BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1565| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED SB 1565 Page 2 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 CONTINUED SB 1565 Page 3 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 CONTINUED SB 1565 Page 4 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 CONTINUED SB 1565 Page 5 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 **** END **** CONTINUED