$6 Billion in Taxpayer Money at Risk

The Foundation for Taxpayer and Consumer Rights (FTCR) & California Nurses Association (CNA)

Palo Alto, CA – In a comprehensive report on the oversight of California’s stem cell research discoveries, the Foundation for Taxpayer and Consumer Rights (FTCR) proposed policies to ensure that all Californians benefit from $3 billion in research grants provided by Prop 71. Asserting that broad access to cures and treatments is essential to fulfilling Prop 71‘s promises, the California Nurses Association backed FTCR’s plan.

The report will be released today at a press conference before the stem cell oversight committee’s Intellectual Property Taskforce meeting at Stanford. The report may be downloaded at: http://www.consumerwatchdog.org/healthcare/StemCell/

Other proposals being considered by the stem cell oversight committee say the state should closely follow guidelines for federally funded research, but these would not deliver Prop 71‘s promise of public benefit, FTCR said.

“Too often flawed federal rules have proved to be a blank check for drug and biotech companies,” said John M. Simpson, FTCR’s Stem Cell Project Director. “Californians were promised our stem cell institute would be a model for the world and we expect the best. That means enacting the right rules for California that protect the interests of patients and taxpayers.”

Key provisions of FTCR’s plan include requirements that the state would receive at least 25 percent of royalties from Prop 71 funded discoveries and that the California Attorney General would have the authority to intervene if the stem cell institute or Prop 71 grantees fail to make taxpayer-funded discoveries affordable and widely available. The state’s share of any royalties would be used to help fund access to Prop 71 therapies for people who cannot afford them. FTCR also called for the creation of a Prop 71 “patent pool” to make discoveries more available to other researchers.

“As nurses, we’re on the frontlines of health care,” said Deborah Burger, California Nurses Association (CNA) President. “We know how important it is that everyone have access to the best medical technology and cures, not just a wealthy few.”

FTCR’s report comes as the board overseeing California’s stem cell institute debates who should control medical cures resulting from the taxpayer-funded research and whether the public deserves a return on its investment.

Under debate are policies, intellectual property (IP) rules, that determine who will control and ultimately benefit from valuable drugs and treatments resulting from the state’s stem cell research program. FTCR has cautioned the institute against accepting a proposal to accept flawed federal standards. A recent analysis of the 50 top-selling drugs over a five-year period found that forty-five of them received millions of dollars of federal taxpayer money with virtually no payback to patients or taxpayers.

“Including the financing for the bonds, the state will spend $6 billion of the public’s money,” said John M. Simpson. “Supporters of Proposition 71 promised all Californians would benefit. To fulfill their promise, IP rules must be based on three principles: affordability, accessibility and accountability.”

“The ICOC has an opportunity to adopt the rules necessary to fulfill Prop 71‘s promise,” said Burger. “They must do so.”

FTCR’s principles and polices include:

Affordability. Cures and treatments must be priced so all Californians can afford and benefit from them, not just a wealthy few. To achieve this:

• Research institutions that get CIRM funds should pay the state at least 25 percent of net royalties in excess of $100,000 received for any invention or discovery developed with Prop 71 funds.
• The state’s share of any royalties would be used to help fund access to Prop 71 therapies for people who cannot afford them.
• The licensees of discoveries developed with Prop 71 funds must sell any resulting drugs, therapies or products to the state at their lowest price.

Accessibility. Not only do all Californians deserve access to Prop 71-funded therapies, but stem cell researchers need access to the results of other Prop 71-funded research to develop the widest range of cures. To achieve this:

• The stem cell institute would create a patent pool that would include all patents resulting from research it funds. A three-person board including the California Attorney General would govern the pool.
• The institute would be able to tell an applicant that no patent is possible for a particular project if it determines that keeping the expected results in the public domain best promotes further research.
• Any California-based researcher would be able to use the results of Prop 71-funded research for further research without paying a licensing fee.

Accountability. Polices must assure that grantees and licensees fulfill their obligations when benefiting from public money. To achieve this:

• The California Attorney General would have “march-in rights” — the ability to intervene — if a drug or therapy were priced unreasonably or any other public benefit requirement is not met.
• The institute would have the responsibility to take control of new therapies for public health and safety reasons. For instance, meeting the public need of getting vaccines to market.
• All investors and researchers involved in commercial enterprises resulting from Prop 71-funded research would be required to file disclosure forms. These would be public records.

The $3 billion in stem cell research grants have been held up by two lawsuits brought by opponents to stem cell research. The lawsuits allege that the research institute has violated the California Constitution’s requirement that the state must control taxpayer-funded endeavors.

FTCR said that the institute could go a long way to eliminate those legal concerns by adopting an IP policy that guarantees public control and benefit of research discoveries.

FTCR and the CNA also agreed that the stem cell oversight committee, the institute and its working groups must follow good government requirements including public meetings, providing access to all records and grants, and disclosing conflicts-of-interest like any other state agency.

“It’s the public’s money that’s funding this research and that makes it the public’s business,” said Burger. “The public’s business must be done in public and seen to be done in public.”

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The Foundation fro Taxpayers and Consumer Rights is California’s leading non-profit and non-partisan consumer watchdog group. For more information visit us on the web at http://www.ConsumerWatchdog.org