Senate Health Committee, Senate Subcommittee on Stem Cell Research
Oversight, Assembly Health Committee, Assembly Judiciary Committee
San Francisco, California
My name is Jesse Reynolds. I am the director of the Project
on Biotechnology Accountability at the Center for Genetics and
Society, a public interest organization advocating responsible
societal governance of the new human biotechnologies. We support
human embryonic stem cell research and its public funding, but
have raised many concerns about Proposition 71 and the activities
of the California Institute for Regenerative Medicine.
Thank you for giving me the opportunity to speak.
As we have heard today, intellectual property is perhaps the
most pressing issue facing the CIRM. An IP policy must be in
place before any grants, including training grants, are issued.
The Center for Genetics and Society believes that provisions
regarding returns to the state and accessible pricing must be
made explicit before individual grant agreements are negotiated.
This will make it much easier to secure terms that benefit the
citizens of California.
IP policy has a major influence on all aspects of stem cell
research and applications. I'll note just three. First, it determines
the level of financial returns to the state. Second, it can
determine whether any applications are likely to be affordable
by the majority of Californians. And third, it can, if poorly
crafted, undermine public support for the work of the CIRM.
If CIRM-funded research leads to a valuable product that a pharmaceutical
firm is selling at high prices with little return to the state,
public support for the work of the CIRM is very likely to decline.
As we've heard, there are many different approaches to crafting
policy regarding intellectual property. Like all policies, policies
on intellectual property are grounded in sets of values and
criteria. I'd like to focus on an important set of values and
criteria that haven't been emphasized, namely, those outcomes
promised to the voters of California during the Proposition
During the course of the campaign, voters were repeatedly told,
"Trust us with your taxpayer dollars, we'll do the research
and deliver the therapies, and the state will financially benefit
in the process." They were told that the initiative would
provide an opportunity for the state to receive a share of royalties.
These claims were made in printed materials, television and
radio ads, public statements and all other communications, throughout
Although these pledges do not carry the weight of law, they
were clearly a foundational element of voter support. At the
March hearing of this committee, bioethicist Arthur Caplan repeatedly
called the language used in the campaign an "implicit moral
We can make allowances for typical campaign rhetoric and still
understand that these pledges have created an obligation. Ask
yourselves: if the voters of California had been asked last
November to approve $3 billion in taxpayer dollars for stem
cell research without pledges that this money would be returned
to the state, what effect would this have had on the final vote?
The presentation used by the campaign, available on its website,
cites the state's "opportunity to share in royalties resulting
from the research, which could generate millions in additional
state revenues for decades to come."
The economic analysis commissioned and promoted by the Proposition
71 campaign estimated that the state could expect to receive
up to 1.1 billion dollars in direct returns.
And, as a typical example, an op ed by Edward Holmes, John Reed
and Joe Panetta - two of whom are now on the ICOC - that ran
just before the election in the San Diego Union Tribune, said
"Proposition 71 … has the potential to bring the state
of California billions of dollars through new tax revenues,
patent royalties and by reducing California's skyrocketing health
Earlier this year, the public became aware that such returns
to the state may conflict with the federal government's provision
for tax exempt bonds. We were disturbed - to put it mildly -
to have learned last week from a story in the San Francisco
Chronicle that Robert Klein, as chairman of the Proposition
71 campaign, knew of this likely conflict but did not inform
the voters. Yet the campaign continued to project financial
returns that relied on tax exempt bonds and returns to the state.
Mr. Klein himself said on national television, in no uncertain
terms, that "The state of California will gain jobs, new
tax revenues and intellectual property revenues to pay back
If this report is true, then Mr. Klein knowingly misled the
voters of California and the supporters of Proposition 71.
I am sure you are aware of the crisis of health care disparities
in America. Millions of Californians lack health care, and even
those who have it often find their share of the costs difficult
to cover. And the largest source of rising health costs is the
price of pharmaceuticals.
One of our original concerns about Proposition 71 was that it
could greatly exacerbate health inequities. Stem cell therapies
are expected to be extraordinarily expensive. We've heard a
leading CIRM scientist say that some stem cell therapies could
cost one hundred thousand dollars per patient., and paraphrasing,
"I don't like that, but it's not my job to worry about
it. Our job is just to do the science."
The CIRM's policies, and its IP policies in particular, can
greatly influence the degree to which Prop 71 contributes to,
health care disparities.
The ICOC is obliged to enact policies, to the best of its ability,
which fulfill the promises made to voters. Unfortunately, the
work so far is not encouraging. The leadership of the new institute
has been surrounded with an echo chamber of enthusiasm for the
status quo, that is, the Bayh-Dole act. As we've seen today,
there are numerous critics of Bayh-Dole who have constructive
ideas about alternative approaches, yet these perspectives have
not been included among the CIRM's advisors.
A notable example of the biased sources on which the CIRM has
been soliciting for advice is the committee of the California
Council on Science and Technology. The committee's membership
is dominated by private industry and university representatives,
particularly from technology transfer offices. These are the
very institutions that are likely to oppose provisions to ensure
returns to the state and affordable pricing.
Meanwhile, key constituencies have been notably absent in the
discussion over IP policies. These include representatives of
state government and of public interest groups, particularly
those who advocate for affordable health care.
As many of you heard at the March hearing of this committee,
some scientists believe that the "culture of science"
warrants downplaying or even disregarding the general public
interest as a criterion for determining public policies. We
believe this contention is incompatible with a commitment to
democratic governance. We don't believe that the CIRM leadership
is entitled to use public funds without continuing and effective
oversight by the general public through its elected officials.
The Center for Genetics and Society is looking to this committee
to provide leadership ensuring that the promises of the Proposition
71 campaign and the promise of stem cell research in California
are fulfilled. The results of this generous public investment
must benefit all Californians - not just the wealthy and not
just the pharmaceutical corporations. To do otherwise is to
renege on pledges made to the voters of California last November.