Looking for some stem cell payback

Biomedical industry to California legislators: "Don't you dare tell us what to do with your money!"

Published April 4, 2007 7:32PM (EDT)

Surprise, surprise -- California's biomedical technology industry is unhappy with proposed legislation aimed at ensuring that the state of California gets a fair return on its $3 billion investment in stem cell research. The newest addition to my blogroll, David Jensen's California Stem Cell Report, excerpts a five-page letter sent this week from the California Healthcare Institute (CHI) -- a lobbying organization -- to the two co-sponsors of SB 771, Democrat Sheila Kuehl and Republican George Runner.

SB 771 mandates that any for-profit recipient of California's stem cell funding, as doled out by the California Institute for Regenerative Medicine (CIRM), pay a 25 percent royalty rate on the "net licensing revenues it receives associated with any institute-funded patented invention... Net licensing revenue shall include all forms of financial consideration from licensing and shall be defined as gross licensing revenues, less patent expenses and reasonable payments to inventors."

The horror! To CHI, SB 771 is unwarranted state intervention in their profit-making potential, an act of robbery that must be resisted with extreme prejudice. As quoted by the California Stem Cell Report, the letter declares:

Because commercialization is essential for the development and production of new medicines that can be used by Californians and others, CHI believes that the basic goal of intellectual property policies should be to minimize barriers to transfer technologies from basic research laboratories to the private sector for commercialization into products. Moreover, while we strongly support policies to improve patients' access to advanced medicine, we maintain that IP policies and regulations are not the way to improve access and cost.

Investment in biotechnology is inherently very risky. Any aspect of a technology transfer contract that increases risk, particularly by adding an element of uncertainty, makes it less attractive to potential partners and investors and thus reduces the prospects for successful commercial collaboration...

[CHI questions] the appropriateness of commercial companies being forced to pay royalties, beyond what they negotiate with basic research institutions. If additional payments like this are required, along with the revenue sharing, pricing and access clauses mentioned above, they will only serve as an additional disincentive to commercial participation in CIRM-funded research."

As a citizen of California who voted for the state's landmark stem cell initiative, and whose tax dollars will go toward paying off the bonds issued to pay for it, I fully support legislative efforts to ensure that some of the revenue generated by the commercialization of research paid for with my money return to the state. SB 771 also requires that grant recipients "have plans which the institute determines will provide substantial access to the resultant therapies, drugs, and diagnostics to uninsured Californians." That also seems a fine and worthy idea. If the biomedical companies don't like it, they can just go find someone else's money to play with.

Not that there seems to be that much of a likelihood that the bill, which will receive its first public hearing on April 11, will actually pass. As Jensen, a longtime political reporter in California, notes, passage will require a "super super majority" of 70 percent. That's a hard number to reach when matched up against the lobbying power of California's biotech industry.

Whatever happens, I look forward to following the twists and turns of California's ambitious attempt to bootstrap stem cell research via the reporting at the California Stem Cell Report blog. I have a particular weakness for blogs that obsessively cover every iota of news about a single, highly circumscribed topic -- they seem to regularly expose me to information that is not easily found elsewhere. And I've been remiss in not paying more attention to stem cells, a narrative that includes intellectual property, advanced science, and the proper role of government: red meat for the How the World Works carnivore.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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California Globalization How The World Works Intellectual Property