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Controller's Stem Cell Agency Audit Ignores California Agency's Built-in Flaws

SANTA MONICA, Calif., May 12 /PRNewswire-USNewswire/ -- An audit of the state stem cell agency by California's Controller ignores fundamental flaws in Proposition 71 that created the agency, Consumer Watchdog said today.

The audit released by State Controller John Chiang found that with a relatively minor exception the California Institute for Regenerative Medicine (CIRM) complies with the requirements of Proposition 71, the initiative that created the agency, as they relate to conflict-of-interest policies, grant administration, administrative expenses and expenditures.

"The problem is that Prop 71 deliberately created an oversight board that is fraught with conflict," said John M. Simpson, director of Consumer Watchdog's Stem Cell Oversight and Accountability Project. "The board is dominated by representatives of the very institutions that will receive most of the $3 billion in research funds handed out. Controller Chiang found that CIRM is following Prop 71's rules, but those rules specifically put the foxes in charge of the chicken coop."

Find a copy of the controller's news release and audit here:

The audit found that "specialist" scientists had failed to sign post-review conflict-of-interest certification forms and urged that they be required to do so. CIRM said it would follow the advice.

"Big deal," said Simpson. "Under Prop 71, none of these disclosures are open to public review. They should be."

The audit did not deal with the case of John Reed, a board member who tried to influence the awarding of a grant to his institution, The Burnham Institute for Medical Research. The state's ethic's board, The Fair Political Practices Commission, is investigating that incident at Consumer Watchdog's request. Chiang also asked the FPPC to investigate.

Besides being created with built-in conflicts of interest the 29-member board is too big to be effective, Consumer Watchdog said. The problem with the controller's audit, the nonpartisan, nonprofit group said, is that it only examined if CIRM was following Prop 71's provisions.

"We need to go beyond that and ask what's wrong with Prop 71 that must be changed," said Simpson. "We need an outside analysis by unbiased observers. A good, hard-nosed look by the Little Hoover Commission at CIRM's operations would be a good first step."

Simpson said that because all Californians are paying for Prop 71, all should benefit from it. When there are cures and treatments resulting from the $6 billion taxpayers will spend on the project, they should be affordable and accessible.

"We need a provision that allows the State Attorney General to intervene if drugs or therapies funded by the stem cell agency are priced unreasonably," said Simpson. "We've seen too many cases where companies benefit from publicly funded research and then set prices at obscene levels. They act like socialists when seeking research funding but are greedy capitalists when there are profits on the table."

Proposition 71 that created CIRM provides that the act can be amended three years after the initiative was passed. Amendments require a super-majority of 70 percent. The initiative passed by 59 percent of Californians in 2004. Consumer Watchdog's Stem Cell Oversight and Accountability Project is working to ensure that California's landmark stem cell research program offers accessible and affordable cures and treatments to the taxpayers who have funded it. The program will sell $3 billion in bonds over a decade to fund stem cell research. Financing charges mean the project, the largest source of stem cell research funding in the world, will cost California taxpayers $6 billion.

Consumer Watchdog is California's leading nonprofit and nonpartisan consumer watchdog group. For more information visit us on the web at:

SOURCE Consumer Watchdog
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