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Stem cell profit rules urged

Sacramento Bee
January 24th, 2006

Biotech companies that commercialize taxpayer-funded stem cell research would have to plan to sell the drugs at the "lowest available U.S. commercial price" to low-income Californians, a task force recommended Monday to a citizens group that oversees the state's $3 billion stem cell program.
During a four-hour session at Stanford University, the group also recommended that research grant recipients return 25 percent of income they receive from commercially licensing their stem cell breakthroughs to the state's general fund.

In still another break from federal policy that typically governs such "intellectual property" transactions, members suggested that researchers generally seek nonexclusive licenses for their inventions to provide the maximum potential for fast commercial breakthroughs. Typically, private companies seek exclusive rights to develop a product generated from public research funds.
"Three different companies might pursue that technology three different ways," said Dr. Francisco Prieto, a diabetes specialist at Sutter Medical Group in Elk Grove and task force member who supported the idea.

Monday's recommendations could prove a key turning point in a contentious debate over how Californians and the public treasury will benefit from the nation's first state-run research program in the emerging field of embryonic stem cell therapy.

Establishing a legal framework for sharing its "intellectual property" - the scientific papers, research, inventions and patents that arise from state funding - is critical for the new program.

If Monday's recommendations are adopted by a 29-member Independent Citizens Oversight Council scheduled to meet Feb. 10, they will become "interim" state policy during a 270-day comment period before they become final.

Several University of California officials expressed concerns that the conditions might cause reluctance among biotech and pharmaceutical companies to license university research.

The requirement for low-cost drugs for poorer residents met a key goal outlined in a report issued Monday by the Santa Monica-based Foundation for Taxpayer and Consumer Rights. It could also become a template for other states aiming to stimulate stem cell research programs, said Dr. Ben Rich, associate professor of bioethics at the University of California, Davis.

"You can argue this should be tried in the future," he said. "It seems to meet a social justice requirement that in the past hasn't been there."

In support of the move, the task force also recommended so-called "march-in" rights, the authority to revoke a license if a company makes its drugs too expensive for the poor and uninsured.

Who would enforce such actions was left unresolved until Feb. 10. Although the consumer rights organization suggested the state attorney general be given the responsibility, group members said they didn't know if the state's top prosecutor had a position on the idea.

The group, a subcommittee of the entire stem cell oversight board, approved a two-pronged method to guarantee that drugs are made available to low-income Californians.

They would have to be sold at the lowest price nationally to people on Medi-Cal, the state's medical insurance for the poor. And companies would determine their own way to provide them to the uninsured, said Ed Penhoet, a former biotech executive and vice chairman of the citizens oversight board. The board, in turn, would review both requirements yearly to make sure companies comply with their plans.

The moves were aimed at finding a balance between the interests of taxpayers and the people who might use the drugs with the university research community and business interests that often spend up to $1 billion to develop and market drug products.

A spokeswoman for state Sen. Deborah Ortiz, D-Sacramento, said in a statement that Ortiz supports returning up to half the money earned from licensing state-funded invention to the state "to help pay back the cost of the bonds."

In the face of federal reluctance to fund embryonic stem cell research, California voters in November 2004 approved selling $3 billion in bonds to jump-start research by California nonprofit institutions. The program is expected to cost about $6 billion with interest payments.

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