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Companies balk at California's patent rules for stem cell research

Other states could adopt similar strict policies.

California is set to adopt rules that will guarantee public return on its state-funded stem cell research, requiring grantees to share patented materials, send a portion of revenues to the state and guarantee cheap treatments to Californians.

But the rules, which could set the tone for other state-funded science programs, are too restrictive and might put off companies, industry representatives warn.

The regulations are more stringent than the federal Bayh-Dole Act, which doesn't mandate revenue sharing or treatment access.

California's policy could set a precedent. Jesse Reynolds, Center for Genetics and Society

“The stem cell program in California launched two experiments. The obvious one is the research being done, and the other is an enormous policy experiment,” says Jesse Reynolds, project director on biotechnology accountability at the Oakland-based nonprofit Center for Genetics and Society.

The state is finalizing patent rules for nonprofit grantees and the companies that work with them, and will begin enforcing them once the first grants are awarded in February 2007. Requirements for companies are expected to follow later in 2007.

Nonprofits and commercial ventures will both be required to notify the California Institute for Regenerative Medicine, established by the state to oversee grants, when their state-funded research results in a publication or patent and to freely share research materials—cell lines, compounds or DNA sequence information—they develop. The state will also receive a share of the revenues from licensing agreements and sales of therapies developed.

Although the biomedical industry has questioned whether some of the material-sharing policies are feasible, it has reserved its harshest criticisms for rules on discounted pricing and broad access.

Under the proposed rules, companies must make treatments developed using state-funded research accessible to Californians who don't have health insurance and at a discount through the state's healthcare plans.

Companies may decide not to license patents if they have to provide deep discounts on their products, says David Gollaher, president of the California Healthcare Institute, which represents more than 250 biomedical companies and research institutions.

Mary Maxon, deputy vice chair of the California Institute for Regenerative Medicine, says companies shouldn't worry and that specific access proposals will be judged on an individual basis. “You sign a contract saying you'll provide these things, but we won't tell you how to do it. We don't want you to go out of business,” she says.

Reynolds says the industry is also worried about the precedent California could set. Nine other states fund or plan to fund stem cell research, and their intellectual property approaches vary vastly. Connecticut, for example, receives royalties on commercial developments but other terms are negotiable. Illinois's plan resembles California's but the specifics have not yet been determined.

“If California's policy works,” Reynolds says, “then when other policies are revisited, it could set a precedent.”

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Keim, B. Companies balk at California's patent rules for stem cell research. Nat Med 13, 6 (2007).

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