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California Stem Cell Program: A Billion-Dollar Bait And Switch?

Genetic Crossroads
November 10th, 2005

Robert Klein, chair of the new California stem cell research agency and of the initiative campaign that created it, withheld critical information from California voters during the campaign, according to the San Francisco Chronicle.


According to the front-page account, Klein knew that ensuring royalties to the state from research funded by last November's $3-billion Proposition 71 was questionable because of its tax implications. Yet he and the campaign continued to promise voters that the state could receive up to $1.1 billion in royalties without incurring a federal tax burden.

The leadership of CIRM appears to be backpedaling on many key promises made to voters during last year's initiative campaign. It has raised doubts both about whether it will honor explicit claims that the state will share any profits and ownership rights from discoveries funded by the agency, and about whether it will keep implicit promises that any successfully developed treatments will be widely accessible to Californians. Stem cell-based therapies are likely to be extremely expensive, and unless they are affordably priced, they will not be available to millions of Californians.

CGS's Jesse Reynolds testified at a hearing of the Senate Subcommittee on Stem Cell Research Oversight on October 31.

Chaired by Senator Deborah Ortiz (D-Sacramento), the hearing included testimony by several intellectual property experts who offered suggestions about how the stem cell agency can maximize both financial returns to the state and accessibility of treatments.

The only member of CIRM's governing board to testify was Edward Penhoet, founder of the biotech giant Chiron Corporation who chairs the agency's task force on intellectual property. Penhoet, who happened to make headlines on the day of the hearing because Chiron was sold to Novartis for $5.1 billion, asserted that the stem cell institute's leadership has not yet decided on a policy for intellectual property.

Related articles:

"Opinion: Stem cell royalty promise just election ruse?" Sacramento Bee (November 7)

"Debate grows over return from stem cell program," Contra Costa Times (November 1)

"Tax law casts doubt on stem cell royalties: State may not reap billions promised to voters last fall," San Francisco Chronicle (October 25)

"Stem-cell wonderland / Will cures be affordable to all?," Sacramento News & Review (October 20)

"Opinion:State needs return on investment in stem-cell studies," San Jose Mercury News
By Jerry Flanagan and Deborah Burger (October 11)


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