Another $5.5 Billion for the California Stem Cell Institute?

The California Institute for Regenerative Medicine (CIRM), established by a 2004 ballot initiative that allotted it $3 billion, has finally run out of cash. Proposition 14 is on the November 3rd ballot in California to re-finance CIRM with even more money — $5.5 billion plus interest. Unfortunately, the new measure does nothing to ameliorate the flaws of the old one, and in some ways makes it worse.

A lot has changed about the context of stem cell research since 2004:

• This is a terrible time for California to take on even more debt. The state had only just clambered out of a huge deficit and established a rainy day fund of $14 billion, when the disaster of 2020 caused a $54 billion shortfall. Cuts to social programs are looming.
• Federal policy has changed significantly since 2004, when the Federal government refused to fund most embryonic stem cell (ESC) research.  The National Institutes of Health (NIH) are now funding stem cell research, to the tune of over $2 billion a year.
• Private investors are investing substantial sums in developing stem cell-based products.
• Science has also changed: In addition to embryonic stem cells – and often in preference to them – scientists now use induced pluripotent stem cells (iPSCs), which are derived from adult humans and therefore can be used to develop treatments from a patient’s own cells.

In short, since 2004 both the political and the technical rationale for committing state funds to stem cell research have evaporated.

Flawed from the Start

Moreover, the original proposition, and thus the structure of CIRM itself, was seriously flawed. The 2004 proposition amended the California constitution to establish a “right to conduct stem cell research” and insulated CIRM from oversight by requiring that it establish its own rules, and that a 70% supermajority in the legislature be required for making any changes. The governing board was required to have 29 members, making it rather unwieldy (the update actually adds six more). The 2004 initiative mandated that the board’s directors include, specifically, representatives of most of the major universities in the state, private as well as public (all of which had a financial interest in the project); biotechnology companies; and advocacy groups. CIRM is also exempt from existing laws, regulations and guidelines. It was set up as a private fiefdom using public money.

Critics pointed all this out in 2004. Progressive opponents included the Center for Genetics and Society (CGS), the California Nurses Association, the Pro-Choice Alliance Against Proposition 71, CalPIRG, and Consumer Watchdog. But their concerns were drowned out by a tsunami of hype about cures, along with a flood of money, in what was for a while the most expensive (and lop-sided; supporters outspent opponents by 67 to 1) ballot initiative campaign in the state’s history.

The conflicts of interest built in to CIRM continued to draw attention over the years, including from two prestigious groups of outside analysts. In 2006, California’s independent oversight agency, known as the Little Hoover Commission, reviewed CIRM, and “urge[d] the state to reform the governance structure of the California Institute for Regenerative Medicine to improve transparency and accountability.” Not much happened. Then in 2012, CIRM struck a contract with the Institute of Medicine (IOM, now called the National Academy of Medicine) to review its operations, hoping for a positive report. IOM also recommended reforms, several of which “would require amendments to Proposition 71.” Some procedural changes were made, but Proposition 14 fails completely to address those original concerns.

It is no coincidence that both propositions were written by, and to a large extent financed by, the same individual, Robert N. Klein II, who also served as CIRM’s first Chair.

Newspaper Endorsements on Proposition 14

Now that the November election is approaching, California newspapers have started to make recommendations on the ballot initiatives. On balance, they are so far recommending voting No on Proposition 14. The Bakersfield Californian opposes it largely on economic grounds: 

Adding $5.5 billion to the state debt for just stem cell research would be unwise in these economically dire times. 

The Orange County Register agrees, calling Prop. 14 “a costly, unnecessary bond measure.” The Santa Rosa Press-Democrat headlines that: “It’s time for stem cell agency to stand on its own,” objecting to what they call “ballot-box budgeting”:

Is stem-cell research more important than education? Transportation? Safety net programs? There isn’t an easy answer, and that’s the problem with budgeting by ballot initiative.

The San Francisco Chronicle, which ran a detailed investigation of CIRM in 2018 titled “Lofty promises, limited results,” recommends:

No on Prop. 14; no need to replicate California’s disappointing stem cell experiment

... [T]he fiscal benefits are a matter of speculation. And with the pandemic, wildfires and more stretching the state’s resources, stem cell research looks like an even more unlikely gamble for a government with more pressing priorities.

Bloomberg Government has not made an endorsement, but has published a useful overview of the issue.

Perhaps the strongest editorial so far came from The Mercury News, which is worth reading in its entirety. It includes this notable criticism, which slipped past most commentators:

Prop. 14 also specifies that rather than letting the best scientific proposals guide the board’s choices, a minimum of $1.5 billion must be allocated to research on brain and central nervous system conditions such as autism, Alzheimer’s, Parkinson’s and schizophrenia. While everyone wants to see research progress in those areas, they might not be the areas that provide the best opportunities for medical advancements.

That kind of micro-management is a good example of how poorly both Proposition 14 and its predecessor were drafted, and why the limitations on reform are so unfortunate. 

Objections from Close Observers

To the surprise of many, one long-time member of the CIRM board, Jeff Sheehy, broke with the rest of CIRM’s directors and voted against endorsing Proposition 14. Sheehy was appointed to the board when the agency was set up because of his longstanding AIDS activism as a member of ACT-UP, and then communications director for the UCSF AIDS Research Institute. He also served briefly as a member of the San Francisco Board of Supervisors. Despite being an active member of the CIRM board since 2005, Sheehy calls Prop. 14 “unaffordable, unnecessary, fatally flawed and unsupportable.” In an op-ed published by the The San Diego Union-Tribune, he notes that the revision adds some new wrinkles that amount to a blatant giveaway to pharmaceutical and biotech companies, since “any returns from the state’s investment in new therapies are given back to pharmaceutical and biotech companies, thus freeing them from any price restraints since CIRM will be making up the difference.”

Another key voice is that of former reporter David Jensen, whose independent California Stem Cell Report has closely watched CIRM from the beginning. Jensen recently wrote about CIRM’s conflicts of interest in the Capitol Weekly:

Over the last 15 years, California’s stem cell agency has spent $2.7 billion on research. ...  The vast majority of the money has gone to enterprises that have ties to members of the agency’s governing board.

All of which is legal. All of which is not likely to change.

And all of which is troubling, given that this money comes entirely from the public purse. Jensen quotes Harold Shapiro, who led the IOM committee:

“They (the agency’s directors) make proposals to themselves, essentially, regarding what should be funded. They cannot exert independent oversight.”

This is exactly the complaint made in 2004 by David Winickoff, then a Berkeley professor (later a member of the CGS advisory board). He wrote in the San Francisco Chronicle that the 2004 proposition was “a risky experiment in squandering public monies”:

When we mix big money, big science and new biotechnologies with the state, stronger mechanisms for public accountability are required. 

Contrary to what its name suggests, the ICOC is neither “independent” of interest-group politics nor does it include any “citizen” members. Hard-driving university scientists, disease group advocates and private industry executives who will make up the ICOC all have vested interests in how the money is to be used.

Promises, Promises

Proponents of Proposition 14 argue that it “will provide an Economic Job Recovery Stimulus.” Well, we’ve heard that before too. The 2004 version claimed that it “could cut health care costs by tens of billions of dollars in future decades.” These numbers come from a 2004 Economic Impact Analysis (commissioned by the proponents); its estimates predicted that by now California should have saved between $1.1 billion and $11.3 billion in reduced health care costs already (we haven’t). The same report projected royalty revenues in the first 14 years of at least $10 million, and possibly $19 million; the actual number is currently $350,000 (about 1.5% to 3% of what was dangled). 

In addition to saving money, the 2004 proposition also promised cures. Its official name was “the California Stem Cell Research and Cures Act” and the proponents listed in the Voter Guide a smorgasbord of diseases that might be cured: “Cancer, heart disease, diabetes, Alzheimer's, Parkinson’s, HIV/AIDS, multiple sclerosis, lung diseases, and spinal injuries.” According to this year’s Voter Guide, Proposition 14 “funds further development of treatments and cures for chronic, life-threatening diseases like Cancer, Alzheimer’s, Heart Disease, Diabetes, Parkinson’s, Kidney Disease.” Space must have been tight, or surely the guide would also have included HIV/AIDS, multiple sclerosis, lung diseases, and spinal injuries. 

As noted above, circumstances have changed, but Proposition 14 does not reflect those changes. CIRM itself is touting clinical trials rather than cures, and boasting of building pipelines that “can be notoriously long and tricky, with plenty of twists, turns, and unexpected obstacles along the way.” That’s true. The scientists have done good work, but they have not delivered on the over-hyped promises that voters heard last time. 

As President George W. Bush famously said:

“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”