With roughly four years to go and $859 million left to distribute, the California Institute of Regenerative Medicine (CIRM) received a stinging rebuke of much of the way it has been carrying out its business by a group of independent reviewers corralled by the Institute of Medicine (IOM). Released in December, the report took issue with the CIRM's governance, some of its policies affecting decision making on grants and its handling of intellectual property (IP). At the same time, the report praised the courage and vision of the individuals who spearheaded the program as well as those toiling in the CIRM office in San Francisco. Much of this is not new; the CIRM has received similar criticisms in the past, but chose to ignore them for the most part. However, in previous spats, California real estate mogul Bob Klein, who was the organizer of the proposition that gave rise to the institute, was at the helm. The question is whether Klein's replacement, John Thomas, who assumed leadership in 2011, will be more open to the IOM's recommendations for which the institute paid a hefty $700,000.

CIRM President, Alan Trounson Credit: Rick Wood/Rapport Press/Newscom

In 2004, in response to the blocking of federal funding for human embryonic stem cell research by the Bush government, the citizens of California approved in large numbers Proposition 71, a $3-billion, ten-year stem cell program to be supported by bonds issued by the state. (The final price tag, to be paid by the California taxpayers in future years, will be closer to $6 billion when interest on the loans is factored in.) Held up for awhile by legal wrangling initiated largely by opponents of the research, the agency started dispersing funds in 2006, and in the intervening years, has granted almost $1.7 billion in funding to 59 California research institutions in a dizzying array of research grant and facilities programs.

After over a year of study and interviews with people within the Institute, those funded by CIRM as well as its critics, the report came out with nine recommendations, many of which echo those of several earlier program reviews. In 2009, the so-called Little Hoover commission, at the request of several California legislators, took issue with CIRM's governance, conflict-of-interest policies and accountability. A year later, the External Advisory Panel review, initiated by CIRM itself, assessed the program's scientific goals and plans for the future, issues not addressed except in general terms by the IOM.

In the present report, the IOM recommends sweeping changes in both the composition and the activities of the 29-person governing board, termed the Independent Citizens' Oversight Committee (ICOC). CIRM has long been plagued by overlapping responsibilities of the president and the chairman of the board, and previous evaluations of CIRM have called for greater clarity in responsibilities. The IOM also criticized the somewhat unorthodox situation for the board to be responsible for both day-to-day operations as well as oversight—in essence the board serves as overseer of itself—and called for the two functions to be separated. The ICOC, it wrote, should be focused on “broad oversight and strategic planning,” whereas management responsibilities should rest with the president, currently Alan Trounson. The three working groups—on standards, facilities and grants—which currently report to the chairman of the board, should instead report to the president, the ICOC said.

In addition, the report points out that the board, which renders final decisions on grants, is populated by numerous people who have either a personal or financial stake in the outcome—university presidents, for example, and patient advocates. The IOM recommends that CIRM restructure the board to be composed of a majority of independent members, with greater representation from industry. Although the reviewers did not seek to identify particular cases where a conflict might have occurred, they pointed out that 91% of the funding has gone to institutions that have board representation. Whereas the ICOC has the standard procedures for dealing with potential conflict situations—members recuse themselves when grants from their institutions are under discussion—an unnamed member of the board admitted that they really couldn't say how well this is working because “so many decisions take place off camera in secret meetings.” The IOM recommends that personal conflicts of interest be treated the same as financial ones.

Another area that the IOM identified as requiring rethinking is the policy on IP. Acknowledging that CIRM had consulted broadly when crafting the policy and has made fixes to it over the years, nonetheless, the IOM reviewers felt that efforts to commercialize CIRM inventions and engage industry would be better served if the provisions were harmonized with those established by the Bayh-Dole Act in 1980, which set the rules for patenting of inventions by federally funded researchers. In particular, rules on revenue sharing with the state and a provision requiring access to therapies for Californians unable to afford them, depart from federal policies and might also be contributing to a lack of much-needed participation by industry with CIRM-supported endeavors. Trounson points out, however, that adjusting the IP policy to be in line with Bayh-Dole would mean that California would lose some of the projected benefits that future CIRM inventions would provide, something that he finds hard to imagine the legislature will do.

Other issues addressed in the report concern the continuity of the program once the funds run out, a topic that has been in discussion at least since Thomas took over as chairman, if not before. The report also recommends establishing a permanent external scientific advisory board to work with the president on establishing strategic priorities and changes to the grant review process that would eliminate the extraordinary petition process. This policy allows individuals to appeal directly to the board for reconsideration of unfunded grants. The CIRM has started working on this because of several cases that have received public scrutiny. Trounson agrees that changes to the review process allowing applicants to respond to the grants-working-group critique would be a better way to go. “The board is not very well versed to adjudicate, since they haven't seen the arguments that people pose during the reviews,” he says.

Given that the proposition was carefully crafted to be an amendment to the constitution of the state—in part to minimize political pressure—some of the recommended changes, such as those affecting the composition and activities of the board, will require action by the state legislature with a two-thirds majority vote. Whereas changes have been made in the past—in 2010, a bill, SB 1064, amended the law to allow CIRM staff to exceed the 50-employee maximum that was set in the original legislation—this was something that the CIRM clearly felt was needed. Whether the agency is similarly motivated to restructure itself in the ways suggested by the IOM at this late date remains unclear.