Stem cell agency draws Capitol scrutiny

Lawmakers – again — are questioning the operations and culture of the state’s stem cell program, which was created by voters nearly six years ago in Proposition 71 and has placed California at the forefront of stem-cell research and development.

But the issue isn’t so much the scientific savvy of the California Institute for Regenerative Medicine or the competence of the group that supervises it, the 29-member Independent Citizens Oversight Committee, which serves as the CIRM’s board of directors.

Rather, it is the potential for conflicts in the distribution of hundreds of millions of dollars of grants – the current total is over $1 billion  — and the perceived lack of public disclosure cloaking the agency’s activities. Proposition 71 of 2004 authorized the state to sell $3 billion in general obligation bonds and limit sales to no more than $350 million annually. Up to 6 percent of the money covers administrative costs.

Over the years, lawmakers and the state controller have sought tighter controls over CIRM, assurances that the state will get the financial benefits of products developed through the CIRM’s use of  public money and greater disclosure of the board’s activities.

The stem cell agency says that the voter-approved initiative contains numerous provisions for disclosure, including the requirement for periodic audits by both the Legislature and controller. The agency also posts reports of committee and subcommittee meetings, including summaries of vote tallies and recusals for each meeting. It details the winners of grants – although not the unsuccessful applicants – and provides other details of its proceedings.

“There is a tremendous adherence to dealing with conflicts of interest, to transparency, to making sure that anyone who has even a scintilla of a conflict is removed from the process,” said Art Torres, vice chairman of the ICOC, a former state senator and former head of the California Democratic Party. “I’m there every day. If there is a conflict, they are asked to leave the room and recuse themselves.”

But even early backers of California’s stem cell program have voiced deep suspicions of the CIRM and the board.

“Basically, the attitude has been that they just want the Legislature to go away so they can run their own show,” said former state Sen. Sheila Kuehl, D-Santa Monica, a supporter of stem cell research, who authored legislation in 2007 to tighten controls over CIRM. A number of bills targeting stem cell programs were authored by Sen. Deborah Ortiz, D-Sacramento, an early supporter of Proposition 71. Some were approved, others were rejected, but the fundamental governance of the board and CIRM remain unchanged, they say.

Kuehl’s proposal, SB 1565,  was approved by more than 70 percent in both the Senate and Assembly – the 70 percent threshold was written into Proposition 71 – and later vetoed by Gov. Arnold Schwarzenegger. An earlier, similar attempt by Ortiz also was rejected. Schwarzenegger said in his veto message that Kuehl’s bill hampered the stem cell agency from doing its job.

Another bill, SB 1064 by Sen. Elaine Alquist, D-San Jose, was introduced last month. Like Kuehl and Ortiz, Alquist supports stem cell research.

“However, CIRM is essentially accountable to no one, given the way the initiative was written,” Alquist said in a written statement when she introduced the bill, which would force changes in the leadership structure of the stem cell program, expand outside auditing authority and give greater details of board votes.

Stem cell officials, meanwhile, want the bill, which has not yet had its first policy committee hearing, sent to “interim study,” a Capitol limbo commonly used to derail or delay legislation. 

Last June, the Little Hoover Commission reported that “skepticism continues to surface from detractors, the media, members of the Legislature – even early backers – about the agency’s ability to direct funding to science that will best lead to new medical treatment and cures.”

The Commission made a number of recommendations, some of which were adopted, such as improved minutes for board meetings that identify specific votes and recusals, and the creation of succession plans for the leadership, said Stuart Drown, the commission’s executive director.

The commission believed that greater disclosure was necessary.

“It very clearly would propel forward the mission of CIRM. We support their mission. It would protect their mission and give it more transparency, more accountability,” he said.

But some recommendations were not accepted, he added. The commission also urged greater disclosure of the peer-review process, potential financial disclosure statements of peer-reviewers, beefed-up, more frequent audits by  the state controller and a reconfiguration of the powers of the CIRM.

The governance of the CIRM and the board, challenged by critics, ultimately was upheld in the courts.

But the skepticism remains in the Capitol.

Bob Klein, chair of the ICOC also wields influence over the CIRM – a dual role that has drawn criticism from, among others, state Controller John Chiang, who heads the committee that regularly audits the stem cell agency. Alquist’s bill seeks to divide the roles of the board chairman and day-to-day management of CIRM.

Klein, a successful businessman with a background in land development, also wrote most the Proposition 71 initiative and has played a key role in hiring personnel over the years. “Klein is an absolutely tremendous entrepreneur and a creative guy, and if it wasn’t for him, this (CIRM) wouldn’t even exist,” noted Consumer Watchdog’s John Simpson, who has been sharply critical of CIRM and the ICOC.

Simpson, among others, noted that 17 of the ICOC’s 29 board members have ties to entities that have received stem cell funding – more than $900 million by one estimate. Simpson also said that key proceedings of the ICOC’s scientific advisory group, which makes recommendations on grant funding to the full ICOC, are not disclosed to the public.

“When they get responsible criticism from outsiders, they kind of circle the wagons and say, ‘We know science, we know best,’” Simpson said. “I think they would be much better off if they would sit down and engage.”

“The fact of the matter is,” he added, “is that in virtually every case, the full board accepts the recommendations of the advisory panel, which means in a de facto way it is the scientists who are really making decisions on who gets grants and who doesn’t. At a minimum, they are acting in a policy-making way that should require them to file Form 700 (financial disclosure) reports. But they don’t, and they are exempt from having to file the same kind of financial disclosure reports that other state officials are required to file.”
 The lack of disclosure, Simpson added, is a major bone of contention.

David Jensen, publisher of the California Stem Cell Report blog, has covered CIRM since its inception and has written extensively about the potential conflicts and other issues at the agency. Jensen, a retired newsman who lives in Manzanillo, Mexico, is one of the few journalists to systematically cover California’s stem cell program.

“I have been told by some reporters that in recent years that CIRM has been less than responsive. Since I am a blogger, albeit the only medium that covers the agency with regularity, it is difficult to tell w
hether the agency’s interactions with me reflect its standard media responsiveness,” Jensen wrote in an email to Capitol Weekly, which sought his views on the activities of CIRM and the ICOC.

“Coverage of the agency has been extremely light in the last couple of years, so it is also difficult to tell whether there is significant dissatisfaction from reporters who have written about CIRM. Not that reporters should always be happy, but CIRM ill serves its own mission if it does not communicate well with the media,” he added.

In the end, CIRM’s difficulties with the Legislature may stem in part from its lack of political sophistication – a problem that the newly named ICOC vice chairman, Torres, may be able to resolve.

“That ‘interim study’ thing, that was Torres coming up with that. It was actually a sensible political move. What they need to have happen is to engage the Legislature instead of stiff-arming them,” Simpson said.

“You watch,” said one Capitol staffer who asked not to be identified, “Art’s over there, and in two years we won’t even be talking about disclosure. We’ll be talking about cures.”