question about the review process, Stuart Orkin, Harvard medical professor and chair of the grant review committee, said, "I think it is a very fair and transparent process for selection of the best and most promising grants for the CIRM."

Regarding the lack of transcript and minutes, Carlson said, "We keep very careful records on the (grant reviewers) who vote and have conflicts. They are retained and available for review by auditors."

CIRM declined to disclose whether Klein took part in the discussion of the CHA RMI application, but noted that he sits ex officio on the committee and does not have a vote.

Klein was in Korea in October 2005. Carlson said that he met with Cha at that time but offered no further details. In economic disclosure statements filed with the state, Klein, a multimillionaire who takes no salary for his post with CIRM, listed a gift from CHA Health Systems on Oct. 16, 2005, valued at $100. It was described as a "stone stamp/seal." Klein also received a decorative box valued at $175 from the Korean International Trade Association during the trip, which was paid for by the same association. The flight was valued at $4,170 and his one-night hotel stay at $509, according to Klein's filings. He reported that he spoke at a symposium and three research hospitals. Klein received no honorarium or other fee for his speeches, according to state filings. His trip was made to join in the announcement of an international stem cell consortium being organized by then stem-cell superstar Woo Suk Hwang, according to published reports. The consortium later collapsed when Hwang confessed to stem cell research fraud and was indicted on embezzlement and bioethics law violations.

Carlson said,

"Klein's probably met hundreds of scientists in California and elsewhere in the past couple of years, including many with applications considered by the ICOC. That's probably true for most, if not all, members of the
ICOC. They are, after all, a pretty high-profile group with a lot of public interaction. What's your point? Meeting someone does not constitute a conflict of interest."

We asked Carlson whether CIRM, prior to the working group review of grants, gathered any information on grant applicants and their institutions? His response:

"In the interest of effectively managing our scarce resources, the rigorous due diligence conducted on each applicant investigator and/or institution is undertaken after the ICOC votes to approve grants for funding. The administrative review is an intensive process, as I'm sure you can imagine. With 300 applications for SEED and Comp grants, for example, and an expectation that the ICOC would approve just 55, it wouldn't be prudent to examine all 300 to see if they met the requirements of the RFAs. Better to focus our limited time on those that actually have a chance of a grant award."

We also asked Carlson whether, during the grant review process, there was any discussion of CHA's reputation or that of its parent or allied organizations? Or of the reputations of the CHA scientists or management or scientists and other personnel associated with CHA's allied organizations? He replied,

"The public summary indicates that there was discussion of the capabilities of the principal investigator and his collaborators. The focus is on scientific merit. Exclusively, scientific merit.

"I think it's worth noting that none of the stories referenced by (watchdog groups and others) had surfaced at the time the application was submitted or reviewed."

As for the agency's position on withholding information on votes and other non-scientific information involved in the grant reviews, Prop. 71 states: "All records of the working groups SUBMITTED (our capitalization) as part of the working groups’ recommendations to the ICOC for approval shall be subject to the Public Records Act." That phrasing apparently serves as the legal foundation for the institute's position that it may withhold any information that is not submitted as part of the grant review's formal recommendations. The language is part of state law as opposed to the State Constitution.

During the same election in which Prop. 71 was passed, California voters also adopted Prop. 59, amending the state Constitution to guarantee the public's right to government records. The constitutional amendment states: "A statute, court rule, or other authority, including those in effect on the effective date of this subdivision, shall be broadly construed if it furthers the people's right of access, and narrowly construed if it limits the right of access." The measure was approved by 89 percent of voters, far exceeding the 59 percent for Prop. 71. That is significant because courts have used approval rates in some cases to determine precedence in case of conflicting measures.

Does the voter-approved Constitutional provision mean that CIRM must open its processes? That question is not likely to be completely answered short of litigation that would probably proceed to the State Supreme Court. Other possibilities include a legislative change in Prop. 71, which requires an overwhelming 70 percent vote in both houses, or an attorney general opinion. Those can be requested by legislators or state agencies and carry considerable legal weight. CIRM can also change its policies on its own volition.

Kuehl On the Big Lie, Aging Porsches and Politics

California State Senator Sheila Kuehl, author of the latest legislation to intervene in California stem cell matters, talks about her politics and personal life in a lengthy interview in California Conversations magazine in Sacramento.

Writer Aaron Read opens the article by commenting that Kuehl, a Santa Monica Democrat, has "a Cagneyesque, spit-in-the-eyes willingness to engage in consequential discussion on how we are allowed to live our lives–a real world concept that public policy im­pacts Californians in elemental ways."

The interview is remarkably revealing. Few politicians, businessmen or women or stem cell scientists would be so open. Here are sample quotes from Kuehl, who once played Zelda on the Dobie Gillis television series, concerning the more pedestrian matters of politics and policy:

Why did she seek a legislative seat:

"I was working with a small group of people framing a domestic violence law in California. And, because I was a law professor, I was asked to come up and testify at the Capitol, where I had only been once as a teenage tourist. And I would sit and wait while committees rambled on and watch everybody and after a while I thought, 'I could do this.'"

Her major legislative accomplishments?

"There are three I’m most proud of. One is the protection of students in school against harassment or discrimination or violence on the basis of real or perceived sexual orientation. It protects all the kids, even if they’re not gay and others just think they are. The second is nurse-to-patient staffing ratios, which I’m very proud of. And the third is paid family leave."

On political lies:

"I think the right-wing philosophy of starving the beast is so detrimental to 90% of the people. They’ve got the people fooled that somehow if rich people do okay, then every­body does okay. That’s the big lie."

She tells readers that she still has her 1964 red Porsche convertible, a model we have admired over the years. She attended and worked at UCLA for a number of years before getting a law degree at Harvard. But she does not mention UCLA basketball (tonight the Bruins play Florida in the final four). She discusses her love life, but she does not mention stem cells or the California Institute of Regenerative Medicine. Perhaps because the interview was conducted some time ago. Magazines usually have lengthy prepublication schedules. Or perhaps because the topic was not as interesting as other matters. (Hard to believe, I know.)

Los Angeles Times blogger Robert Salladay reports that the magazine is produced by some folks at Aaron Read & Associates, a Sacramento lobbying firm that represents the California Association of Professional Scientists, the California Medical Association, AT&T, PG&E, among many others. Read, head of the firm, conducted the interview with Kuehl.

CIRM Lab Grant Programs Coming Up in April

The agenda for the April 10 meeting of the Oversight Committee of the California stem cell agency is now available on the institute's web site, well ahead of the actual date of the meeting.

It is still quite shy of background material but that is likely to fill in as the date of the meeting at the Sacramento Convention Center approaches.

Topics to be considered include SB771 (see item below), an update on the search for a person to replace CIRM President Zach Hall, who is leaving in three months, and discussion of procedures for considering the upcoming round of laboratory grants. A goodly number of the members of the Oversight Committee represent institutions that are likely to be applying for the grants.

Also on the agenda is a "presentation of survey description and concept plan for large facilities," meaning grants for buildings and laboratories. CIRM has about $300 million allotted for various building projects.

SB771: CHI Takes 'Not-So-Subtle Jab'

California's biomedical industry has already begun its lobbying campaign against legislation to guarantee the state shares in the potential bounty from products developed from its $3 billion stem cell research effort.

Writing on Law.com, reporter Cheryl Miller said members of the California Healthcare Institute were pounding the hallways in the Capitol a few days ago armed with a "not-so-subtle jab" at SB771, which does not face its first legislative test until April 11.

Miller said that their talking points included the following:

"Recent legislative proposals that focus on revenue-sharing thresholds and pricing and access requirements place direct financial return ahead of the far greater benefit to all Californians (and people everywhere) from the development of innovative technologies. Such provisions are sure to discourage the private investment needed to bring state-funded science to market."

Miller also quoted the author of the bill, Sen. Sheila Kuehl, D-Santa Monica, as saying,

"I expect that there will be people who are not going to praise this bill. But they're going to have to find a way to critique it without saying we don't want the state to get any money."

CHI members have a number of legislative fish to fry so it is not clear how widely their stem cell message was distributed.

Clarification

The "Eggs" item below makes a reference to CIRM regulations concerning reimbursement of expenses for egg donors involving "lost wages" vs. direct expenses. Some persons contend that lost wages should not be reimbursed, arguing that creates a disparity between well-paid and less well-paid women. In California, CIRM regulations include reimbursement for lost wages. So does the proposed policy for ESC research that is not connected to CIRM funding, which is regulated by another state law.

Eggs and Absurd Inconsistencies

Writing in the New England Journal of Medicine, a Harvard business professor says the "politics of egg donation" have obscured the real issues concerning the market for human oocytes.

Debora Spar discusses the scene nationally and internationally, using the case of woman she calls "Anna Behrens," who Spar says is not a real person. Spar wrote in the March 29 edition of the NEJM:

"The United States, by contrast, maintains the absurd inconsistency illustrated by the case of Anna Behrens: $20,000 for an egg used for reproduction; nothing for the same egg used for stem-cell research. Such a policy would make sense only if we deemed assisted reproduction socially more valuable than research. But this argument is not being made and perhaps could not logically stand, given that the alternative to assisted reproduction would often be adoption. Instead, opponents of egg selling tend to refer to the fears of commodification and the risks to donors — all of which, if valid, apply equally to the reproductive and research uses of eggs.

"What we need, therefore, is a fresh debate on egg donation and a new set of policies. We need to consider the health risks and ways of identifying and mitigating them. We need to ensure that all potential donors are fully informed of these risks and fully protected against them. We need to make clear that the benefits of egg donation, for reproductive or research purposes, are complicated, and that few of these benefits will ever flow directly to the donor. At the moment, though, the politics of egg donation have blinded us to these real issues. We have not thought deeply about what makes sense for science, for women, and for society. Instead, we are only fighting about the price."

Spar, author of "The Baby Business: How Markets are Changing the Future of Birth," does not discuss in her NEJM article the possible growth of a black market for human eggs, which seems certain to arise if eggs have real monetary value and there is a shortage.

As far as California is concerned, Spar reports that researchers using state funds are prohibited from compensating egg donors for anything beyond direct expenses.

The actual language of the CIRM regulations is slightly different. It says that "permissible expenses" are "necessary and reasonable costs directly incurred as a result of donation or participation in research activities. Permissible expenses may include but are not limited to costs associated with travel, housing, child care, medical care, health insurance and actual lost wages."

NEJM has also posted an interview with Spar and Emily Galpern of the Center for Genetics and Society in Oakland on the subject of egg donations.

Comments

John M. Simpson has posted a response on the "Sacbee and Cha" item. Den has posted a commento on "Fairness and Cha."

Fresh Comments

We have two anonymous comments today. One is on the question of the costs included in CIRM grants(see the "CIRM Grant Oversight" item). The other is a comment on the "FTCR and Sacbee" item.

Governmental Camels and Stem Cell Swag

Is it good business for a drug company to charge – let's say $47,000 for a 10-month cancer treatment – or will such pricing hurt the industry long term?

But forget the business issue. Is it good public policy to allow a company to charge those fees – labelled egregious by some? Especially if the treatment was partially financed with public funds?

Questions such as those stand close to the center of the debate over the intellectual property that will be produced by $3 billion in research funded by California's stem cell agency. Intellectual property policy is the vehicle because that's where CIRM sets its requirements for royalties and revenue-sharing connected to its research. That is also where it sets its requirements for affordable access to stem cell cures that it helps to finance.

The $47,000 treatment cost is not hypothetical. It involves Genentech and its drug, Avastin, which was developed with the help of some clinical trials that were subsidized by the federal government.

On March 15, the Wall Street Journal examined the case of Avastin in a front page story. Reporter Geeta Anand began her piece like this:

"Two years ago, Steven Harr urged Genentech Inc. to lower the price of a key drug that was helping buoy its stock price. He was an unlikely messenger because of his job: a Wall Street research analyst whose investing clients crave profits.

"In a conference room with 30 senior managers from the biotech company, Dr. Harr said he feared patients wouldn't be able to afford the drug Avastin, which costs about $47,000 for the average 10-month course of treatment for colorectal cancer. He warned that Congress 'will get involved when its constituents can't get drugs.' Genentech later capped Avastin's price, acknowledging the influence of Dr. Harr, among many others."

Harr also pointed out an interesting bit of blowback from oncologists detected during a survey he conducted. According to the WSJ story,

"He says most physicians surveyed weren't prescribing the drug in breast and lung cancer for fear of not being reimbursed. Avastin and Erbitux are given to patients intravenously in doctors' offices. Doctors buy the drug ahead of time, infuse it into patients and then wait to be reimbursed. Any refusal by insurers to reimburse would leave doctors thousands of dollars in debt."

Harr, an analyst with Morgan Stanley, sees high prices as bad for business.

"He says soaring cancer-drug prices, generating fat profit margins, aren't sustainable."

That is a message that is sometimes hard for business executives to accept. They rail at governmental fiddling with their enterprises. They froth at bumbling regulators. But at the same time, many seek government assistance for research, favorable regulation, tax benefits or laws restricting their competitors. Contrary to popular belief, the vast majority of legislative activity nationally and in California does not involve such things as gay marriage or sex offenders or drivers licenses. It involves "filthy lucre" and crass commerce. Most of it is instigated by those advocates of free markets – the top executives of the finest companies in America. It is why business spends tens of millions of dollars and more annually lobbying lawmakers.

Folks such as those at the California Healthcare Institute, which represents the state biomedical industry, want the grants from CIRM. But they don't want to pay the piper that provides the basis for the plenititude. Or they don't want to pay as much as some watchdog groups and legislators would like. But like any other investor, the state wants its slice and does not want to be treated a whole lot differently than, say, the venture capitalists at Kleiner Perkins Caufield & Byers, if they had laid out a $3 billion investment. When you invite governmental camels into your tent, it is sometimes hard to get them to leave.

Biotech, however, has valid points concerning writing what are basically the terms of a business deal into state law and regulation. Both are difficult to change and can impair development of cures if they are riddled with restrictive minutia. Likewise, biotech firms must see a strong likelihood of making money. If they don't, the cures will not be developed unless the government is ready to pay for the whole process, which is not likely to happen in our lifetime.

Obviously, the state of California is not a venture capital firm. Perhaps not so obviously, the stem cell industry is not the most shining example of private markets at work. The finest risk-takers in America(venture capitalists) run for the back exits, for the most part, when they see a stem cell executive come through the front door. The result is that with embryonic stem cell research in California, we have an amalgam of business, government and science. That means that compromises must be made by all the players. If one of the partners gets too greedy, the whole endeavor – the California stem cell experiment -- can fail.

Finally we should note that a group actively engaged with CIRM on IP issues was mentioned in the WSJ article but not by name. That organization is the Foundation for Taxpayer and Consumer Rights of Santa Monica, Ca. Here is what the WSJ wrote about FTCR.

"In the spring of last year, a taxpayer group in California began publicly condemning Genentech for charging too much for Avastin, noting that the federal government's National Institutes of Health had subsidized some clinical trials of the drug. Not long after, Genentech said it was considering capping the price of Avastin."

FTCR on Sacbee and Cha

John M. Simpson, stem cell project director of the Foundation for Taxpayer and Consumers Rights, sent along the following comment on today's Sacramento Bee editorial on CHA RMI.

"What the Foundation for Taxpayer and Consumer Rights has said is that there are enough red flags associated with CHA's leadership and corporate affiliations as to warrant a thorough vetting of an application from its researcher.

"Precisely because we raised our concerns, CIRM's staff is now on the record in public in response as promising a thorough review of all applications -- including this one -- before any checks are issued.

"We did our job. The editorial board of the Sacramento Bee did its job. Now it's up to CIRM to do its job."

See the item below on the Bee editorial.

Sacramento Bee: Fairness and Cha

The Sacramento Bee today said today that the California stem cell agency should "resist calls to rescind or freeze" a $2.6 million grant to CHA RMI, whose founding president is embroiled in an international plagiarism scandal.

The medical director of an allied organization, CHA Fertility, is also under investigation by the state Medical Board in connection with an allegation that he seduced her and lied to her about the number of eggs he extracted from her.

The Bee said in an editorial:

"Both allegations are serious. But the CHA scientist who applied for and received the $2.6 million stem cell grant, Dr. Jang-Won Lee, hasn't been implicated in either incident. Unless someone can demonstrate otherwise, the California Institute for Regenerative Medicine should resist calls to rescind or freeze the $2.6 million grant.

"The issue is a simple one of fairness. Over the years, medical scandals have rocked several university medical centers, including one at UC Irvine that was forced to close its transplant center. These revelations were shocking, but they don't mean that all scientists affiliated with UC Irvine should be disqualified from government research funds. Nor, by itself, should Lee's affiliation with CHA prevent him from receiving a state grant, which he hopes to use in the development of stem cells that can be used to study Amyotrophic Lateral Sclerosis, also known as Lou Gehrig's disease."

For more details on this issue, see: "CHA Example," "Grant Recipient." You can also use the "search blog" function at the upper left hand corner of this page to find all the items on CHA. Use the search term "Cha."

Stem Cell Snippets: Financial Challenges, Kuehl and Presidential Search

CIRM's Governance -- The stem cell institute's governance committee will meet April 5 in San Francisco to consider "CIRM merit and professional development programs," "key financial challenges and opportunities" and travel rules for the Oversight Committee. Public teleconferencing locations are available: Two different sites in Los Angeles, three different locations in San Francisco and separates at Stanford, Sacramento, La Jolla and UC Irvine.

Kuehl and the Mayor – State Sen. Sheila Kuehl, author of legislation to guarantee the state a return on its stem cell investment, is a member of Los Angeles Mayor Antonio Villaraigosa's inner circle, according to the Los Angeles Times. The story by Duke Helfand says the mayor has offered her a job more than once. She says she wants to be on the ride when he goes for governor.

CIRM Presidential Search – A meeting scheduled for today of the CIRM presidential search subcommittee has been cancelled. Do not expect fresh information until the April 10 Oversight Committee meeting in Sacramento.