Fledgling stem cell program faces legal threat from the left

One day after a federal judge threw out one of the lawsuits by anti-abortion
groups against California’s fledgling stem cell agencies, a liberal watchdog
group warned it might launch its own legal challenge.

“We’re hoping it doesn’t come to that,” said Jerry Flanagan, the health care
policy director for the Foundation for Taxpayer and Consumer Rights, a
frequent critic of the California Institute for Regenerative Medicine.

“We’re hoping CIRM will do what they said they would do.”

At issue are the campaign promises that were used to sell Proposition 71.
The initiative, approved last year, created a $3 billion stem cell research
program, with the funds to be distributed by CIRM. But nearly 12 months to
the day after voters approved it, the program remains stalled as it fields
concerns over its public accountability and its credibility.

Voters were sold not just on the promises of miracle cures, Flanagan said,
but also with the promise that the state would see somewhere between $500
million and $1 billion from royalties and licensing from intellectual

These numbers, however, were never actually written into the initiative.
Many intellectual property experts say that Californians may never see the

Flanagan’s comments came before the long-delayed first meeting of the
Intellectual Property Task Force that is supposed to determine who will own
the potential technologies that will come out of California’s 10-year effort
to fund stem cell research.

In recent months, many experts have been warning that California may not be
able to get the kinds of returns on it’s investment that had been promised.
UC Berkeley professor Pamela Samuelson says that federal government efforts
to control–and profit from–new discoveries do not have a very promising

“The government was not very good at deciding what types of discoveries
needed to be transferred [to the private sector],” said Samuelson.
This problem was largely taken care of by the Bayh-Dole, the 1980 federal
law that regulates the intellectual property developed with federal funding.
Flanagan countered that Bayh-Dole has created a huge corporate giveaway at
the expense of taxpayers.

“Forty-four percent of all medical research is taxpayer funded,” said

But Stephen Rockwood warned that critics might be oversimplifying the
issues. Rockwood is co-chair of the IP Study Group of the California Council
on Science and Technology, which has been advising the state on stem cell IP

“When you say ‘drugs created with public money,’ I wonder what drugs you’re
talking about,” Rockwood said “The NIH [National Institutes of Health] does
not put drugs on the market. They fund basic research through phase 1.
Affordability has to work both ways: affordable to the consumer, and
affordable to the companies developing the drugs.”

Even if it is unlikely that Californians could realistically make a profit
from Prop. 71, CIRM might still be held liable for promises made during the
campaign, Flanagan said. After all, the Committee for Proposition 71 was
headed by Robert Klein II, who is now the chairman of CIRM.

The Committee for Prop. 71 also paid for the study that was the source of
the numbers used in the campaign. This was according to one of its authors,
Bruce Deal, managing partner the Analysis Group, a consulting firm based in
Menlo Park. Last month, Deal told the Capitol Weekly that the estimates were
based on what could be possible if California was able to option
intellectual property rights–and that they had widely been taken out of

A new suit could come at a bad time for CIRM. The agency has been unable to
distribute research funds because of three lawsuits filed by anti-abortion
groups, and has been operating on a $3 million loan from the state.

With one anti-abortion lawsuit probably out of the picture and the fates of
the other two in doubt, CIRM would appear to be getting closer to getting to
work. Recent advances, such as experiments that have shown it is possible to
develop new stem cell lines without destroying human embryos, may also be
clearing away some of the moral concerns among religious conservatives.

But the intellectual property question is far bigger than who will make the
money off of whatever therapies finally make it to market, Samuelson warned.
The state won’t just be dealing with drug patents but with stem cell lines,
basic research discoveries, even software–and Bayh-Dole doesn’t have all the
answers, she said.

The main goal, many panelists said, should be to make sure that companies
don’t just sit on potential life-saving discoveries. Samuelson suggested the
creation of “open source” databases for sharing discoveries, as well as
“march-in” clauses that would allow the state to take over useful patents if
private companies don’t exploit them.

Meanwhile, Task Force member Ted Love voiced concern that the group was
trying to tackle too many problems at once.

“Healthcare in this country is unequal in a lot of ways, in terms of wealth,
race and geography,” Love said. “But our mission is much narrower than that.
I don’t want to see us fail by trying to solve things that are not part of
our mission.”

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