Stem cell: California’s ARS and its multibillion-dollar clout

California’s taxpayer-financed stem cell agency will give away $98 million later this week, but the agency’s full, 35-member board is not going to have much to do with making decisions about who gets what.

That’s because 15 members of the governing board are barred from voting on applications for any of its research awards, which will ultimately total roughly $5 billion over the next decade or so.

The ARS is functionally a subset of the Independent Citizens’ Oversight Committee, whose cost to taxpayers is expected to be about $12 billion over the next decade or so.

The odd situation exists because of built-in problems involving conflicts of interest — matters that have dogged the agency, known officially as the California Institute for Regenerative Medicine (CIRM), since its inception in 2004.

Here is how it all works, but first a warning.

What follows is a dive into a condensed, alphabet soup of acronyms. The uncondensed version of the soup actually totals 17,000 words (Proposition 14 of 2020). Not to mention additional regulatory verbiage created by CIRM. (This article runs only about 1,000 words.)

With that said, here is a go at picking out the best bits from the broth.

Come Thursday of this week, a group called the Application Review Subcommittee (ARS) will convene electronically to take the legal votes necessary to ratify award decisions made earlier by a panel of anonymous reviewers from out of state.

The subcommittee (the ARS) is functionally a subset of the Independent Citizens’ Oversight Committee (ICOC).  That is the formal name of the governing board of the agency, whose cost to taxpayers is expected to be about $12 billion over the next decade or so.

The subcommittee (ARS) effectively consists of 20 members of the 35-member board (the ICOC). All 35 are nominally on the awarding subcommittee, but 15 cannot vote.  They are only ex officio members of the ARS.

The University of California has the largest voting bloc (13) on the governing board.

The ARS  subcommittee was created by the ICOC in 2013 in the wake of sharp criticism by the National Academy of Medicine, which was paid $700,000 by CIRM itself to evaluate its work.

Harold Shapiro,  former president of Princeton University and who led the academy’s study, said at the time, “They (the agency’s directors) make proposals to themselves, essentially, regarding what should be funded. They cannot exert independent oversight.”

The CIRM board did not like what it heard. But it took some steps to deal with the problems identified by the prestigious organization, then called the Institute of Medicine.

One of those steps led to the formation of the ARS and the exclusion of all the other board members from voting on awards or discussing them at meetings. Board members who were excluded largely had obvious ties to enterprises that could benefit from CIRM’s largess.

The current members of the ARS, however, include five ICOC members with ties to the University of California (UC), which has the largest voting bloc (13) on the governing board. The ARS members include CIRM Vice Chair Art Torres, who is a member of the University of California board of regents. The others are Elena Flowers, Christine Miaskowski and Adriana Padilla, all of whom have positions with the University of California, San Francisco. The fifth with UC ties is Karol Watson, who is a member of the faculty at UCLA.

To prevent legal conflicts of interest at meetings of the ARS, CIRM’s lawyers prepare a list of ARS members with conflicts of interest on each application. The list of conflicts is given to each member with instructions not to vote or participate in any discussion of the applications in question.

The study said the composition of the board makes it neither “independent” nor capable of  “oversight.”

What does all this mean in terms of good government and public policy? One of the stronger criticisms of the 2004 ballot initiative that created CIRM was that the agency was to be overseen by a board that included a number of persons with ties to institutions that stood to benefit.

In fact, 80 percent of the awards — $2.1 billion — made over the life of the agency went to institutions with links to members of the CIRM board, according to a 2020 analysis by the California Stem Cell Report. 

The academy’s 2012 study of the stem cell agency said,

“Far too many board members represent organizations that receive CIRM funding or benefit from that funding. These competing personal and professional interests compromise the perceived independence of the ICOC introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board.”

The study said the composition of the board makes it neither “independent” nor capable of  “oversight,” although the board is legally dubbed the Citizens’ Independent Oversight Committee.

The two ballot initiatives that created and sustain the agency are at the heart of conflict problems.

Placing deans of medical schools and patient advocates on the board who are linked to specific diseases “raises questions about whether decisions delegated to the board—particularly decisions about the allocation of funds—will be made in the best interests of the public or will be unduly influenced by the special interests of board members and the institutions they represent. Such conflicts, real or perceived, are inevitable….,” the study said.

The two ballot initiatives that created and sustain the agency are at the heart of conflict problems. The initiatives specify that some board members be selected from enterprises likely to receive awards.  CIRM’s former general counsel, James Harrison, who also helped to draft both initiatives, once described the situation as “inherent conflicts of interest.”

CIRM’s board had an opportunity in 2020 to remove the conflicts. It came during the writing of Proposition 14, which saved the agency from financial extinction. CIRM directors could have insisted that its sponsor, Robert Klein, a Palo Alto real estate developer, remove the problematic language, telling him that they would not support the measure without changes.

But they did not.

Here are the current members of the ARS with links to their CIRM bios:
—Dan Bernal
—Anne-Marie Duliege
—Ysabel Duron
—Mark Fischer-Colbrie
—Fred Fisher
—Elena Flowers
—Le Ondra Clark Harvey
—David Higgins
–Steve Juelsgaard
—David Martin
—Christine Miaskowski
—Lauren Miller Rogen
—Adriana Padilla
—Joe Panetta
—Al Rowlett
—Jonathan Thomas
—Art Torres
—Karol Watson
–Rich Lajara
–Unfilled position

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Editor’s Note: CORRECTS to show that ARS will have 20 members instead of  18; the incorrect  information came from the CIRM website. Rich Lajara was not listed as a member by CIRM, which also  did not note there is a vacancy on the panel. EDITS  throughout to conform, ADDS Lajara to the ARS list, notes unfilled position.