BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                                 THIRD READING


          Bill No:  SB 1565
          Author:   Kuehl (D), et al
          Amended:  4/16/08
          Vote:     28 (70 percent vote required)

           
           SENATE HEALTH COMMITTEE  :  11-0, 4/2/08
          AYES:  Kuehl, Aanestad, Alquist, Cedillo, Cox, Maldonado,  
            Negrete McLeod, Ridley-Thomas, Steinberg, Wyland, Yee

           SENATE APPROPRIATIONS COMMITTEE  :  14-0, 5/12/08
          AYES:  Torlakson, Cox, Aanestad, Ashburn, Cedillo, Corbett,  
            Dutton, Florez, Kuehl, Ridley-Thomas, Runner, Simitian,  
            Wyland, Yee
          NO VOTE RECORDED:  Oropeza


           SUBJECT  :    California Stem Cell Research and Cures Act

           SOURCE  :     Author


           DIGEST  :    This bill requires the Independent Citizens  
          Oversight Committee (ICOC) of the California Institute for  
          Regenerative Medicine (CIRM) to include in its intellectual  
          property standards a requirement that each grantee and  
          licensee submit for CIRM's approval a plan that will afford  
          uninsured Californians access to any drug that is, in whole  
          or in part, the result of research funded by the CIRM,  
          requires these plans to include a requirement that grantees  
          and licensees sell drugs that result from CIRM funding and  
          are purchased with public funds at a price that does not  
          exceed any benchmark price in the California Discount  
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          Prescription Drug Program , and requires the Little Hoover  
          Commission to conduct a study of the governance structure  
          of the California Stem Cell Research and Cures Act by July  
          1, 2009. 

           ANALYSIS  :    

          Existing law:

          The California Stem Cell Research and Cures Act, enacted by  
          voters as Proposition 71 in November, 2004, establishes the  
          CIRM to make grants and loans for stem cell research and   
          research facilities.  Existing law also establishes the  
          ICOC as the governing body for the CIRM.  Existing law  
          authorizes the sale of $3 billion in general obligation  
          bonds over 10 years for stem cell research and facilities  
          in California, with a focus on research that does not  
          qualify for federal funding.

          Existing law, from Proposition 71, requires the ICOC to  
          establish standards that require all grants and loan awards  
          to be subject to intellectual property agreements that  
          balance the opportunity of the state to benefit from the  
          patents, royalties, and licenses that result from research  
          and therapy development, and clinical trials with the need  
          to assure that essential medical research is not  
          unreasonably hindered by the intellectual property  
          agreements.

          Existing law also provides that the Legislature may amend  
          the non-bond statutory provisions of the Act, to enhance  
          the ability of the California Institute for Regenerative  
          Medicine to further the purposes of the grant and loan  
          programs created by that Act, with a 70 percent vote of  
          each house and compliance with specified procedural  
          requirements.

          Existing law establishes the California Discount  
          Prescription Drug Program (CalRx) within the Department of  
          Health Care Services, and requires the department to  
          attempt to negotiate, with each drug manufacturer,  
          discounts to offer single-source prescription drugs under  
          the program at a volume weighted average discount that is  
          equal to or below any one of the following benchmark  

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          prices:  (1) eighty-five percent of the average  
          manufacturer price for a drug, as published by the Centers  
          for Medicare and Medicaid Services; (2) the lowest price  
          provided to any nonpublic entity in the state by a  
          manufacturer; or (3) the Medicaid best price, to the extent  
          that this price exists under federal law. 

          Existing law establishes the Milton Marks "Little Hoover"  
          Commission on California State Government Organization and  
          Economy, a multimember body appointed by the Governor and  
          the Legislature with various duties that include making  
          recommendations to the Governor and the Legislature to  
          promote efficiency in government operations. 

          This bill requires intellectual property standards  
          developed by the ICOC to include a requirement that each  
          grantee and licensee submit for CIRM's approval a plan that  
          will afford uninsured Californians access to any drug that  
          is, in whole or in part, the result of research funded by  
          the CIRM, and would require this submission prior to the  
          drug's commercialization.  This bill would also require  
          that the aforementioned plans require the grantees and  
          licensees to sell the resulting drugs that are purchased  
          with public funds at a price that does not exceed any  
          benchmark price in CalRx as it exists on January 1, 2008. 

          The bill would not preclude any public agency from  
          obtaining prices that are lower than the benchmark prices  
          described in CalRx.  The bill also defines "drug" as any  
          article recognized in the United States Pharmacopeia or the  
          National Formulary, or any article intended for the  
          diagnosis, cure, mitigation, or prevention of disease in  
          humans or animals, or any article intended for use as a  
          component of diagnosis, cure mitigation or prevention of  
          disease in humans or animals, and inclusive of therapeutic  
          products, including, but not limited to, blood, blood  
          products, cells, and cell therapies.

          This bill requires the Little Hoover Commission to conduct  
          a study of the governance structure of the California Stem  
          Cell Research and Cures Act, and submit, by July 1, 2009, a  
          report to the Legislature on the results of the study and  
          recommendations of ways the governance structure of the  
          ICOC could better ensure public accountability and reduce  

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          conflicts of interest, consistent with the purposes of  
          Proposition 71. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                          Fiscal Impact (in thousands)

           Major Provisions                     2008-09     2009-10   2010-11   
              Fund  
          Little Hoover Commission      $25       $130 $0      
          General*
          ICOC staff/regulation costs        $30       $150 $0       
          Bond**

            *Legislative authority to direct Commission actions is  
          unclear
          **Proposition 71 bond proceeds, 2004

           SUPPORT  :   (Verified  5/13/08)

          American Federation of State, County and Municipal  
          Employees 
            (AFSCME)
          California Alliance for Retired Americans
          California Nurses Association
          Center for Genetics and Society
          Foundation for Taxpayer and Consumer Rights
          Gray Panthers
          Greenlining Institute
          Pro-Choice Alliance for Responsible Research


           ARGUMENTS IN SUPPORT  :    The Foundation for Taxpayer and  
          Consumer Rights states that this measure will help ensure  
          that the taxpayers of California, who are paying $6 billion  
          for stem cell research, will have affordable access to the  
          fruits of the research they are funding, and will help make  
          CIRM and the ICOC more responsive and accountable to the  
          public. The California Nurses Association writes that  
          California residents should be the primary beneficiaries of  
          the research and therapies developed through the  

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          expenditure of state funds. 

          The Center for Genetics and Society adds that this bill  
          takes a much-needed first step to reforming the governing  
          structure of the CIRM, which under the current statute is  
          inherently conflicted.  The Pro-Choice Alliance for  
          Responsible Research points out that at a recent ICOC  
          meeting, all but nine members of the board had to recuse  
          themselves because of conflicts of interest and believes  
          that structure does not serve the people of California  
          well.  


          CTW:nl  5/14/08   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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