Agency should split operations from policy, add more oversight committee members without conflicts

California's $3 billion stem cell agency should reduce its built-in conflicts of interests or risk losing effectiveness, according to a report released today from the prestigious National Academy of Sciences.

The academy's report said the original structure of the California Institute for Regenerative Medicine may have been useful to get it off the ground and insulate it from political pressure, but that time has passed. CIRM's overly centralized nature makes it vulnerable to conflicts, the report said, so it needs a separation of powers.

The agency's challenge for the next phase of its existence is to safeguard public support for its agenda, the report said, and CIRM's structure impedes that goal.

Allegations of conflicts have periodically arisen over the years. They reached San Diego in 2007 when John Reed, CEO of the Sanford-Burnham Medical Research Institute and then a member of CIRM's governing oversight committee, was criticized for intervening to endorse a grant application to his institution. It wasn't just Reed: grant applications from a total of 10 institutions were disqualified because oversight committee members lobbied for them.

A conflict of interest scandal scandal at a similar public agency, the Cancer Prevention & Research Institute of Texas, provides a warning of what could happen if CIRM doesn't adopt safeguards, the report stated.

The entire review panel for the Texas agency resigned this fall, with many criticizing CPRIT's peer review process, that was accused of favoritism.

The report was produced by the academy's Institute of Medicine. A non-profit group, the academy was established in 1863 to provide independent advice to the government on science and technology. CIRM itself asked for the report in 2010, paying $700,000 to have it done.

CIRM was established in 2004 with the passage of Prop. 71. The goal was to hasten development of disease treatments with stem cells, especially embryonic stem cells.

Prop. 71 authorized $3 billion in bond money to be spent over 10 years to fund stem cell research and related items. The total cost of repaying the bonds, plus interest, amounts to $6 billion. The agency has enough cash to give grants for the next four years. Its leadership has said it may ask California voters for more bond money to further its mission.

The report lavished praise on the agency's performance to date.

"It is the committee’s judgment that overall, CIRM has done a very good job of initially establishing and then updating the strategic plans that have set priorities for and guided its programs, and of taking advantage of its guaranteed flow of $300 million a year for 10 years to establish a sustainable position in regenerative medicine for California," the report stated.

CIRM is run by an 29-member oversight committee that both makes policy and implements it. That creates an inherent conflict, the report said. Moreover, too many of the committee's members come from institutions that receive or benefit from CIRM funding. Prop. 71 specifies that such institutions be represented on the board, along with patient advocates.

This centralization of power creates too much opportunity for conflicts of interest, and threatens to undermine public confidence in the board, the report stated. Splitting the policy-making and operational functions would reduce conflicts.

The report recommended that the oversight committee devote itself to making policy, with day-to-day operational functions controlled by the agency's president and its senior management. In addition, the oversight committee should add more members who do not have built-in conflicts of interest.

"The moves would permit the board to better focus its energy and collective talent on strategic planning, overseeing financial performance, ensuring legal compliance, assessing the president's performance, and devising a plan for preserving and expanding its considerable assets to permit the institute to continue its important work after the bond measure ends," the report stated.

CIRM responded to the report with a statement thanking the Institute of Medicine for the findings. It highlighted the report's characterization of CIRM as a "bold social innovation," that has advanced regenerative medicine, and briefly mentioned the conflict of interest issues.

The CIRM response was disappointing, said John Simpson, a longtime observer of the agency who has often been critical of its handling of conflict of interest issues. By minimizing the conflict of interest issues in its response, CIRM indicated it doesn't take the matter seriously, Simpson said.

"CIRM suffers tremendously from built-in conflicts of interest, and if they want to have any credibility with the public, they should fix that," said Simpson, of Consumer Watchdog, a Santa Monica-based consumer advocacy group. "It's long past time for these guys to wake up and listen."

Simpson said changing CIRM's structure is difficult because of the safeguards in the initiative, such as requiring a super-majority vote in the state Legislature. He suggested that CIRM embrace the report's suggestions and ask the Legislature to enact them.

The California Stem Cell Report, run by veteran journalist David Jensen, provided its analysis of the IOM report reachable at utsandiego.com/iomcirm/.