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Stem-cell battle looms: Strictures in Prop. 71 generate some concern

by Daniel S. LevineSan Francisco Business Times
December 3rd, 2004

When life-science executives gathered for the California Health Care Institute's annual public forum just days after the November election, the event felt at times like a victory lap for backers of California's $3 billion stem-cell measure.

But if some back-patting was going on, the event was not without its more sobering moments.

State Sen. Deborah Ortiz, D-Sacramento, who authored legislation that gave rise to the measure, warned the audience at Stanford University that as the newly established California Institute for Regenerative Medicine races into being, it must set up guidelines that provide transparency, protect against conflicts of interest and ensure that Californians will enjoy the financial and health benefits that their investment yields. All the while, the health of women who donate their eggs for stem-cell research must be protected, she said.

It was the opening salvo in what threatens to become a legislative battle over the guidelines for the new institute involving Ortiz; Robert Klein II, the measure's originator; and the 29-person oversight panel that will create guidelines and oversee research grants.

The measure was written to make it difficult for lawmakers to change it. But some who support the the research have problems with the measure.

"I'm wondering if the origin of the problem comes from a failure to understand just how much is at stake here," said Mitch Kapor, the founder of Lotus Development Corp. who was an outspoken critic of the structure of Prop. 71. "That enthusiasm and passion doesn't justify a kind of uncritical, not-thought-through, trust-us-we're-going-to-do-the-right-thing approach. Not when it's $3 billion of California taxpayer money and huge potential impacts."

"They have bullet-proofed it," said Marcy Darnovsky, associate executive director of the Center for Genetics and Society, a nonprofit public policy group in Oakland that supports embryonic stem-cell research but opposed Proposition 71. She backs plans to make legislative changes. "If they choose to challenge that in court, it would show us something about their intentions."

Proposition 71 calls for a financial oversight committee chaired by the state controller and three advisory committees to make recommendations to the governing panel.

These include:

A 23-member Scientific and Medical Research Funding Working Group.
An 11-member Scientific and Medical Accountability Standards Working Group.
A 19-member Scientific and Medical Research Facilities Working Group.
Passage of Prop. 71 came in the face of Bush administration restrictions on federally funded embryonic stem-cell research. Researchers believe that work with embryonic stem cells, which can develop into virtually any specialized cell within the body, could lead to treatments for a broad range of indications ranging from spinal injuries to diabetes, as well as lead to new understandings of the mechanisms behind genetic-based diseases.

The research is controversial because extracting embryonic stem cells for research requires the destruction of an embryo, which some religious and anti-abortion groups see as tantamount to murder.

The proposition's proponents believe the massive investment by taxpayers will not only lead to cures for diseases, but also put California at the forefront of medical research that will attract leading researchers, spur new investment and give rise to new companies here.

Setting the rules
But before the regenerative medicine institute can start funding research, it must set the rules by which it will play -- among other things, defining how transparent its decision-making will be and the extent to which grant recipients will be allowed to participate in decision-making.

To ensure that work starts quickly, Prop. 71 mandated that appointments to the oversight panel -- the Independent Citizen's Oversight Committee -- be made by Dec. 13 and that the board meet within days after that.

The measure prescribes a set of qualifications for each position on the panel, with the authority for making the various appointments divvied up among the governor, lieutenant governor, treasurer, state controller and five University of California chancellors.

The first meeting is set for Dec. 17.

"There's housekeeping work, clearly. Cash is not going to fly out of the door tomorrow," said Fiona Hutton, a spokeswoman for the Yes on 71 campaign and for Klein, who was one of the measure's biggest financial backers. "The California electorate has created a new state agency. It has to be done in a careful, thoughtful manner."

Many supporters of the proposition believe its language ensures that money from the measure will be spent as voters intended. In some cases, the measure uses federal standards from the National Institutes of Health regarding such issues as informed consent and conflict of interest polices. But it also provides for "modifications to adapt to the mission and objectives of the institute."

"From what I've seen, there is a very thorough level of oversight. Klein and the other authors gave this a great deal of thought. It's been one of the most thoughtfully laid-out pieces of public policy I've seen," said state Controller Steve Westly, who is slated to make five appointments to the ICOC and serve as chair of the Citizen's Financial Accountability Oversight Committee.

"Is it perfect? I don't know. Probably not," he said. "Is it better thought out than 98 percent of what I've seen in state government? Yes. Does it presume we will move very quickly? Yes. Is that appropriate? Absolutely."

Pushing for rules
But Ortiz believes the proposition gave the oversight board too much leeway. She and others worry that the measure falls short in a variety of ways, including these:

Protections needed to avoid conflicts of interest.
Assurances that the state will get an adequate share of any profits from research funded by the measure.
Provisions to require the institute's decisions are open to public scrutiny.
Protections for women who may choose to donate their eggs for research.
"Legislation needs to be drafted," said Darnovsky of the Center for Genetics and Society. "Some good, effective regulatory requirements would be at least putting the ICOC on notice that this is what's expected."

The difficulty is that the measure was written to prohibit such changes. In fact, the Legislature can't change anything except the proposition's bond provision for three years -- and then only with 70 percent votes by both the Assembly and state Senate.

Ortiz nevertheless will try to push through some rules for the panel.

"If I am not able to do so, my hope is the ICOC and all of the appointees will understand they have that obligation to provide those assurances in their rule-making or regulatory adoption process," said Ortiz.

Darnovsky at the Center for Genetics and Society worries that the rigid structure that the proposition sets up could lead to both fiscal and scientific problems.

"There is a growing practice in this country at many levels to set up these echo chambers where people only hear from people who agree with them. It makes for bad policy and it will make for bad science, too," Darnovsky said.

'People are dying'
Controller Westly, who will chair the financial oversight committee, said he expects people will second-guess what research the ICOC opts to fund, but he said the biggest challenge right now is to make sure money gets out quickly to institutions that could do the most good with it.

"This process may not be perfect, but people are dying because of a lack of cures. The United States, from a policy purpose, has really dropped the ball in terms of being a leader in stem-cell research," he said. "The state of California is going to pick that ball up and run with it, and I'm going to do the best I can to make sure we bring the best and brightest minds in the state and make sure money is spent in the most effective way possible."

Daniel S. Levine covers biotechnology for the San Francisco Business Times.

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