FIRMS DOING BUSINESS WITH INSTITUTE SHOULD PAY MORE

The San Jose Mercury News (California)

A bill expected to be introduced as early as today would require companies doing business with California’s $3 billion stem-cell institute to give the state a larger portion of their revenues than the institute has proposed.

The bill by Sen. Sheila Kuehl, D-Los Angeles and Sen. George Runner, R-Lancaster, would require firms that make products based on the institute’s stem-cell grants to pay the state up to 5 percent of the product’s lifetime revenues.

Under a policy tentatively adopted on Dec. 7 by the institute, formally known as the California Institute for Regenerative Medicine, the most a company would pay the state would be 1 percent of its product’s revenue, plus 9 times the amount of the grant.

Another provision of the bill is intended to insure that poor Californians can afford treatments developed from the institute’s stem-cell grants. It would require that uninsured Californians have “significant access” to the treatments and that any treatments purchased with public money be provided at federal Medicaid prices, which are typically discounted.

By contrast, the institute’s current policy requires companies to provide their treatments to the state “consistent with industry standards,” which Kuehl argued could allow companies to charge excessively for the treatments.

Under Proposition 71, bills affecting the institute’s operations can only be passed with a 70 percent majority, which could make it tough to get the measure enacted. Nonetheless, Kuehl said voters were promised the program would generate significant financial returns to the state when they passed Proposition 71 in 2004. The measure authorizes the institute to spend about $300 million a year for 10 years on stem-cell studies. Moreover, she noted that the institute last week awarded its first stem-cell research grants.

“This is extremely important,” said Kuehl, who chairs the Senate Health Committee. “We have to nail this down now, because the first grants have gone out the door.”

“The voters believed they were going to get some royalty or benefit from their dollars,” added Runner’s spokeswoman, Becky Warren. “We just want to make sure that occurs.”

Dale Carlson, spokesman for the stem-cell institute, declined to comment in detail about the bill until he has a chance to read its language. He also said the agency’s policy governing the amount the state receives from companies that receive stem-cell grants is still being revised.

But Carlson emphasized the institute wants to ensure Californians have reasonable access to therapies developed through its grants and added, “we look forward to having a continuing conversation with the legislature about these and other issues.”

Some members of the institute previously have resisted forcing businesses to pay the state significant amounts, arguing that such a requirement could deter companies from having anything to do with the research effort. That’s a worry shared by Ken Taymor, a lawyer and researcher with Stanford University‘s Program on Stem Cells and Society.

“I’m concerned that it would discourage the most promising businesses from participating,” he said. Taymor added that the bill seems premature, since it is unlikely any products will be developed from the institute’s grants for at least a decade.

But John Simpson of the Foundation for Taxpayer and Consumer Rights said he fears the bill may not go far enough, particularly in ensuring that any products developed from the stem-cell grants be made available to Californians at reasonable prices.

While cautioning that he hasn’t seen the measure’s language yet, “I think Kuehl’s bill would increase payback to the state, but doesn’t do enough to ensure affordable access for all Californians,” he said. “There should be a provision that if there are unreasonable prices, the attorney general can intervene.”
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Contact Steve Johnson at [email protected] or 408-920-5043.