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CA Stem-Cell Bill in Limbo Until Governor, Legislature, Plug $15.2B Budget Shortfall

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A drug-access and -governance bill opposed by California’s stem-cell agency is among 890 measures passed by the state’s legislature, but remaining in limbo due to a budget standoff now in its third month between Gov. Arnold Schwarzenegger and legislative leaders.
 
Late last month California’s state Senate and its lower house, the Assembly, approved an amended version of The California Stem Cell Research and Cures Act, available here, but it is being held from Schwarzenegger after the governor threatened to veto any bill that reaches his desk before a state budget agreement has been hammered out.
 
“Given the fact that the governor indicated he’s not going to do anything for any bills until there’s a budget, we didn’t want to start the clock ticking” on any of the  bills approved by the legislature during its session that concluded Aug. 31, state Sen. Sheila Kuehl (D-Santa Monica), author of the stem-cell bill, SB 1565, told BioRegion News last week.
 
“So no bills are going to the governor. This has nothing to do with the content of the bills. This is all about schedule,” she said.
 
By state law, Schwarzenegger has till the end of this month to sign or veto any bills approved during the legislative session.
 
Kuehl’s is one of 890 bills locked in legislative limbo by sponsors who have opted to hold them rather than send them to Schwarzenegger. Democrats who lead California’s state Senate and Assembly and Schwarzenegger, a Republican in his second term, remain at odds over how to plug the state’s $15.2 billion budget shortfall for the fiscal year that began on July 1.
 
Democratic leaders are seeking two Republican state senators and six Assembly members to join them since each chamber of the legislature must approve a budget with at least a two-thirds majority. Republicans insist the budget can be balanced without tax increases; Democrats disagree.
 
Despite these and other efforts, the standoff, which has created the longest period that California has gone without a budget, isn’t likely to end soon. Last week, Schwarzenegger chided legislative leaders for not working diligently enough to resolve the impasse, touching off angry denials from the lawmakers. The governor has also blamed the dispute for causing him to skip last week’s Republican National Convention in St. Paul, Minn.
 
Once the budget battle is resolved and SB 1565 is sent to his desk, Schwarzenegger faces another quandary: Should he sign a bill that is opposed by the state’s stem-cell agency?
 
That agency, the California Institute for Regenerative Medicine, objects to a provision in the bill that would lower, from two-thirds to a simple majority, the margin needed for an advisory panel to recommend funding for applications that present a “vital research opportunity.”
 
That funding and its recommendation requirements were ratified in 2004 when voters approved Proposition 71, which allows the California state government to spend $3 billion over 10 years on stem-cell research. As part of the referendum, the state created a 23-member Scientific and Medical Research Funding Working Group to advise CIRM’s governing board, or Independent Citizens Oversight Commission, on which researchers, universities, and other institutions should receive funding.
 
Recommendations by the working group, 15 of whom must be working scientists, must follow criteria that include a preference for human embryonic stem-cell research — a requirement that CIRM and other critics of SB 1565 contend would be negated by the bill.
 
In addition, an amendment to SB 1565 gives the working group the power to recommend for funding “other scientific and medical research and technologies and/or any stem-cell research proposal not actually funded by the institute.”
 
Because the amendment was added by state Sen. George Runner (R-Lancaster) — the state Senate’s second-most powerful Republican and an opponent of hESC research — critics of SB 1565 argue it would torpedo California’s top-tier stem-cell effort by restricting future ICOC funding approvals to research based on adult stem cells. This could remain in effect even if the federal prohibition on hESC funding is lifted by a new President in January..
 

“So no bills are going to the governor. This has nothing to do with the content of the bills. This is all about schedule.”

“We definitely think it sends the wrong message about embryonic stem-cell research at this point in time,” Don Gibbons, a CIRM spokesman, told BRN last week of the legislation.
 
Not so, Kuehl countered.
 
“The board is still making the decision. The board still has the priority written in the initiative that embryonic stem cell takes priority,” Kuehl told BRN. “The original push behind Prop 71 was a reaction to the fact that the feds were adamant about not funding stem-cell research; the emphasis was on stem-cell research in California.”
 
She argued in favor of empowering the agency to be more flexible in the type of stem-cell research it funds in part because of the improving quality of adult stem-cell research, and assured that the bill was “thus not political.”
 
Despite her reassurances, CIRM’s argument helped produce the first legislative votes against SB 1565 since it was introduced on Feb. 2. Supporters prevailed, however, by a 64-7 margin in the Assembly on Aug. 25. Voting against were Assembly Majority Leader Alberto Torrico (D-Newark) and members Jim Beall Jr. (D-San Jose), Felipe Fuentes (D-Sylmar), Jared Huffman (D-San Rafael), Pedro Nava (D-Santa Barbara), Nicole Parra (D-Hanford), and Lois Wolk (D-Davis).
 
Four days later, the full state Senate approved by a 37-1 vote the changes made to the bill. The sole state senator to vote against was the chairman of the state Senate Appropriations Committee, state Sen. Tom Torlakson (D-Antioch), a key Democrat who opposed it due to a procedural concern, his spokesman Robert Oakes told BRN last week.
 
“He was concerned with how the changes in the bill could potentially change the intent of the proposition approved by voters. He understood the bill was going to pass with widespread support, but he wanted to make a statement about his concerns,” Oakes said in an interview.
 
Proposition 71 prohibits amendments unless voters approve them in another referendum, or at least 70 percent of members of both legislative houses pass a bill at least two full calendar years after the original referendum. Even then, Prop 71 may only be amended “to enhance the ability of the institute to further the purposes of the grant and loan programs created by the measure,” according to the text of the law, available here.
 
A Schwarzenegger spokeswoman, Lisa Paige, told BRN the governor has taken no position on SB 1565, and typically does not decide on legislation until they reach his desk.
 
Asked what effect CIRM’s opposition to the bill would have on Schwarzenegger’s decision, she said the governor “considers each bill on its merits, and will do so with this bill as well when it reaches his desk and when there’s a budget.”
 
Among the bill’s requirements is for drug makers, research centers, and other recipients of CIRM funding to ensure that the drugs they develop are accessible to uninsured state residents — through Medi-Cal, California’s Medicaid program, and the state’s other publicly funded drug programs — at any of three benchmark prices in the California Discount Prescription Drug Program, unless waived from the rule by CIRM’s governing board, the Independent Citizens Oversight Committee.
 
Gibbons said CIRM prefers this version of the bill’s drug-accessibility portion over an earlier version, which required that drug developers receiving funding from the stem-cell agency “provide drugs to publicly funded programs in California.”
 
The change followed concerns by CIRM that the bill’s drug-access provision may have otherwise been extended to federal programs such as Medicaid and Medicare.
 
Another section of SB 1565 commits the state Legislature to request a study of CIRM by a state-created government watchdog agency. The Milton Marks, or “Little Hoover,” Commission on California State Government Organization and Economy, would examine CIRM’s governance and its vulnerability to conflicts of interest.
 
Proponents say that will reduce the likelihood of conflicts of interest among ICOC board members. Once such instance took place last year when John Reed, president of the Burnham Institute in La Jolla, Calif., asked a CIRM administrator to reverse a decision rejecting a $638,000 grant request by Burnham.
 
Reed, who sits on the board as a private citizen, recused himself from ICOC activity while the agency’s anti-conflict policies were audited by state Controller John Chiang. In May, Chiang completed his audit by largely giving CIRM a clean bill of health, concluding that the agency followed all but one of its own policies intended to minimize conflicts of board members between their duties as overseers of the agency, and their duties to their employer institutions [BRN, May 19].
 
Chiang found fault with CIRM over a single issue: the institute’s failure to require specialists used by the agency’s Grants Working Group to sign statements after their meetings declaring they would not disclose financial and other confidential information of grant applicants, and that their dealings with applicants did not result in conflicts of interest. CIRM required the specialists to sign similar statements before their calls.
 
Don Reed, co-chair of Californians for Cures, and director of policy outreach for Americans for Cures Foundation — and no relation to John Reed — told BRN earlier this summer a new study of CIRM could produce legislation that would hinder the agency, delaying cures for diseases, and lessening the agency’s value in helping research institutions leverage private donations.

Reed is a retired schoolteacher who spearheaded the passage of a law directing the state to spend $1.5 million annually on research to fight paralysis. The law is named for Reed’s son Roman Reed, who is paralyzed following a 1994 football injury.

 

“To my mind, the $3 billion dollar research fund is the joy of our state, the pride of our nation, and the hope of our world,” Reed said.

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