The $3 billion California stem cell agency, which is moving to engage the biotech industry ever more closely, is proposing a major weakening of the financial disclosure requirements for its board of directors and executives.

The move comes as the agency is also seeking to raise cash from the private sector to continue the state research effort's existence.  CIRM's dimming of transparency runs counter to government trends nationally for more disclosure rather than less, including regulations enacted last year by the NIH.

The proposed changes will be considered next Thursday by the CIRM directors' Governance Subcommittee, which will have public teleconference sites in San Francisco and Irvine and two each in Los Angeles and La Jolla.

Currently CIRM board members and top executives must disclose all their investments and income – in a general way – along with California real property that they hold. Under the changes, disclosures would instead be required only "if the business entity or source of income is of the type to receive grants or other monies from or through the California Institute for Regenerative Medicine." CIRM offered no explanation of what it means by "of the type to receive" funds from the agency.

The proposal further narrows disclosure in connection with income or investments in enterprises that provide facilities or services used by CIRM. With the removal of the requirement for reporting all investments, CIRM's changes also specified disclosure of income and investments connected to business entities (nonprofits are not mentioned) that are engaged in biomedical research or the manufacture of biomedical pharmaceuticals.

The new code would appear to give CIRM directors and executives wide personal latitude in determining what should be disclosed. The current language simply states that "all" investments, etc., must be disclosed. That language originated in the 1974 ballot initiative that created the state disclosure requirements. The initiative's intent was to give the public and interested parties access to key information that would allow them to determine what forces are at work in government and whether conflicts of interests exist – as opposed to simply trusting the assertions of officials without additional substantiation.

The new code also appears to relieve CIRM officials of reporting investment in or income from venture capital or other firms that may be engaged in financing biotech or stem cell enterprises, since the firms do not receive cash from CIRM or engage in biomedical research.

While the code appears to provide more reporting freedom for board members and executives, it also may indirectly impose a burden on them to determine whether any of their investments may involve biomedical research or enterprises that could possibly receive funds from CIRM at some point

Earlier this week, the California Stem Cell Report asked the stem cell agency about such issues. Kevin McCormack, CIRM's new senior director of public communications and patient advocate outreach, replied that the changes were "proposed" by the state Fair Political Practices Commission, which oversees state disclosure laws.

He said the FPPC says agencies "should tailor their disclosure categories to type of work performed by the agency."

McCormack cited as examples the State Board of Education and the state retirement system.

As for the specific changes in CIRM's code, McCormack said,

"Because these are the types of entities that are likely to create potential conflicts of interest, we believe the disclosure categories are appropriate."

McCormack did not comment on whether the proposed code would give board members more reporting latitude or whether it relieve them of reporting investments tied to the financing of biotech or stem cell firms. (The text of his response can be found here.)

The California Stem Cell Report is querying the FPPC concerning its policy regarding disclosure codes. CIRM's new code is expected to go before the the full CIRM board in late May. The changes are subject to review by the FPPC and then must formally go through the state administrative law process during which the public can comment and the code modified before final adoption.

Our take? The proposed changes are not in the best interests of CIRM or the people of California. The absence of transparency and disclosure only breeds suspicious speculation of the worst sort. The agency is already burdened by conflicts of interest that are built in by the ballot measure that created it in 2004. Nearly all of the $1.3 billion that CIRM has handed out has gone to institutions linked to CIRM directors. Weakening disclosure at a time when the biotech industry will become more closely tied to CIRM inevitably raises questions about financial linkages – present and future – between CIRM directors and executives and industry. For the past seven years, CIRM directors and staff have been able to comply with
more complete disclosure. They should continue to do so for the life of the agency, which will expire in less than a decade unless it finds additional sources of cash.

Source:
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"In answer to your question, we
are proposing changes to the Conflict of Interest Code based upon
recommendations from the California Fair Political Practices
Commission (FPPC). The Political Reform Act requires state
agencies like CIRM to review their Conflict of Interest Codes every
two years.  The FPPC, which is charged with enforcing the
Political Reform Act, is responsible for reviewing and approving
CIRM's Conflict of Interest Code.  In preparation for this
review, CIRM's counsel met with the FPPC staff who suggested the
proposed amendments which are the subject of the upcoming Governance
Subcommittee meeting.  The proposed amendments to CIRM's
Conflict of Interest Code are consistent with the FPPC's position
that agencies should tailor their disclosure categories to type of
work performed by the agency.  For example, CalPERS's
conflict of interest code requires CalPERS officials to disclose
investments in, and income from, entities that are of the type with
which CalPERS contracts and entities in which funds administered by
CalPERS could be invested.  Likewise, the State Board of
Education requires its members to disclose investments, business
positions, and income from a publisher, manufacturer, or vendor of
instructional materials, or services offered to educational
institutions in the State of California and investments, positions of
management and income from any private school in the State of
California.  Similar to these codes, the FPPC proposed that
CIRM's Code be tailored to the nature of CIRM's work.  Thus,
the FPPC proposed that CIRM require its board members and high-level
employees to disclose investments in, and income from, entities that
are of the type with which CIRM would contract or from which CIRM
could procure goods or services as well as investments in, and income
from, biotech and pharmaceutical companies.  Because these
are the types of entities that are likely to create potential
conflicts of interest, we believe the disclosure categories are
appropriate.  It is important to remember, however, that
this is a preliminary proposal.  CIRM will seek input from
the Governance Subcommittee, the Board, and members of the public
before seeking approval of the amendments."

Source:
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