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April 6, 2013
Editorial: Stem cell agency finally addresses potential for conflicts

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(April 6 -- By the Editorial Board)

Politics is the art of the possible. Jonathan Thomas, who chairs the oversight committee for California's stem cell institute, has taken important steps in reducing the potential for conflicts within this agency.

He hasn't gone as far as we would like, or that independent outside reviewers have recommended, in reforming governance of the California Institute for Regenerative Medicine. But he's persuaded CIRM's oversight board to make some changes it has long resisted. He's achieved what's possible, at least for now, and the board may empower him to go further.

Since voters agreed to create the institute in 2004 through Proposition 71, CIRM has become the most influential funder of stem cell research in the world. To date, it has issued more than 520 grants and committed more than $1.5 billion - money that has attracted hundreds of scientists to California so they can seek research funding. The goal is to make California an international epicenter for developing new therapies to treat a wide range of diseases.

Yet because of the way Prop. 71 was crafted by Robert Klein - the bond financier who wrote the initiative and chaired the institute until 2011 - CIRM has always held serious potential for insider dealings. By law, 13 of its 29-member oversight board must be representatives of UC campuses and other institutions who are eligible for funding. Ten other members represent disease advocacy organizations, who clearly have a stake on how CIRM spends $3 billion in state bond funds.

The potential for conflicts became real in 2007, when the CEO of a research institute in San Diego, a member of the CIRM oversight board, intervened to endorse a grant application for his institution. That led the disqualification of grant applications from 10 institutions that were the focus of improper lobbying by oversight board members.

Two years ago, in response to that incident and others, CIRM asked the Institute of Medicine, a blue-ribbon committee of the National Academy of Sciences, to examine the institute's internal workings. The Institute of Medicine report found that CIRM's oversight board was encumbered by "almost unavoidable conflicts of interest." It recommended that CIRM eliminate positions on the oversight board reserved for institutions vying for stem cell grants. It also recommended that the oversight board remove itself entirely from the role of approving or rejecting grant applications, and leave that job to CIRM's scientific reviewers.

Aware that his board was unlikely to go along with such sweeping changes, Thomas, an investment banker with a Yale law degree and scholarship in the sciences, brokered a compromise. At a meeting last month, he persuaded the institute's oversight board to adopt changes that will prevent board members of funding-eligible institutions from voting on grants. They will still be allowed to discuss individual grants, but not vote on them.

We think Thomas and the oversight board should go further and adopt the Institute of Medicine recommendations. But that is politically unlikely. As is now obvious, it will be up to the Legislature to fully remove representatives of funding-eligible institutions from being involved in decisions about grants that could come back to them.

Thomas, to his credit, recognizes that his compromise may not be the perfect solution. He wants to test out the new policy for a year, and see how it works. There's a lot riding on the outcome. CIRM is expected to run out of funds in 2017, and while philanthropy and foundation money could extend that for a few years, supporters of California stem cell research clearly want to go back to the ballot to seek additional funding. To make that case, CIRM supporters can't afford any more scandals about insider dealing. The next year will reveal whether it is on right track.

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