CONTRA COSTA TIMES
PALO ALTO, CA — For months, critics have questioned whether California taxpayers will receive a dime from their huge investment in stem cell research.
On Monday, a panel of stem cell leaders endorsed policies designed to ensure that taxpayers receive a share of royalties earned by universities and other nonprofit institutions.
Such organizations would also be required to develop plans for making any groundbreaking stem-cell therapies available to the state’s low-income and uninsured residents.
The moves won praise from one consumer advocate.
“There’s a need to remember that this is public money funding this research,” said John Simpson of the Foundation for Taxpayer and Consumer Rights. “I had a sense that there was recognition of that today and there was progress in a number of areas that I thought was outstanding.”
The policies were adopted by the stem cell board’s intellectual property task force, and now go to the full stem cell board Feb. 10 for final approval.
They deal only with nonprofit institutions that receive funding grants. A separate policy, for biotech and other commercial firms, will be considered at a later date.
At issue is the return California taxpayers will reap from their unprecedented, $3 billion investment in stem cell research during the next 10 years.
During the campaign for Proposition 71, supporters predicted as much as $1 billion would flow back to state coffers through royalties from stem cell therapies.
But last year, critics wondered whether that was an empty promise after experts testified that under federal tax law, if California required companies to share royalties, it might be prevented from issuing tax-exempt bonds to finance the program.
Issuing taxable bonds could increase the state’s cost by as much as $700 million because of higher interest rates.
But Ed Penhoet, who chairs the stem cell board’s intellectual property task force, said Monday that stem cell leaders now believe they can impose royalty-sharing requirements without violating federal tax laws by timing when bonds are sold and issuing a combination of taxable and tax-exempt bonds.
None of that can happen any time soon, however. The program has been stalled by lawsuits challenging its constitutionality. While the case makes its way through the courts, stem cell leaders are moving to put policies in place.
The intellectual property questions prompted Sen. Deborah Ortiz, D-Sacramento, a strong stem cell supporter, to hold a hearing in November to explore ways to make sure taxpayers are not shortchanged on their investment.
On Monday, before the stem cell meeting, Simpson joined Deborah Burger, president of the California Nurses Association, for a news conference to promote their own plan for providing benefits for California residents.
“As nurses, we’re on the front lines of health care,” Burger said. “We know how important it is that everyone have access to the best medical technology and cures, not just a wealthy few.”
Under the policy endorsed by the stem cell panel Monday, universities and other nonprofit institutions would provide the state with a portion of the royalties they receive from licensing inventions that are developed with stem cell research funds.
Such organizations would return 25 percent of their royalties in excess of $500,000. They also would share a fraction of their royalties with the inventor under their established policies.
To receive a grant, each nonprofit organization would be required to develop a plan for providing access to any therapies for the state’s Medi-Cal recipients and uninsured residents.
Stem cell leaders decided to give the organizations flexibility as to how to accomplish this but suggested they may want to agree to sell therapies to the Medi-Cal program at their lowest commercial price, for example.
Such plans should be filed with the stem cell board annually and be available for public scrutiny, the task force recommended.
Still to be decided is how this would be enforced. The plan presented Monday by the California Nurses Association and Foundation for Taxpayer and Consumer Rights recommends that the attorney general have the power to provide enforcement.
The policy adopted by the stem cell panel Monday would give the California Institute of Regenerative Medicine, which oversees the state’s stem cell program, “march-in rights.” If an organization has an exclusive license for a stem cell invention but is not moving to make it available in a reasonable time frame, the stem cell agency could step in and require that other organizations be licensed.
The policy also seeks to ensure that researchers share their findings with other researchers and prepare papers explaining them in plain English for the general public.
After the meeting, Simpson noted that he still has to examine the details in the final document, but said the policy addresses many of his group’s concerns.
“I don’t think anybody really believes that the state is going to have a big payoff soon in terms of royalties,” he said, “but whatever the payoff is, it’s important that the public gets its fair share.”
Reach Sandy Kleffman at 925-943-8249 or [email protected]