Wednesday, March 06, 2013

Good News, Bad News and the California Stem Cell Agency

A few weeks ago an anonymous reader admonished the California Stem Cell Report to be more positive about the $3 billion agency and its efforts to develop the cures that its backers promised California voters more than eight years ago.

The comment was thoughtful and pointed out that “almost all the time” the agency “has done the right thing.” The reader made the remarks in the context of continuing coverage of the Institute of Medicine (IOM) report that found there were major flaws in CIRM's operations. (The reader's comment can be found here at the end of the post.)

Given the reader's remarks, it seems a good time to review the operating principles and biases of the California Stem Cell Report.

Bias No. 1: Openness and transparency come first in any government operation. They are fundamental to the integrity of all government enterprises. Bias No. 2: The California stem cell agency is generally doing a good job at funding stem cell research. We generally favor all manner of stem cell research. 

Regarding our operating principles, the goal is report news and information about the agency along with analysis and explanation. One key to understanding what this blog does is to understand what news is. News by definition is almost always “bad” as opposed to “good.” News deals with the exceptional. It is not news that millions of drivers commute to work safely each day on California freeways. It is news when one is killed in a traffic accident.

The California Stem Cell Report also tries to fill information voids. We understand that the stem cell agency believes certain information is not in their best interests to disclose. Such is always the case with both private and public organizations. However, it is generally in the public interest to see more information rather less, particularly information that an organization would rather not see become public.

Analysis and explanation of what the stem cell agency does is rare in the California media and even less seen nationally or internationally. This blog focuses primarily on the public policy aspects of the agency – not the science. The agency is an unprecedented experiment that brings together big science, big government, big academia, big business, religion, morality, ethics, life and death in single enterprise – one that operates outside the normal constraints of state agencies. No governor can cut CIRM's budget. Nor can the legislature. Even tiny changes in Proposition 71, which created CIRM, require either another vote of the people or the super, super-majority vote of both houses of the legislature and the signature of the governor. All of this is the result of the initiative process – a well-intended tool that has been abused and that has also created enormous problems for the state of California that go well beyond the stem cell agency.

Then there is the funding of the agency, which basically lives off the state's credit card. All the money that goes for grants is borrowed and roughly doubles the actual expense to taxpayers.

Since January 2005, we have posted 3,452 items on the stem cell agency because we believe the California Institute for Regenerative Medicine (CIRM) is an important enterprise – one that deserves more attention that it receives in the mainstream media. Our readership includes persons at the NIH, the National Academy of Sciences, most of the major stem cell research centers in California, academic institutions in the Great Britain, Canada, Norway, Germany, Russia, China, Australia, Singapore and Korea – not to mention the agency itself and scientific journals.

We do not attempt to replicate what the California stem cell agency itself does, which is to post online a prodigious amount of positive stories and good news about the agency. To do so would serve no useful public purpose and would simply be repetitive. That said, there is room to acknowledge the work that the agency does, particularly the staff, but also the board. We try to point that out from time to time.

The California Stem Cell Report also welcomes and encourages comments, anonymous and otherwise. Directors and executives of the agency have a standing invitation to comment at length and have their remarks published verbatim, something almost never seen in the mainstream media.

Finally, given the questions raised by the Institute of Medicine about disclosure of potential conflicts of interests, the author of this blog and his immediate family have no financial interests in any biotech or stem cell companies, other than those that may be held by large mutual funds. We have no relatives working in the field. We do have the potential personal conflicts, cited generally by the IOM in connection with some CIRM board members, involving relatives who have afflictions that could be possibly be treated with stem cell therapies in the distant future.   

Thursday, February 28, 2013

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

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

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

The Times editorial said,
“After years of resisting all criticisms of its operations, the California Institute for Regenerative Medicine is finally listening — a little.“
The editorial continued,
“Yet the agency isn't exactly embracing an ethical overhaul. It's doing just enough to address the criticisms without triggering any oversight from the Legislature. The modifications are more a bandage than a cure. Like a bandage, they will probably do, but only for a limited time.”
The board plans to have 13 board members with ties to recipient institutions voluntarily refrain from voting on any grants that come before the board, not just the ones to their institutions.

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

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

Wednesday, February 27, 2013

Reader Says Open Grant Reviews to Public

An anonymous reader this afternoon filed a comment on the “Prieto on Disclosure" item. Here is an excerpt from the comment from the reader, who has obviously been following the stem cell agency for some years,
“Confidential peer review is just an excuse for secrecy. Any CIRM observer has seen that scientists are more than willing to discuss and argue about their grants before the ICOC (stem cell board) if they think that will get them funded.”
You can read the entire comment by clicking on the word “comment” at the end of the Prieto item.   

CIRM Director Prieto on Disclosure of Reviewer Financial Interests

A member of the governing board of the $3 billion California stem cell agency is weighing in on an item on the California Stem Cell Report that called for public disclosure of the financial interests of the scientific reviewers, who make 98 percent of the decisions on awards by the agency.

Francisco Prieto, a Sacramento physician and a patient advocate member of the board, said in an email:
“ It seems to me there's a bit of 'damned if we do and damned if we don't' here. If the ICOC (the agency governing board) decides to listen to some of the members of the public who come to our meetings and overrule a recommendation of the Grants Working Group(GWG), we're slammed for letting emotion trump science, or bowing to special interests. If we just accept the rankings of the GWG and approve all their recommendations, we're criticized for not being truly independent.  I think we don't do it often (for good reason) but should and do retain the right to look at other factors besides those our scientific reviewers do, and make our own decisions about funding. We are ultimately responsible, not the scientific reviewers. 
“As for the issue of their disclosure of personal conflicts of interest, from what I've read of the NIH processes, ours are no less strict. The NIH requires that reviewers disclose any conflicts to their institutions which I believe must disclose them to the NIH, but I have not seen anything requiring them to disclose all their personal financial & other interests publicly, as we (ICOC members) have to.  When we were assembling our group of reviewers initially, the fear was that many of the best scientists would turn us down if we required them to make the kind of personal disclosures we have to. I don't know how many we might actually lose if that were the case, but as you know we do require them to disclose to CIRM, and they have to leave the room when any application for which they have a conflict is discussed.”
Our take: Prieto is right about the board being perched on the horns of a dilemma, which has a lot to do with Proposition 71, which created the agency, and American scientific traditions, which place an extraordinary value on the “integrity” of the review process. In this case, integrity refers to adherence to reviewers' scientific judgments.

Proposition 71 placed the legal authority for grant approvals in the hands of the CIRM board, which has overridden decisions by reviewers in only 2 percent of the cases since 2005. However, that was enough, with at least one high profile case coupled with public appeals, to cause the Institute of Medicine to raise concerns about the integrity of the CIRM grant review process. Traditionally, peer reviewers are deemed to be the most capable of making the scientific decisions about grant applications, rather than a board appointed by University of California chancellors and elected state officials.

Yet, if the board concedes the decisions to the grant reviewers, state law is likely to require public disclosure of their financial interests, a move that the board has opposed for years. Former CIRM Chairman Robert Klein repeatedly advised the board during its public grant approval processes that reviewers' actions were only ”recommendations” and that the board was actually making the decisions. However, it has long been apparent that the reviewers were making the de facto decisions. A CIRM memo in January confirmed that, producing the 98 percent figure.

The issues involving disclosure by reviewers, integrity of peer reviews, the language of Proposition 71 and state law are difficult and may, in some cases, be at odds.

However, it makes little difference what the NIH is doing. It is a much different organization and has had a history of conflict of interest problems that it has been trying to work through.

The trend in the academic and scientific research community has been towards more public disclosure rather than less because of many well-documented instances of problems. What is at stake is the public's faith in scientific research and the integrity of public institutions.

Our thanks to Prieto for his comments on this important subject.  

California Stem Cell Agency: Comparing the Critiques

State Controller John Chiang has posted a useful, side-by-side comparison of critiques of the $3 billion California stem cell agency, including the Institute of Medicine(IOM) study, along with the responses from the agency.

Chiang, the state's top fiscal officer, has additionally posted the initial remarks Jan. 23 by CIRM Chairman Jonathan Thomas before the stem cell agency governing board on his plan to deal with the sweeping recommendations of the IOM.

Regardless of one's opinion of the board's response to the IOM, Thomas adroitly handled the discussion and vote, not a small accomplishment given the size of the board (29 members) and the legal restrictions involving public meetings. Under state law, Thomas could not lobby significant numbers of the board in advance of the meeting. He was restricted to engineering the approval in a public session, which can easily take on a life of its own given the unwieldy size of the board and the necessity for public comment.

As for the documents posted by Chiang, he is chairman of the Citizens Financial Accountability and Oversight Committee, the only state body specifically charged with oversight of the agency and its board. The web site for the committee is the only location on the Internet where Thomas' prepared remarks and the comparison can be found.

Chiang's comparison chart includes not only the IOM study, but last year's performance audit and the Little Hoover Commission study in 2009. Missing, however, is the state auditor's report in 2007 and its recommendation that the agency seek an attorney general's opinion on whether scientific grant reviewers must file a public financial disclosure form.

Here are links to the various documents: Thomas' prepared comments, Power Point chart used by Thomas, comparison chart of various studies and the transcript of the Jan. 23 meeting during which the governing board approved its response.

Sunday, February 24, 2013

California Stem Cell Agency Bonds On Sale in March

Early next month, the state of California will sell $2.7 billion in bonds, a tiny fraction of which will go towards the California stem cell agency.

It is all part of an arrangement that currently involves short-term borrowing as well to keep the cash pipeline at CIRM properly filled.

To refresh some of you, the agency subsists off money that the state borrows (bonds) instead of going to the legislature annually for financial support. While that avoids competing against school children, the poor, the University of California, state colleges, parks, highways and other interests seeking state funding, it also means that the cost of a $20 million grant is something closer to $40 million because of the interest expense.

The California Stem Cell Report last week asked the state treasurer's office about the bond sale March 12-13 and what it means for the stem cell agency. Here is what Tom Dresslar, spokesman for the treasurer, replied in an email.
“CIRM’s funding needs now are met via the issuance of commercial paper (CP).  They’re authorized a certain amount of CP periodically.  Then we work with them on a regular basis to issue the commercial paper on an as-needed basis.  Last fall, they were authorized $160 million of CP.  We will issue the first $27 million under that authorization (this) week.  This spring, CIRM is scheduled to receive another $100 million authorization. The Department of Finance , consulting with CIRM officials, determined the $100 million would be needed to meet CIRM’s funding requirements through the end of 2013.

“Now, here’s where it gets a little complicated.  The state pays down the CP with bond proceeds.  The March ....bond sale includes $60 million of stem cell bonds.  Those proceeds won’t provide new money for CIRM, but will pay down the CP proceeds CIRM already has used.”
Proposition 71, which created the stem cell agency in 2004, authorized bond sales for stem cell research for only 10 years. CIRM's financial timekeepers say the clock started running when the first bonds were sold. The upshot is that the agency will run out of money for new grants in less than four years.


Saturday, February 23, 2013

City of Hope Exec Will Leave California Stem Cell Agency Board

Michael Friedman
City of Hope photo
The governing board of the $3 billion California stem cell agency will lose another one of its veteran members this year – Michael Friedman, the CEO of the City of Hope in the Los Angeles area.

He will join Claire Pomeroy in leaving the board. Pomeroy is resigning as vice chancellor of Human Health Services at UC Davis this spring to become president of the Lasker Foundation in New York.. Friedman is retiring at the end of this year.

Both have been on the CIRM board since its first meeting in December 2004. Pomeroy was appointed by the UC Davis chancellor. Friedman was appointed by the state treasurer.

No names have surfaced concerning likely successors. However, the UC Davis chancellor is required by law to appoint an executive officer from the campus. The new dean at the UCD medical school would seem to be the most likely candidate.

To fill Friedman's seat, Treasurer Bill Lockyer must appoint an executive officer from a California research institute. The tradition on the board has been for particular institutes to hold particular seats on the board. The major exception is the Salk Institute, which lost a seat on the board a few years back.

Both UC Davis and the City of Hope have benefited enormously from CIRM largess. UC Davis has received $131 million and the City of Hope $51 million. Although Friedman and Pomeroy have not been allowed to vote on grants to their institutions, their presence and the presence on the board of other executives from beneficiary institutions has triggered calls for sweeping changes at the agency.

A blue-ribbon report by the Institute of Medicine said “far too many” board members are linked to institutions that receive money from CIRM. The institute recommended that a new majority of independent members be created on the board.

According to compilations by the California Stem Cell Report, about 90 percent of the $1.8 billion the board has awarded has gone to institutions with ties to past and present board members. Fifteen of the 29 members of the board, which has no independent members along the lines suggested by the IOM, are linked to recipient institutions.

The agency has $700 million remaining before money for new awards runs out in less than four years.  

Friday, February 22, 2013

Monitoring the Cash and IP at the California Stem Cell Agency

The $3 billion California stem cell agency appears unlikely to make any changes in who gets the cash from any commercial products that its research grants help finance despite recommendations from the Institute of Medicine(IOM).

The subject will come up next Wednesday during a meeting of the intellectual property subcommittee of the governing board of the stem cell agency. Intellectual property (IP) simply determines ownership rights and the share of any revenue from therapies that result from research.

CIRM staff has prepared a briefing paper with recommendations for next week's meeting, which has teleconference locations in La Jolla, Los Angeles, two in Irvine along with the main site in San Francisco.

The document summarized two key IOM recommendations in this fashion:
“Because CIRM is a new institution without a track record to reassure stakeholders, and because its finite funding timeline means as yet unknown agencies will be enforcing these policies years down the road, CIRM should “propose regulations that specify who will have the power and authority to assert and enforce in the future rights retained by the state” in CIRM IP, specifically referring to march-in rights, access plans and revenue sharing....
“Second, as other sources of funding become more prevalent, the agency should “reconsider whether its goal of developing cures would be better served by harmonizing CIRM’s IP policies wherever possible with the more familiar policies of the BayhDole Act.
Here are the CIRM staff recommendations.
“CIRM staff has engaged in preliminary discussions several years ago with other agencies regarding future enforcement of CIRM’s regulations and agreements. Staff proposes to restart those discussions and return to the Subcommittee (or the Board) with a formal proposal to address future enforcement of CIRM’s IP regulations.”

“In light of the IOM’s own recognition that it may be premature to assess whether CIRM’s regulations will act as a deterrence to future investment, the fact that a number of CIRM’s regulations have been codified in statutes and CIRM’s positive progress in its industry engagement efforts to date, although quite early, CIRM staff proposes to continue to monitor this area and not to pursue any changes at this time.”
The director's subcommittee is unlikely to diverge significantly from the staff proposal, which was dated Feb. 14 but not posted on the CIRM website until Feb. 20.   

Wednesday, February 20, 2013


UC Davis stem cell scientist Paul Knoepfler is a man of many parts. Not only does he thrash around in petri dishes, but he also dabbles in graphics. In this case, a cartoon about grant reviews and conflicts of interest. Above is the the first frame of the cartoon. You can see the whole story on his blog at this location.

Tuesday, February 19, 2013

Half-full, Half-empty Editorial on California Stem Cell Agency

The California stem cell agency's editorial road show paid off a bit again this week with a mildly approving editorial in the Oakland Tribune.

The Feb.18 piece said that the presence of Jonathan Thomas, a Los Angeles bond financier, as chairman of the $3 billion agency has improved things, compared to the reign of Bob Klein, who “built a protective shield” around the agency's governing board and prevented action to deal with obvious conflict-of-interest problems.

The newspaper also said that “to some extent” the agency has brought “cutting edge” scientists to the state and helped boost the stem cell field.

That was the half-full side of the editorial. The half-empty side included the headline.
“California must get its stem cell house in order”
The editorial continued:
“...{T)he agency must prove that it understands how to properly handle the public's money. …. If the stem cell agency can establish a record as a good steward of public dollars to finance brilliant science, it can continue to play a useful role in stimulating and guiding research to bring the potential cures from stem cell research to fruition.
“If it cannot do that, it will be just another expensive Tyrannosaurus rex.”
Thomas and company are knocking on editorial doors around the state in hopes of building support for the board's modest – some might say inadequate – response to recommendations for sweeping changes at the agency.  

Sunday, February 17, 2013

Time For Public Disclosure of Financial Interests of Stem Cell Agency Reviewers

Should the scientists who evaluate and score the applications for $3 billion in taxpayer funds be required to publicly disclose their financial interests?

No, says the California stem cell agency, despite concerns by the state auditor and the state's Fair Political Practices Commission (FPPC) that date back at least six years. The agency says that its governing board makes the decisions on the applications – not the grant reviewers – and that the members of the board fully disclose their economic interests.

However, last month the agency produced a document that sheds new light on the issue. The document confirms that the board rubber-stamps virtually all the reviewers' decisions, going along with their actions 98 percent of the time. The board exercised independent judgment on 28 out of 1,355 applications.

Why is this important? Here is what the state auditor said in 2007,
“(T)he FPPC believes that, under state regulations, working group members (including grant reviewers) may act as decision makers if they make substantive recommendations that are, over an extended period, regularly approved without significant amendment or modification by the committee. Thus, as decision makers, working group members would need to be subject to the conflict-of-interest code. This would mean that working groups would be subject not only to the (public) financial disclosure requirements of the Political Reform Act but also to the prohibition against a member participating in a government decision in which that member has a disqualifying financial interest and may be subject to the penalties that may be imposed on individuals who violate that act.”
The auditor recommended that the stem cell agency seek an attorney general's opinion on the matter, a recommendation the agency agency summarily dismissed seven months later..

Then interim CIRM President Richard Murphy, a former member of the agency's board and former president of the Salk Institute, replied to the auditor:
"We have given careful consideration to your recommendation and have decided it is not appropriate to implement at this time. In almost three years of operation and approval of four rounds of grants, the recommendations of the CIRM working groups have never been routinely and/or regularly adopted by the ICOC. Until the time that such a pattern is detected, the question you suggest we raise with the attorney general is entirely hypothetical, and is therefore not appropriate for submission. We will, however, continue to monitor approvals for such a pattern and will reconsider our decision if one emerges."
In the four rounds mentioned in Murphy's response, 100 percent of reviewer decisions were rubber-stamped by the board. In the other two rounds, the percentage was 95 and 96 percent.

Currently, scientific grant reviewers at the stem cell agency, all of whom are from out-of-state, disclose financial and professional conflicts of interest in private to selected CIRM officials. (See policy here.) From time to time, grant reviewers are excused from evaluating specific applications.

The CIRM governing board has resisted requiring public disclosure of the interests of reviewers. The subject has come up several times, but board members have been concerned about losing reviewers who would not be pleased about disclosing their financial interests.  Nonetheless, disclosure of interests among researchers is becoming routine in scientific research articles. Many universities, including Stanford, also require public disclosure of financial interests of their researchers. Stanford says,
“No matter what the circumstances -- if an independent observer might reasonably question whether the individual's professional actions or decisions are determined by considerations of personal financial gain, the relationship should be disclosed to the public during presentations, in publications, teaching or other public venues.”
The latest version of CIRM's conflict of interest rules are under review by the FPPC. They do not include any changes in public disclosure for grant reviewers. In view of the new information that confirms that reviewers are making 98 percent of the decisions on who gets the taxpayers' dollars, it would seem that it is long past due for public disclosure of both financial and professional interests of reviewers. Indeed, given the nature of scientific research and the tiny size of the stem cell community, disclosure of professional interests may be more important than financial disclosures.

"The public trust in what we do is just essential, and we cannot afford to take any chances with the integrity of the research process."
Here is the CIRM document concerning reviewers' decisions and governing board action. The table has not been posted on the CIRM website, but it was prepared for last month's meeting dealing with the Institute of Medicine's recommendations for sweeping changes at the agency, especially related to conflicts of interest.

Wednesday, February 13, 2013

San Jose Newspaper Lauds CIRM Chairman Thomas

The California stem cell agency got some good news this week. The San Jose Mercury News ran an editorial yesterday that was headlined,
“State stem cell agency is taking Institutes of Medicine advice”
The 306-word editorial said CIRM Chairman Jonathan Thomas is a refreshing change from
Robert Klein, the first chairman of the $3 billion enterprise. The brief editorial said
Thomas recognizes that the eight-year-old agency "has to mature." It said Thomas was
trying to improve transparency and accountability.

The last paragraph declared,
“If the stem cell agency can establish a record as a good steward of public dollars to finance brilliant science, it can continue to play a useful role in stimulating and guiding research to bring the potential cures from stem cell research to fruition.”







Tuesday, February 12, 2013

Reader Wants More Positive Slant From California Stem Cell Report

An anonymous reader has posted a thoughtful comment admonishing this writer to be more positive about the $3 billion California stem cell agency.

We recommend the comment to the readers of this blog. The remarks can be found by clicking on the word comment at the end of the “no improper influence” item. We will have more to say on the subject in the next few days.

Monday, February 11, 2013

No Improper Influence: CIRM Defends 'No Actual Conflicts' Claim

Earlier this month the California Stem Cell Report  published an item that said:
“In the wake of recent considerable criticism concerning conflicts of interest at the $3 billion California stem cell agency, its leaders have taken to saying 'no actual conflicts' have been found at the agency.
“That assertion is simply not true.”
We asked the stem cell agency if it would like to respond and said that its response would be carried verbatim. The agency's comments are below. Our take on the response follows the CIRM comments, which were authored by Kevin McCormack, the agency's senior director for public communications and patient advocate outreach.

In David Jensen’s recent blog about the stem cell agency he claims to “debunk” claims that there have been no actual conflicts in CIRM’s funding decisions saying “the agency has a long history of problems involving conflicts of interest, 'actual' and otherwise.” In fact, in the cases cited by Mr. Jensen, show 'otherwise' is the appropriate word here because as we’ll show CIRM’s conflict procedures worked and the funding decisions were not affected by any improper influence.
Let’s take it case by case, looking at each instance of a “conflict” cited by Mr. Jensen.
John Reed
In 2007, John Reed, a member of the stem cell agency’s Governing Board, contacted staff in his capacity as the president of the Burnham Institute after the Board approved a SEED grant award to a Burnham investigator. Dr. Reed did not participate in the Board’s decision to approve the award and played no role in that decision. All he did was send a letter to CIRM staff after the Board meeting to provide factual information in response to technical questions raised by CIRM staff concerning the investigator’s eligibility for an award. Those questions ultimately led staff to reject the grant. Because the Board had already made the decision to award the grant, it did not occur to Dr. Reed that the conflict rules would prevent him from contacting staff to provide relevant information. And why would it? The decision was made so there was nothing to influence. After CIRM staff received Dr. Reed’s letter, they informed Dr. Reed that he must refrain from participating in any way in CIRM's consideration of the Burnham grant. In addition, CIRM staff did not consider the letter in conducting their administrative review of the Burnham grant and their determination that the investigator was not eligible did not change. The FPPC determined that, although Dr. Reed’s conduct raised ethical concerns, he had not violated conflict of interest laws because he attempted to influence a decision that had already been made. Furthermore, Dr. Reed’s conduct did not affect a CIRM funding decision because the grant was rejected by CIRM staff.
New Faculty Awards
When a candidate applies for a CIRM New Faculty Award it is standard practice for them to include a letter of support from the institution where they hope to be working. In December 2007, during a review of applications for New Faculty Awards, CIRM staff discovered that ten applications were accompanied by letters of institutional support signed by members of the Board. This was due to a miscommunication by staff, a poorly drafted memo to Board members leading them to think it was OK to sign the letters of institutional support. The error was discovered before the Board considered any of the applications. CIRM staff determined that the letters could be perceived to create a conflict of interest and so, to avoid even the appearance of a conflict, CIRM staff disqualified the ten applications. As a result, the applications were not presented to the Board for its consideration, thereby avoiding any potential for a conflict of interest in a funding decision.
John Sladek
In 2011, while preparing the public summary for Basic Biology III applications, CIRM staff discovered that Dr. John Sladek was one of several co-authors on scientific publications with a researcher who was listed as a consultant on a CIRM grant application. This is a technical violation of the Grants Working Group (“GWG”) conflict policy, which prohibits a member of the GWG from participating in the review of an application if the member has co-authored papers with a salaried investigator listed on a CIRM application within a three year window. It should be noted, however, that Dr. Sladek’s participation in the review of the application would not have constituted a conflict of interest under state conflict of interest laws because Dr. Sladek did not have a financial interest in the application. In addition, the amount of funding involved – approximately $3,000 of salary per year for three years, less than one percent of the total award – was not material, and Dr. Sladek did not stand to receive any financial benefit from the application. Finally, Dr. Sladek’s participation in the review did not affect the outcome because the application was not recommended, or approved, for funding.
The three instances cited by Mr. Jensen share two common features. First, CIRM staff identified the potential for a conflict before any funding decision was made. Second, CIRM’s funding decisions were not affected by any improper influence.
Ted Love
Mr. Jensen also cites the service of Dr. Ted Love, a member of the Board who volunteered his time to assist CIRM in offering his scientific and medical expertise, as evidence of a conflict of interest. Although Mr. Jensen insinuates that Dr. Love’s service constituted a conflict of interest, he does not cite any facts, except Dr. Love’s “deep connections to the biomedical industry.” But the fact that Dr. Love has experience in the biotech industry does not constitute a conflict of interest, and as a member of the Board and as a volunteer to CIRM, Dr. Love abided by CIRM’s conflict of interest policies.
In the past Mr. Jensen has criticized the stem cell agency for its lack of connections and engagement with industry. In this case he criticizes us precisely because of our connection and engagement with someone who has industry experience.
Venture Capital Firm
Mr. Jensen also suggests that a conflict of interest arose from the fact that “iPierian,Inc., whose major investors [a venture capital firm] contributed nearly $6 million to the ballot measure that created the stem cell agency, has received $7.1 million in awards from the agency.” While it is true that Proposition 71 involved a multi-million dollar campaign, the funding for the campaign came primarily from individuals who had a family member who suffered from a chronic disease or injury, including individuals associated with a venture capital firm. The firm itself did not contribute to the campaign, nor did the campaign accept contributions from biotechnology or pharmaceutical companies. Furthermore, the venture capital firm did not invest in a CIRM grantee; rather, it invested in a different company which subsequently merged with yet another company to form an entity that later applied for, and was awarded a CIRM grant.
Stem Cells, Inc.
Mr. Jensen cites CIRM’s award to Stem Cells, Inc. as another source of a conflict. In support of this claim, Mr. Jensen’s references Bob Klein’s support of the award, as well as the fact that Irv Weissman, PhD, appeared in an ad for Proposition 71 in 2004. However, neither Mr. Klein’s support for the award nor Dr. Weissman’s support for Proposition 71 constitutes a conflict of interest. First, Mr. Klein, like any member of the public, has the right to express his views to the Board. The state’s revolving door laws do not apply to a former member of the Board who, like Mr. Klein, is not compensated for making an appearance. As for Dr. Weissman’s support for Proposition 71, nothing in state law prohibits a member of the public from seeking CIRM funding even though he supported the measure during the campaign. In fact, it would be reasonable to expect that most stem cell scientists in California (and elsewhere) supported Proposition 71. Disqualifying individuals from receiving funding because they supported the law would leave few, if any, eligible applicants.
Allegation of Conflict at Board Meeting
As further evidence of an “actual conflict”, Mr. Jensen cites another instance in 2008 in which a representative of a for-profit applicant publicly complained at a Board meeting that a member of the GWG had a conflict of interest “from a business perspective.” As provided for by CIRM’s regulations, the applicant had filed an appeal, claiming that the reviewer had a conflict of interest because he had a financial relationship with another company that was not an applicant for CIRM funding. CIRM’s legal counsel reviewed the appeal and determined that there was no conflict of interest under CIRM’s policy.
Saira Ramasastry and Laurence Elias
Mr. Jensen cites two instances in which CIRM’s hired consultants in support of his claim that CIRM has “actual conflicts of interest.” In 2010, CIRM retained a partner at Life Sciences Advisory, LLC, Saira Ramasastry, to assist CIRM’s External Advisory Panel, which completed its work in December 2010. In 2012, Sangamo BioSciences, Inc., nominated Ms. Ramasastry to serve on its Board of Directors. Although Ms. Ramasastry continued to provide some consulting services to CIRM through fiscal year 2011-12, none of her work for CIRM involved Sangamo or any CIRM program in which it was involved. Ms. Ramasastry’s services on behalf of CIRM did not create any conflict of interest. The same is true of the second instance cited by Mr. Jensen. In 2010, CIRM hired Dr. Laurence Elias, a former Geron employee and an accomplished clinical development professional, to provide CIRM with technical and regulatory input to ensure that the clinical elements of an RFA were technically complete and accurate. The concept for RFA had already been approved and as such Dr. Elias was not in any position to influence the overall scope or structure, nor did he have any role in evaluating applications. CIRM staff and Dr. Elias complied with all conflict of interest requirements. Neither contract led to an “actual conflict of interest”.
Diane Winokur
Mr. Jensen’s laundry list of “conflicts” also includes a reference to the recent appointment of Diane Winokur to serve on CIRM’s Board. Mr. Jensen quotes a representative of the ALS Association who said that Ms. Winokur will be “a tremendous asset in moving the ALS research field forward through CIRM funding." Of all the insinuations made in his blog this is perhaps the cheapest shot, taking aim at a woman who has dedicated her life to fighting a deadly disease, one that claimed the lives of her two sons. Mr. Jensen knows very well that the ALS Association does not speak for Ms. Winokur or CIRM and while we expect that Ms. Winokur will bring her expertise as an advocate for people suffering from ALS to the Board, she, like all members of CIRM’s Board, represents all Californians, not just those suffering from a particular disease. Ms. Winokur’s appointment does not create a conflict of interest.
Press Releases
Finally, Mr. Jensen cites a Board debate from 2006 involving a requirement in CIRM’s intellectual property regulations regarding press releases. Under Health and Safety Code section 125290.30(g)(1)(C), the discussion of standards does not create a conflict of interest, and the Board’s debate was enriched by the participation of members who brought their expertise and experience to bear.
Mr. Jensen says that one of the reasons why the IOM did not report any instances of conflict of interest in its report is that it did not look for any conflicts of “inappropriate behavior,” But Mr. Jensen was present in the public hearing at UC Irvine in April of 2012 when the IOM panel asked Stuart Drown, Executive Director of the Little Hoover Commission that also looked into allegations of conflict of interest at CIRM, if he could cite any actual instances. Mr. Drown said he could not. Nor did Mr. Jensen offer any when it was his turn to talk.


The view from the California Stem Cell Report:
Generally speaking, CIRM's response about “actual” conflicts of interests is a reiteration of what the California Stem Cell Report carried at the time of each incident and does not add much new to the discussion of the issues. All of the agency's earlier responses could be found in the links in the “debunking” piece. Additionally the agency confuses what are clearly actual conflicts with other instances that could involve either actual or perceived conflicts, which the IOM noted can be as deadly as the real thing. However, in the most egregious cases involving Reed and later the five medical school deans, the agency would like the public to believe that these were not serious matters because the staff detected and caught the conflicts before the grants were made.
That is like saying a burglar who was caught in the act before he escaped with his booty committed no offense.
The acts were committed by members of the CIRM board, and they were violations of conflict of interest standards. In the case of the five deans, that is why the agency voided 10 applications totaling $31 million from their five institutions. If there had been no actual conflict of interest, that would not have been necessary.
As for blaming the staff for “miscommunications,” the applications that the five deans signed were quite clear and offered them the option of having another person at their institution sign the grant proposal. Other deans on the board did not sign applications in the same round. Those applications were then handled in the normal fashion. One might ask how in the world could the head of a medical school who was also serving on the CIRM board NOT recognize a conflict of interest when asked to sign a request for cash from the board on which he served?
Regarding John Reed and his conflict of interest violation, both he and then CIRM Chairman Robert Klein have acknowledged Reed's actions were wrong. Klein, an attorney who directed the writing of the 10,000-word measure that created CIRM, advised Reed to contact CIRM staff to lobby on behalf of a grant that was approved by the board but was about to be denied by staff.(See here, here and here.)
CIRM's response contends that Reed's 6 ½ page letter was nothing more than “factual” information dealing with technical matters. That is hardly the case. In fact, Reed explicitly “emphasized” (Reed's word) that failing to comply with his letter would damage the future of the stem cell agency. Denial of the grant, he said, “will surely discourage clinical researchers from participating in the CIRM mission to advance stem cell therapies.”   
Reed's action was inappropriate, and the California Fair Political Practices Commission warned Reed about his actions. The journal Nature reported,
“California’s Fair Political Practices Commission (FPCC) decided that Burnham Institute President violated conflict-of-interest rules by writing a letter to the California Institute of Regenerative Medicine appealing a decision that an affiliate of his institute was ineligible for funding.”
The California Stem Cell Report's “debunking” piece went beyond "actual" conflicts to describe other instances where conflicts emerged. Readers can go back to the original links for all the details, but the cases of StemCells, Inc., and iPierian, Inc., are worth reviewing again. Both cases involve fund-raising efforts that ran into millions of dollars for the ballot measure campaign that created CIRM. The campaign was run by Bob Klein who later became the agency's first chairman, serving for six years and becoming something of a hallowed figure in stem cell circles. One of the principal jobs of a campaign manager is to raise the millions needed to run a successful statewide election campaign in California. It is common for members of the public to believe that major campaign contributors are rewarded later for their contributions. Whether that was the case in these instances, the reader must decide for himself or herself. But the appearance is less than salubrious for an agency that claims to have never seen an actual conflict of interest as it has handed out $32,000 an hour, 24 hours a day, seven days a week during the last six years.
The facts are that about 90 percent of the $1.7 billion awarded by the CIRM board has gone to institutions tied to present and past members of its governing board. The agency, however, does work hard to be sure legal conflicts do not arise during board action on grant applications, using a voting procedure that is so convoluted that the actual vote on nearly all applications is not even announced at board meetings. Sometimes the procedure means that only a handful of governing board members can participate in debate or vote. In the case of the five medical school deans, as the board struggled to deal with the fallout in 2007, only eight of the 29 members of the board could participate in the discussion because the rest had conflicts.
As for CIRM's comments about “insinuations” and “cheap shots” by the California Stem Cell Report, we naturally differ with that characterization. The case in point involved what the chief scientist for a patient advocate group said she expected as the result of a recent appointment to the board. The scientist's remarks were offered as example of the type of expectation and entitlement that can arise when governing board members must be picked from specific constituencies, as is the case with all 29 CIRM board members.

And as for my testimony at the IOM hearing last April, here is a link to my statement, which includes a discussion of conflicts of interest.  

Sunday, February 10, 2013

CIRM Board Member Prieto Critiques the IOM Stem Cell Report

Francisco Prieto, a member of the governing board of the $3 billion California stem cell agency, is expressing some additional dissatisfaction with the blue-ribbon Institute of Medicine (IOM) report for which the agency paid $700,000.

The report recommended sweeping changes at the agency, including creation of a new majority of independent members on the board. The IOM cited problems arising from the built-in conflicts of interest on the board that were created by Proposition 71, which created in the agency in 2004. Prieto's email refers to Bob Klein, who is a real estate investor and attorney. Klein oversaw the drafting of the 10,000-word ballot measure(writing much of it himself), ran its $35 million ballot campaign and became the first chairman of the agency. The qualifications for chairman were written into the proposition and seemed to uniquely apply to Klein.  Prieto is a Sacramento physician who was appointed to the board as patient advocate.

.Here is the text of Prieto's comments. His earlier comments can be found here.
“A few more words on independence, and the IOM.  I think Bob Klein drafted the proposition (and remember, all of this was spelled out there – readily available to the voters and whatever news sources they were depending on for information) deliberately to engage patient advocates. I think  he knew that those of us who have been active in disease advocacy have a passion around the issue of advancing research that someone without that background would be unlikely to have. I’m not sure exactly what the IOM had in mind when they called for more 'independent' members of the board, since they very unfortunately did not bother to interview the patient advocates on the ICOC(the governing board). I don’t know what their reason for this was, if there was one, but they only circulated a (in my view) frankly inadequate questionnaire, and interviewed a small handful of people. I think this was a major flaw in their process and gave them a very limited view of our role. It is hard for me to imagine who they might have in mind, if not people who had been involved with some existing advocacy organization. I think there are very few if any patient advocates who aren’t working with some group – the only ones I might imagine would be some independently wealthy person able to start a foundation or research institute on their own.  With all due respect to Bill Gates and the great work his foundation is doing with malaria and HIV, I have written before that I think it would be absolutely wrong and anti-democratic to create any public board or commission that only millionaires could sit on.”
An anonymous comment was also posted concerning the IOM report and conflicts of interest. It dealt briefly with the issue and difficulty of managing conflicts. The comment can be found at the end of this item.

Thursday, February 07, 2013

Stem Cell Agency Board Member Defends Independence of Many on Board

A member of the governing board of the California stem cell agency is taking exception to a statement on the California Stem Cell Report that no independent members sit on that body.

Francisco Prieto, a Sacramento physician and a patient advocate member of the board, referred to the “ethical minefield” item Feb. 5, 2013. Here is the text of what Prieto wrote,
“I have to object to this line: 'None of the current members are independent. The ballot measure that created the agency required board members to be appointed from various constituencies.' 
“I think I am absolutely independent, and I think the same applies at the very least to most if not all of my fellow patient advocates, and probably to the biotech representatives as well – remember that they all must come from companies that are not involved in stem cell research.  Although I supported the proposition, I was not involved directly in the campaign in any way, and I did not meet Bob Klein (the first chairman of the stem cell board) or any of my fellow board members until the day I was sworn in at our first meeting.
“The Prop. 71 language I believe specifies that advocates must have a record of advocating for people with the disease or diseases they represent, and not that they belong to or work for any specific organization.  Checking my binder, it refers to 'groups' but does not specify those – for example, it refers to 'representative of a California regional, state or national HIV/AIDS disease advocacy group.' I’m not sure how you would define 'independent' but I certainly don’t think it means 'disinterested.'”
Our take: The Institute of Medicine(IOM) called for a new majority of what it described as independent members, obviously not finding sufficient, if any, independent members on the agency board. The IOM, the most prestigious organization of its kind in the country, said changes were needed because of damaging conflict of interest issues at the stem cell agency.

Prop. 71, which created the stem cell agency in 2004, was carefully crafted to avoid the use of the word “independent” when describing the necessary qualifications for a board member.

 Instead the measure required that, in some cases, they must come from very specific education institutions. (You can find the CIRM summary of all qualifications within this document.) In other cases, the speaker of the state Assembly appoints “one representative of a California regional, state, or national mental health disease advocacy group.” The leader of the state Senate appoints “one representative of a California regional, state, or national HIV/AIDS disease advocacy group. “ Four other statewide elected officials appoint an executive from a “California life science commercial entity.”

Prieto is correct when he says he believes he is “absolutely independent.” But he fills a category that represents a special constituency. What is missing from the board is anyone who does not come from one special constituency or another. The board was constructed in that manner to make sure it would win the broadest measure of support from all the various major constituencies by guaranteeing them a seat at the table where the money is handed out.  Ironically, the full formal name of the CIRM governing board is the "Independent Citizens Oversight Committee," a piece of political legerdemain to mask the actual nature of who would sit on the board. 

Tuesday, February 05, 2013

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

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

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

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

The newspaper said,
“That arrangement is hardly a model of objective decision making. The agency so far has distributed about $1.7 billion in grants, with about 90 percent of that money going to institutions represented on the governing board. 
“Voluntary abstentions are not a serious solution to that ethical minefield. Nor would that approach eliminate potential conflicts, because the agency would still allow the abstaining members to take part in the discussions and debate about who should get the grants. 
“The Institute of Medicine instead recommended remaking the board with truly independent members who have no stake in grant awards. The stem-cell agency rejected that step because it would require changing Prop. 71, either through a super-majority in the Legislature or another ballot measure. That excuse should be a vivid warning to Californians about the dangers of passing complex, costly and inflexible initiatives. 
“Agencies handling billions of taxpayers’ dollars should not avoid good government practice or basic fiscal safeguards. The stem-cell institute offers minor fixes when it needs substantial changes — and legislators should not accept that cavalier approach.”

Monday, February 04, 2013

Debunking California Stem Cell Agency Claims of 'No Actual Conflicts'

In the wake of recent considerable criticism concerning conflicts of interest at the $3 billion California stem cell agency, its leaders have taken to saying “no actual conflicts” have been found at the agency.

That assertion is simply not true.

Nonetheless, the statement has been repeated in some news stories, published in at least one agency press release and peddled by stem cell advocates and some members of the governing board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

The reason? Conflicts of interest were cited prominently as a major problem at CIRM by the blue-ribbon Institute of Medicine (IOM) report. In December, the IOM recommended that a new majority of independent members be created on the stem cell agency's governing board. The existing stem cell board has ignored that recommendation and wants to settle for something considerably less as it tries to find a way to build support for continued financing of its efforts.

The facts are that the agency has a long history of problems involving conflicts of interest, “actual” and otherwise. Here is a rundown on what has been reported on the California Stem Cell Report.

In 2009, board member John Reed, then CEO of the Sanford-Burnham Institute, was warned by the state's Fair Political Practices Commission about his violation of conflict of interest rules. Reed's intervention on behalf of a grant was made at the suggestion of then CIRM Chairman Robert Klein, an attorney who led the drafting of Proposition 71, the ballot initiative that created the stem cell agency in 2004.

In 2007, other violations involving five board members resulted in voiding applications from 10 researchers seeking $31 million. And then the agency shamefully scapegoated employees for the problem.

In 2011, the chairman of the CIRM grant review group resigned from his position as the result of another violation, which the agency felt necessary to report to the California legislature.

In 2009, then board member Ted Love, who has deep connections to the biomedical industry, served as the agency's interim chief scientific officer and helped to develop the agency's first, signature $225 million disease team round while also serving on the CIRM board. As chief scientific officer, Love presumably would have had access to proprietary information and trade secrets contained in grant applications. In 2009, in response to questions from the California Stem Cell Report, the agency said that Love would only serve as a part-time adviser to the agency president, not as chief scientific officer. Nonetheless, in 2012, the board passed a resolution with high praise for Love and his performance as the chief scientific officer.

Since 2010, a stem cell firm, iPierian,Inc., whose major investors contributed nearly $6 million to the ballot measure that created the stem cell agency, has received $7.1 million in awards from the agency. The contributions were 25 percent of the total in the campaign, which was headed by Klein.

Another firm, StemCells, Inc., last fall was awarded $40 million by the CIRM board despite having one of its $20 million applications rejected twice by grant reviewers. The action came after the board was vigorously lobbied by former Chairman Klein. Researcher Irv Weissman of Stanford, who founded StemCells, Inc., and is on its board, was featured in a TV campaign ad for Proposition 71 and helped to raise millions for the ballot campaign. 

In 2008, public complaints by one applicant from industry about conflicts of interest on the part of a reviewer were brushed off by Klein. He told the applicant the board needed to discuss naming CIRM-funded labs and then go to lunch. 

The agency has hired at least two industry consultants in positions that raise conflict of interest problems, in 2010 and again in 2012.

Sometimes groups expect to see increased funding as the result of the appointment of sympathetic individuals to the board. That occurred last fall when Diane Winokur was appointed. The chief scientist for The ALS Association, said Winokur will be “a tremendous asset in moving the ALS research field forward through CIRM funding."

The conflict issue even surfaces in picayune ways. In 2006, board members from various institutions spent considerable time debating a minor requirement involving press releases. They were concerned that the proposal would make their institutions subordinate to the interests of CIRM. At the end of the discussion, the institutional directors prevailed and kept their PR departments from having to notify CIRM about press releases dealing with the hundreds of millions of dollars in state grants that they receive.

All this, and yet on Jan. 24, 2013, CIRM Chairman Jonathan Thomas was quoted in a CIRM press release as saying “no one has found any actual conflicts” at the agency.

In the media, some of the recent news stories have reported that the IOM did not find any “actual” conflicts at the agency. The explanation for that is simple, but mainly omitted from the articles. The IOM did not look for any conflicts of “inappropriate behavior,” as its report clearly states. The California Stem Cell Report last weekend asked the chairman of the IOM panel, Harold Shapiro, why it did not look for conflicts. He replied,
“Our committee was given a set of defined tasks from the IOM(which was under a $700,000 contract with CIRM), and we followed them."
Nonetheless, the IOM report said “far too many” board members are linked to institutions that receive funds from CIRM. A compilation by the California Stem Cell Report shows that about 90 percent of the $1.7 billion that the board has awarded has gone to institutions linked to past and present board members.

The fundamental conflict problem with the CIRM board is that nearly all the California institutions that stood to benefit from the agency's largess were given seats at the table where the money is handed out, under the terms of Proposition 71.

Conflict problems are not unique to CIRM and government agencies. They are also a matter of concern at nonprofit, grant-making foundations, which in some ways CIRM resembles.

The Council on Foundations, a national nonprofit association of more than 1,700 grant-making organizations, takes pains on its web site to explain the importance of managing and avoiding conflicts of interests. In its advice to its members, the group makes it clear that the issue goes well beyond simple financial conflicts. It says,
“(Board) members must represent unconflicted loyalty to the interest of the foundation. This accountability supersedes any conflicting loyalty such as that to advocacy or interest groups, business interests, personal interests or paid or volunteer service to other organizations.”
In the case of the stem cell agency, the “unconflicted loyalty” is to the people of California. Perhaps the California stem cell agency can convince state leaders, both public and private, and its voters that no conflicts exist at the state agency. But it is a big bet and probably carries with it the entire future of what the board and many believe is an exceedingly promising scientific effort.

Perhaps it would be wise for the board to step back and say, “Yes, there are serious conflict problems at CIRM. We recognize that and are working on additional measures to create an independent board as recommended by the IOM.”

Friday, February 01, 2013

Sacramento Bee: Stem Cell Agency Falling Short on IOM Recommendations

It's exceedingly rare when the California stem cell agency makes the front page of any newspaper.

So it is worthy of note that The Sacramento Bee this morning carried a lengthy piece on its page one about the agency and its response to the blue-ribbon Institute of Medicine (IOM) report.

The headline said,
 “Analyst: Stem cell agency reforms fall short.”
The analyst is the Institute of Medicine, more specifically Harold Shapiro, chairman of the panel that studied California's $3 billion research effort for 17 months at a cost of $700,000 to the agency.

Bee reporter Cynthia Craft wrote that Shapiro said the stem cell agency is “falling short” in its response to the IOM recommendation.

Craft wrote,
"'There certainly is a gap between what we recommended and what they responded with,' said Shapiro, president emeritus at Princeton University. ' I wish they had moved closer to our recommendations.'"
Craft said the IOM made sweeping recommendations “emphasizing the need for new blood on a governing board that has been plagued by the appearance of conflicts of interest, cronyism and sluggishness in getting stem-cell products to market.”

Craft also interviewed Jonathan Thomas, chairman of the stem cell agency, who said some of the IOM recommendations would take legislative action. But Thomas said that was “out of the question.”

Craft wrote,
“The process would take years, he said. The first opportunity to get on the ballot, for instance, would be in the fall of 2014.”
The agency will run out of cash for new grants in less than four years.

Craft's story was the first major news article in years about the agency in the Bee, the only daily newspaper in the state's capital. She reviewed a bit of the history of the agency and concerns about conflicts of interest. She concluded,
“Shapiro said he stands firmly behind his committee's report. 
"'I think our recommendations sit together and interrelate to each other well – and should have been moved along as quickly as possible,' Shapiro said. 
"'It might have been helpful if they indicated to us what they were willing to do and what they weren't,' he said."

Thursday, January 31, 2013

Hyping the Economic Impact of the California Stem Cell Agency

The $3 billion California stem cell agency today served up a warmed-over version of a study that would have the public believe that the research program has had a major economic impact on the state.

The latest study was prepared last August by a firm that was hired under an RFP in 2010 that said it must execute "a vibrant and aggressive strategy to support the goals and initiatives of CIRM.” 

The agency paid $300,000 for the original study but contends the report is “independent” of CIRM.

According to the CIRM press release today, the latest version of the study by Jose Alberro of the Berkeley Research Group claims creation of 38,000 “job years” and $286 million in “new tax revenue” from the award of $1.5 billion. Those awards actually cost something in the neighborhood of $3 billion, given that state taxpayers must pay interest the borrowed funds that finance the agency. 

The Institute of Medicine's recent blue-ribbon report on the stem cell agency carried remarkably different information than the economic figures reported today. The institute's study was also financed by CIRM but at a cost of $700,000. The report said,
“In the short term, CIRM’s expenditures are supporting approximately 3,400 jobs and their innovative efforts have also attracted substantial additional private and institutional resources to this research arena in California CIRM’s long-term impact on such critical aspects of the California economy as state tax revenues and health care costs beyond the shorter-term and temporary impact of its direct expenditures cannot be reliably estimated at this point in CIRM’s history."
Here is what the California Stem Cell Report wrote in 2011 when the first study was released:
“No doubt exists that the stem cell spending has had a beneficial economic impact. But whether it has had a 'significant' impact on the California economy is in the eye of the beholder. The state's economy runs to something like $1.7 trillion a year. If California were a nation, it would rank among one of the larger economies in the world. The workforce totals around 18 million, making 25,000 jobs statistically less than a hiccup. Keep in mind as well that CIRM, until 2009,  paid the interest on its borrowing with more borrowed funds, all of which adds to the total cost of the borrowing, which is about $3 billion on top of the $3 billion CIRM is handing out.”
By ballyhooing economic impact reports the stem cell agency would seem to be inviting assessment of its efforts as an industrial development enterprise, which involve criteria significantly different than that of a research enterprise. A few years ago, we asked the agency's then Chairman Robert Klein whether he wanted to have CIRM assessed as industrial development effort. His quick response was a very emphatic no. Klein nonetheless frequently touted the figures produced under the contract with the agency.

The latest figures are undoubtedly likely to be cited as the agency begins a road trip around the state to meet with newspaper editorial boards to trumpet CIRM's reponse to the Institute of Medicine study.

See below for a full copy of the report. We have asked CIRM for a copy of the contract with the group that prepared it. We will carry it when we receive it.
   

Wednesday, January 30, 2013

Los Angeles Times Columnist: Stem Cell Agency Still Saddled with Conflict of Interest Problems

The governing board of the $3 billion California stem cell agency will remain dominated by “special interests” even with the adoption of a plan last week responding to the far-reaching recommendations of a blue-ribbon Institute of Medicine (IOM) study, a columnist for the Los Angeles Times said today.

Michael Hiltzik, Pulitzer Prize winning writer and author, wrote that IOM study showed the agency “the path to cleansing itself of its aura of connivance and influence trading. That the board can't even bring itself to place the proposals before the voters or their elected representatives only shows how much money it's willing to waste to keep living in its own little world.”

Hiltzik's column in California'slargest circulation newspaper included fresh comments from both Harold Shapiro, who chaired 17-month IOM study, which was commissioned by CIRM, and Jonathan Thomas, the chairman of CIRM and who drew up the response.

Hiltzik wrote that the study “concluded that the CIRM board members were saddled with 'almost unavoidable conflicts of interest, whether actual or perceived.'” He continued,
“That's because by law, 23 of the 29 members must be representatives of California institutions eligible for CIRM grants or of disease advocacy groups with their own interest in steering money toward their particular concerns. 
“As a remedy, the panel proposed eliminating some board slots reserved for grant-receiving institutions by Proposition 71, the 2004 initiative that created the agency. The idea was to fill those slots with truly independent members free of any stake in CIRM funding, even indirectly.”
 Hiltzik wrote,
 "Thomas told me his proposal dealt with even perceived conflicts of interest on the board in such "definitive fashion" that it won't be necessary to bother the Legislature, much less the voters, with such big changes as remaking the board with a majority of independent members. He pointed out, not without some pride, that one board member called his proposed changes 'draconian.'"
Hiltzik had some praise for Thomas.
“Let's stipulate that Thomas has, in CIRM terms, moved a mountain by jostling the board even this far. Since its inception, the board has set records for arrogance. That's a direct legacy from Proposition 71, which exempted the stem cell program, uniquely among California government bodies, from any practical oversight by the Legislature or elected officials.”
The Times columnist continued,
“Shapiro told me from his Princeton office that Thomas' proposals were 'a significant step in the right direction, which at least indicates that they haven't ignored the report.' But he doesn't share Thomas' view that voluntary recusals solve the conflict of interest problem. That can be done, Shapiro said, only by replacing stake-holding board members with independents.
"'The more you can reduce the inherent conflicts, the better off everyone is going to be,' he said. The board will 'have to go further over time, in my view.'"
Hiltzik wrote,
“The Shapiro panel said it didn't find any instances of inappropriate behavior by board members or specific conflicts, but there are two reasons for that: It didn't search for any, and Proposition 71 defined certain conflicts out of existence. The measure states that it's no conflict for a board member to also be an officer of an academic institution or private corporation that might be applying for grants.

“One of the CIRM board's enduring self-delusions is that its conflicts of interest are purely a matter of 'perception.' But there have been documented instances of favoritism shown to well-connected grant or loan applicants, and at least one overt attempt by a board member to overturn a rejection of his institution's project. So much of the board's discussion takes place behind closed doors or informally that the opportunities for mutual back scratching are incalculable.
“Thomas' 'draconian' proposals won't change this state of affairs. Special interests will still dominate the board. Will barring 13 members from voting on grants while giving them full rein to participate in discussions really eradicate even the perception of conflicts? You'd have to be terminally naive to think so.”

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