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California

Lloyd Billingsley
Scam Cell
California’s embryonic stem-cell research institute fails to deliver.
14 March 2013

The California Institute for Regenerative Medicine, the state’s controversial, $3 billion stem-cell research agency, has yet to follow recommendations from a December report by the Institute of Medicine, a division of the National Academy of Sciences. The report, which urged the agency to overhaul its board of directors, did not fully convey the magnitude of CIRM’s failure—but it did confirm that CIRM might be better described as Conflict of Interest Research Money. Almost all members of the CIRM board, investigators noted, “are interested parties with a personal or financial stake in the allocation of CIRM fundings.” In fact, CIRM directed a full 91 percent of its research funding to institutions with representatives on its governing board. Similarly, the CIRM board overruled the Institute’s own scientific reviewers, who twice rejected a proposal to fund a for-profit company on whose behalf CIRM founder Robert Klein had lobbied, and the board went ahead and gave the money to the company anyway. According to a Sacramento Bee report, “it was the first time in the board’s eight-year history that it approved an application twice rejected by reviewers.”

That’s the kind of wealth redistribution that Klein probably had in mind from the start. Klein has experience working government for his own ends: he’s the wealthy real-estate developer who created the California Housing Finance Agency (CHFA) in 1973, purportedly because he wasn’t satisfied with President Richard Nixon’s Department of Housing and Urban Development. Klein used the same strategy when President George W. Bush declined to fund embryonic stem-cell research. In 2004, Klein launched Proposition 71 seeking $3 billion in bond money for that research at the state level. Governor Arnold Schwarzenegger backed the measure, and the high-profile, billionaire-funded political campaign featured actors Michael J. Fox and the late Christopher Reeve promising life-saving cures for a host of afflictions.

Yet CIRM has been a scientific bust. It played no role in noteworthy medical-scientific advances of recent years, such as the construction of a new windpipe for a Colombian woman or the near-total restoration of sight for a man whose eyes sustained severe chemical damage in 1948. These were triumphs of adult stem-cell research. A ballpark figure for the number of life-saving cures and therapies CIRM has delivered is zero. But as a staffer said at a meeting of the Little Hoover Commission in 2009, CIRM was “getting money out the door,” as though this was a legitimate measure of success.

CIRM was always more about the money than the medicine. Klein cleverly wrote Prop. 71 to install himself as the institute’s chairman, and he freed it from almost all legislative oversight by requiring a 70 percent supermajority of both houses to make any structural or policy changes. He awarded whopper salaries, such as president Alan Trounson’s $490,000, and provided a comfortable landing spot for Art Torres, a down-at-the-heels former state senator and ex-Democratic Party boss. In 2009, CIRM board member Duane Roth, a San Diego businessman with an extensive background in biotechnology, offered to serve as vice chairman for no salary. CIRM opted to make Roth co-vice-chairman along with Torres, who is a lawyer, not a medical scientist. Almost at once, CIRM tripled Torres’s salary from $75,000 to $225,000. This largesse came during tough budgetary times for the state. Klein himself didn’t take a salary until 2008, when he began collecting $150,000 a year.

By 2009, the Obama administration had authorized federal embryonic stem-cell research, undercutting CIRM’s reason for existence. Prop. 71 gives CIRM until 2017 to find other funding to replace the bond money Californians approved nearly nine years ago. As Klein pitched it then, life-saving cures and therapies would generate significant royalties for the state, and CIRM would eventually be able to fund itself. But no life-saving cures means no revenue. Out of the original $3 billion, CIRM has $859 million left. Before stepping down as chairman of the governing board in 2011, when his six-year term expired, Klein said that he wanted another $5 billion for CIRM. It’s not out of the question that Klein and other CIRM loyalists would float another bond measure. And judging by their recent performance with Proposition 30, California voters might fall for the same promises. No billionaires appear eager to pay for another campaign, though, and despite Governor Jerry Brown’s assurance that “California is back,” the Golden State has no money to burn.

For CIRM’s conflicts of interest alone, Californians should think twice before keeping it in business. Jonathan Thomas, Klein’s successor as CIRM chairman, says the board will vote March 19 on a new policy that should satisfy most of the IOM’s concerns. But once started, government agencies are practically impossible to stop, even if they’re ineffective and wasteful. Hearings on CIRM are unlikely in a virtual one-party state addicted to spending, where the governor greets news of hidden millions with a “Hallelujah!” and where the attorney general declines even to consider whether laws were broken. But perhaps something good could come of California’s stem-cell calamity. CIRM is a vivid example of how much one clever insider can get away with in California. At a minimum, CIRM’s record should prompt reform of the initiative process. As long as politicos can create ballot measures that remain off-limits to oversight, while channeling money to themselves and their cronies, other self-dealing proposals are sure to follow.

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