Stem Cell Panel Follows Some Key “Public Benefit” Proposals for Prop 71 Research

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FTCR Calls for Affordability & Enforcement

Santa Monica, CA — In a comprehensive report on the oversight of California’s stem cell research discoveries, the Foundation for Taxpayer and Consumer Rights (FTCR) has proposed policies to ensure that all Californians benefit from $3 billion in research grants provided by Prop 71.

Meeting in Stanford on Monday, the stem cell oversight committee’s Intellectual Property Taskforce moved to accept key parts of FTCR’s plan — particularly that Prop 71 cures be made available to underserved populations and that the state recoup some of the taxpayers’ investment. FTCR warned that the devil is in the details and vowed to monitor the implementation process and push for key adoption of key missing elements.

Asserting that broad access to cures and treatments is essential to fulfilling Prop 71‘s promises, the California Nurses Association backed FTCR’s recommendations.

Other proposals say the state should closely follow guidelines for federally funded research, but these would not deliver Prop 71‘s promise of public benefit, FTRC said.

“Too often the flawed federal rules have proved to be a blank check for biotech,” 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 in FTCR’s plan include provisions that the state would receive at least 25 percent of royalties from Prop 71 funded discoveries and that the attorney general could intervene if the public benefit requirements were not met. 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. The full oversight committee takes up the rules at its February meeting.

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 it.
  • 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 assuage those legal concerns by adopting an IP policy that guarantees public control and benefit of research discoveries.

“We’re pleased by the acknowledgment Monday of the need to act for the public’s benefit,” said Simpson, “but the devil is in the details. For instance, we still think enforcement needs to be done by the state’s top cop — the attorney general — and the policies most ensure affordable access for all Californians.”

He also noted that yesterday’s rules cover only grants non-profit institutions. The regulations governing grants or commercial enterprises will be much more likely to be ridden with conflicts of interest.

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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:

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Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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