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Elimination of conflicts of interest at stem cell institute target of bill

by Terri SomersSan Diego Union Tribune
February 23rd, 2008

Sen. Sheila Kuehl
Sen. Sheila Kuehl

A bipartisan bill introduced in the state Senate yesterday would authorize California's Little Hoover Commission to investigate how the state stem cell institute's governance structure might be changed to eliminate inherent conflicts of interest.

The bill also seeks to ensure uninsured Californians have access to drugs and therapies funded by the stem cell institute.

The measure, sponsored by senators Sheila Kuehl, D-Santa Monica, and George Runner, R-Lancaster, comes amid investigations by the political fair practices commission and a state audit committee, both of which were prompted by conflict-of-interest allegations against a board member.

“Those (reviews) are directed at things that have happened,” Kuehl said yesterday. “What I want to do is look ahead to see if there are necessary fixes.”

The interest in the structure of the institute, and fixing possible conflict-of-interest issues, is new for the senators – though the concern with access to new therapies is not.

Last year Kuehl and Runner, who serve on the Senate Health Committee, introduced legislation seeking to lower prices for the state's neediest residents on drugs funded in part with stem cell institute money.

Robert Klein, who is chairman of the stem cell institute, seemed optimistic the institute's board could work with the senators to address their concerns.

“Last week we had highly productive discussions with Sen. Kuehl and similar discussions with Sen. Runner, and we believe we should be able to arrive at satisfactory language that advances the mission of (the state's stem cell initiative),” Klein said in a brief written statement issued last night.

However, he did not specifically address the investigation by the Little Hoover Commission, which studies state government operations and recommends improvements.

Kuehl said her decision to look at the potential for conflicts of interest arose after learning that several grant applications to the institute had to be disqualified because members of the institute's board had written letters in support of the applicants.

The institute's board explained that the grant application required the support letters, and the conflict of interest resulted from board members' effort to follow directions.

In another incident board member John Reed, who is chief executive of the Burnham Institute in La Jolla, wrote a letter to the stem cell institute staff, protesting its decision not to give a grant to his institute.

Reed sent the letter after discussing his concerns with Klein, who gave him the go-ahead.

The incidents prompted newspaper editorials bemoaning the conflict-of-interest problems inherent in the makeup of the institute's board. Under Proposition 71, which created the stem cell institute, its board must include leaders of academic research institutes that will be applying for funding, as well as biotechnology industry executives.

A Los Angeles Times editorial that Kuehl read suggested the board could be reconfigured to reduce the number of appointees with potential conflicts and perhaps add elected officials or members from taxpayer advocacy groups.

“Rather than rush in to do that, I met with a couple of people from the institute to get a better understanding of what they are doing about conflict-of-interest provisions,” she said.

Those discussion led her to agree that people who understand the ins and outs of running research labs and biotechnology companies bring the best understanding to the issues facing the institute.

Rather than suggest random solutions, she thought it appropriate to ask the Little Hoover Commission to study the structure and let the legislature know if it saw changes that might be needed.

“I'm really looking for solutions that will protect the public interest but not throw the baby out with bathwater in terms of (the institute's) expertise,” she said.

The proposed legislation was applauded by at least one taxpayer advocacy group that has often criticized the institute board for its potential for conflicts of interest.

“An outside analysis by unbiased observers can only be good,” said John Simpson, of the nonprofit Foundation for Taxpayer and Consumer Rights in Santa Monica. “A hard-nosed look by the Little Hoover Commission is just what's needed.”

But Simpson said Kuehl's suggestions for guaranteeing the poor access to new stem cell therapies does not go far enough to protect the interests of the taxpayers who are footing the bill for the $3 billion stem cell initiative. He called for a provision to allow the state attorney general to intervene if therapies funded by the stem cell agency are priced unreasonably.

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