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Genetic Crossroads
March 31st, 2005

After only three months of operations, California's new $3 billion stem cell research program is facing numerous challenges. After holding hearings on the California Institute for Regenerative Medicine (CIRM), two state Senators - one a prominent supporter of the ballot initiative which created the program - have put forth a reform package that addresses many of the concerns raised by the Center for Genetics and Society and our allies before and since the November election. Moreover, more groups and prominent individuals who support embryonic stem cell research are adding their voices to those criticizing the new program. Of key significance is a formal petition filed with the CIRM governing board by former federal Assistant Secretary for Health Phil Lee and public interest attorney Charles Halpern, requesting specific policy changes.

The growing chorus of criticism - some from supporters of Proposition 71, which created the CIRM - addresses both major flaws in the initiative itself and missteps of its governing board, the Independent Citizen's Oversight Committee. The leadership of the CIRM has responded by adopting much of the critical rhetoric, but has delivered only promises - not policies.

Legislative Hearings


This pattern was most evident at a special Legislative hearing on March 9 in Sacramento. The joint session of the Senate and Assembly Health Committees and the new Senate Subcommittee on Stem Cell Research Oversight was chaired by Sen. Deborah Ortiz (D-Sacramento), a prominent Proposition 71 supporter. The chief power behind the CIRM and Proposition 71, Robert Klein, had previously accepted an invitation to testify at the hearing, but then declined to appear, and instead sent newly appointed interim CIRM President Zach Hall.

The legislators grilled Hall throughout the long afternoon. They also heard testimony on topics including human egg supplies for research, conflicts of interest, and open meetings. Marcy Darnovsky of CGS, Francine Coeytaux of the Pro-choice Alliance for Responsible Research, Terry Francke of Californians Aware, public interest attorney Charles Halpern, and John Yuasa of the Greenlining Institute were among those who testified.


It was in this forum that a major complication for the CIRM was brought to the fore - the enormous supply of eggs needed for large-scale research cloning (also called somatic cell nuclear transfer or therapeutic cloning). In her testimony, Coeytaux cited an open letter by Suzanne Parisian, former Chief Medical Officer of the Food and Drug Administration, describing the possible long-term health effects of the drugs used to induce hyperovulation in women for multiple egg extraction. Additionally, CGS associate executive director Marcy Darnovsky suggested that California consider a licensing program for research cloning similar to that used in the United Kingdom.

Dr. Hall made some rhetorical concessions about the concerns raised. He said that the conflict-of-interest provisions recently adopted at the National Institutes of Health were the "gold standard," and that grants should not be issued until such provisions are in place at the CIRM. But his firm defense of exempting the influential CIRM Working Groups from open meetings and public records laws - despite his statements of commitment to openness - was disturbing. The Scientific and Medical Research Facilities Working Group must meet behind closed doors, he asserted, because choosing which facilities to fund is a scientific decision and thus must follow peer review procedures. And the proceedings of the Scientific and Medical Accountability Standards Working Group must be kept private, as well, because its proceedings will include the medical histories of individuals.

These justifications were unconvincing. Sen. Ortiz commented, "I am not sure it is a compelling policy argument." Terry Francke of Californians Aware noted that of the fourteen responsibilities of the Working Groups, only three would occur in a peer review format. Francke also pointed out that Californians passed another proposition on the same day as Proposition 71 - and by a wider margin - that enshrines the principles of open meetings in the state Constitution.

Public interest lawyer Charles Halpern, whose citation of California's open meeting law caused much of the agenda of the first ICOC meeting in December to be delayed, testified to the need for strict provisions against conflicts of interest at the CIRM: "The ICOC is an institution which is, regrettably, ridden with conflicts of interest… [M]ost of the people sitting around that table are people who have a direct interest in obtaining grants." Halpern's description of these structural conflicts prompted Senator Edward Vincent to comment, "It seems like a poker game to me."

Reform package from Senate

A week after the hearings, Senators Ortiz and George Runner unveiled a reform package for the stem cell program. It addresses many of the key complaints aired by CGS and our allies before and after the Proposition 71 campaign.

In a joint press statement, CGS and the Pro-Choice Alliance for Responsible Research expressed their support: "The voters of California passed Proposition 71 based on promises of widely available cures, high ethical standards, and public accountability. They did not vote for throwing out laws that prevent secret meetings and guard against conflicts of interest. We're glad to see the Senators stepping up to protect Californians, who are the investors in this multi-billion dollar experiment." Californians Aware, CalPIRG, and the Greenlining Institute are also backing the package.

The legislative reforms would:

Place a three year moratorium on multiple egg extractions for research purposes

Strengthen informed consent requirements for providers of eggs for research

Bring conflict-of-interest provisions in line with those recently adopted by the National Institutes of Health

Subject the Working Groups to California's open meetings and public records laws - with reasonable exceptions

Make any treatments developed from the research available to California citizens at affordable costs

Ensure royalties to the state

Require a performance audit of the CIRM

In a press conference, Sen. Ortiz asserted that these changes will bring the law in line with what the voters were promised by the Proposition 71 campaign: "To maintain the public's confidence, the integrity of this important research and California's significant financial investment, we must make sure meetings are open to public scrutiny, strict conflict-of-interest and economic disclosure standards are developed, patients' rights are protected and the state receives a fair financial return on its generous investment…. These measures will uphold our promise to the public that Proposition 71 is implemented in an open, thoughtful and deliberative manner."

Because of the nature of Proposition 71, some of these reforms will require a two-thirds vote in both houses and then approval from the voters in a referendum, while others need simple majorities in both houses and the governor's signature.

Lee-Halpern Petition


Prior to the legislative hearings and reform proposals, Philip R. Lee, MD, former United States Assistant Secretary for Health and Charles Halpern, a public interest attorney, filed a petition with the ICOC. The petition proposed regulations concerning conflicts of interests, compensation and hiring, open meetings of the Working Groups, and the timeline for grants. In a statement, Dr. Lee said, "The Committee has been given an enormous responsibility by the voters of California. It must adhere to high standards of conduct to earn their trust."

The petition was supported by CGS, Pro-Choice Alliance for Responsible Research, Californians Aware, California Nurses Association, Foundation for Taxpayer and Consumer Rights, Greenlining Institute, CalPIRG, and Redefining Progress. All of the petitioners and supporters either support embryonic stem cell research, or remain neutral on the issue.

At its March 1 meeting in Palo Alto, the ICOC handled the petition in a chaotic fashion. On the agenda was a drafted motion that would have delegated complete authority to the Chair, Robert Klein, to respond to this and all future petitions. As this agenda item was taken up, members of the press were called from the auditorium to the lobby for an availability session with the new CIRM interim president, Zachary Hall, whose appointment had been announced earlier that day. The drafted proposal was never mentioned. Instead, in the words of a Sacramento Bee editorial, "From that point on, Klein lost control of the proceedings. The committee wasted 30 minutes debating whether to write a perfunctory response to Halpern and Lee or - horrors! - actually meet with them."

The committee finally unanimously passed and amended motion. The initial motion granted Klein, vice-chair Edward Penhoet, and Hall the authority to write a minimal response to the petition. The amendment by Dr. Michael Friedman stated that, "we make a decision here and now that our formal response will be that these [concerns raised by the petition] are so important, that we will lay these out in public meetings; … [that] we will not be dispensing funds to grants until these policies are explicitly dealt with in the most serious way; … [that] we say to petitioners, 'yes, thank you for pointing these out,' [that] we will hold public discussions properly noticed, and properly prepared for; and that we not give it to [the Chair] and a subgroup to work on."

Two weeks later, when a written response to the petition was delivered, it failed to fulfill the terms of the amended resolution in several ways. The topics in the petition were scheduled for discussion at subsequent ICOC meetings, a format quite unlike "public discussions." Furthermore, the response included substantive arguments as to why the ICOC will reject the petition's request - a move which seems to preempt any true deliberation. And the response was solely from Klein.

Conservatives' lawsuits

In contrast to the petitioners and their supporters, three conservative groups who oppose any public funding of embryonic stem cell research filed lawsuits directly with the California Supreme Court in an attempt to halt the CIRM. Two groups that advocate for low taxes and limited government assert that the Proposition 71 violates the state constitution because the CIRM is not directly under state control. Another group affiliated with opponents of abortion rights claims the proposition is unconstitutional because it contained more than one law in a single initiative.

Although both the plaintiffs and the state wanted the issue to be resolved directly by the Supreme Court, the court rejected this request, sending the cases to lower courts. In the meantime, the Attorney General's office has advised that bonds cannot be issued while the constitutionality of the program is in question. Klein has acknowledged that this will delay grants by a few months, but says he will unveil an "alternate" plan for funding at the next ICOC meeting, on April 7 in Los Angeles.

While the Center for Genetics and Society agrees with many of the assertions in the lawsuits, we do not support their end goal of ending the public funding of embryonic stem cell research.

Klein's conflated role


As described in the last issue of Genetic Crossroads, Robert Klein has been creating increasingly conflicting roles for himself. He was a chief author of the law, the chairman and top donor to the Yes on 71 campaign, and founder and initial chairman of the California Research and Cures Coalition, a stem cell advocacy organization, and he is now the board chairman of the new institute that will disburse billions in grants. The CRCC inherited the staff and infrastructure of the campaign, and provided interim staff support for the CIRM during its first months. Both the Yes on 71 campaign and the CRCC have been housed in the offices of Klein Financial Corporation.

The majority of the new CIRM staff previously worked for the Yes on 71 campaign. Upon questioning from a fellow ICOC member, Klein defended the practice of "direct recruitment" from the campaign. Moreover, because Proposition 71 exempts the CIRM from civil service laws, the new employees are paid considerably more than their equivalents in state or federal government. For example, the interim president of the CIRM will receive $396,000 annually, while the salary of the director of the National Institutes of Health is only $140,000.

Furthermore, a report in the Los Angeles Times showed that the Yes on 71 campaign is $6 million in debt - over $1 million of which is owed to Klein. Not only must the CRCC/Yes on 71 committee raise funds for this debt - some of which will go to repay these personal loans from Klein - but it plans on raising more to fight a proposed federal ban on research cloning, and presumably to oppose any CIRM reforms in the legislature or on the ballot.

Meanwhile, the chairman is not winning many friends in the statehouse. Not only did Klein rebuff theinvitation to testify at the hearings after publicly stating he was willing to work with the legislature, but he called and visited several legislators, asking that the hearings be delayed. (And on the day before the hearings, the CRCC emailed an action alert, asking its supporters to call their legislators and make the same request.) According to an email sent to the California Stem Cell Report weblog, "Legislators who have had any contact with Klein generally believe Klein is ICOC's own worst enemy. He has driven everyone here [in the State House] nuts.… The feeling under the dome is the guy's a megalomaniac and a liar. No one agreed with his request to call off the hearing. If anything, it only made them mistrust him more and raised concerns about what is going on over there behind closed doors."

National attention

The travails and challenges at the CIRM are now generating national attention. In the last month, news stories on the Institute's problems have been featured in Nature, Science, the Washington Post, the Associated Press, and NPR's Morning Edition. Hopefully, legislators in the several states that are considering similar stem cell research funding projects are paying attention. But initial signs (see following story) are not encouraging.

More information on the California Institute for Regenerative Medicine can be found at:


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