BILL NUMBER: SB 1064	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Alquist

                        FEBRUARY 16, 2010

   An act to amend Sections 125290.20, 125290.30, 125290.40,
125290.45, and 125290.60 of, and to add Sections 125290.80 and
125291.90 to, the Health and Safety Code, relating to stem cells.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1064, as introduced, Alquist. California Stem Cell Research and
Cures Act.
   The California Stem Cell Research and Cures Act, an initiative
measure approved by the voters at the November 2, 2004, statewide
general election as Proposition 71, establishes the California
Institute for Regenerative Medicine (CIRM), the purpose of which is,
among other things, to make grants and loans for stem cell research,
for research facilities, and for other vital research opportunities
to realize therapies, protocols, and medical procedures that will
result in the cure for, or substantial mitigation of, diseases and
injuries. Existing law establishes the Independent Citizen's
Oversight Committee (ICOC) composed of appointed members, that is
required to perform various functions and duties with regard to the
operation of the institute, including, but not limited to,
establishing standards applicable to research funded by the
institute. Existing law prohibits amendment of Proposition 71 by the
Legislature unless the amendment is approved by the voters, or the
amendment is accomplished by a bill introduced after the first 2 full
calendar years and approved by a vote of 70% of both houses, and
only if the amendment enhances the ability of the institute to
further the purposes of the grant and loan programs.
   Existing law specifies the appointment process for the members of
the ICOC, including the chairperson and vice chairperson who are
employees of the ICOC, and provides that the chairperson and vice
chairperson serve 6-year terms. Existing law defines the duties of
the chairperson and the president of the ICOC and limits the total
number of authorized employees of the CIRM to 50.
   This bill would reduce the terms of the chairperson and vice
chairperson to 4-year terms, would require their terms to be
staggered, and would require the CIRM, under the guidance of the
ICOC, to create a succession plan addressing changes in leadership in
the CIRM and ICOC, as specified. The bill would make prescribed
changes to the duties of the chairperson and president of the ICOC
and would eliminate the 50-employee maximum for the CIRM.
   The bill would also require the CIRM, under the guidance of the
ICOC, to create a transition plan to address the expiration of
current bond funding and to submit that plan to the Governor, the
Controller, and the Legislature.
   Existing law requires the Citizen's Financial Accountability
Oversight Committee, chaired by the Controller, to review the annual
audit and financial practices of the CRIM.
   This bill would also require the Controller, under the guidance of
the committee, to annually commission a performance audit of the
activities of the CIRM and the ICOC, as specified.
   Existing law contains provisions relating to the extent to which
requirements relating to the disclosure of public records applied to
records of the CIRM.
   This bill would require the ICOC to disclose, in all meeting
minutes, a summary of vote tallies, including each board member's
votes and refusals, and would require the ICOC to amend all past
minutes to include this summary.
   The act provides that the ICOC shall establish standards that
require that all grants and loan awards under the act shall be
subject to intellectual property agreements that balance the
opportunity of the state to benefit from the patents, royalties, and
licenses that result from basic research, therapy development, and
clinical trials with the need to ensure that essential medical
research is not unreasonably hindered by the intellectual property
agreements.
   This bill would require that intellectual property standards that
the ICOC develops include a requirement that each grantee and the
licensees of the grantee submit to the CIRM for 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 that
the plan require that the grantees and licensees provide drugs to
state and local government funded programs at one of the 3 benchmark
prices in the California Discount Prescription Drug Program, provided
for pursuant to existing law, except when the ICOC adopts a waiver,
as specified. The bill would also require all revenues received from
the intellectual property agreements to be deposited in the General
Fund.
   Existing law establishes the procedure by which grant and loan
applications are processed and scored by the 15 scientist members of
the Scientific and Medical Research Funding Working Group.
   This bill would remove the 15 member limit and would require all
grant applications received by the ICOC to be sent to the Scientific
and Medical Research Funding Working Group prior to any other
process, unless the process is only to determine completeness of the
application.
   Vote: 70%. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares the following:
   (a) The California Institute for Regenerative Medicine was
established in 2004, through the passage of Proposition 71, for the
purposes of implementing and managing a $3 billion investment in stem
cell research on behalf of the state.
   (b) Stem cell research is a promising area of research aimed at
finding breakthrough cures for currently incurable diseases and
injuries affecting millions of people. This investment, as stated in
the proposition, would protect and benefit the California budget by
funding scientific and medical research that will significantly
reduce state health care costs in the future.
   (c) Furthermore, the Legislative Analyst, in its official ballot
information, stated that the state would "receive payments from
patents, royalties, and licenses resulting from the research funded
by the institute" through institute-established standards "requiring
that all grants and loans by subject to agreements allowing the state
to financially benefit from patents, royalties, and licenses
resulting from the research activities funded under the measure."
   (d) Since its inception, many concerns and criticisms have been
raised about the institute's practices, its governing board, and how
the state directly and financially benefits through this sizeable
investment. These criticisms divert the attention and focus of the
institute to drive transformational scientific research and find
cures.
   (e) It is the intent of this act to further enhance the ability of
the institute to manage this investment made with public funds by
addressing public concerns regarding oversight and transparency.
   (f) It is further the intent of this act to ensure that California
maximizes its receipt of revenues generated through grants or loans
made through the institute and with state funds.
  SEC. 2.  Section 125290.20 of the Health and Safety Code is amended
to read:
   125290.20.  ICOC Membership; Appointments; Terms of Office
   (a) ICOC Membership
   The ICOC shall have 29 members, appointed as follows:
   (1) The Chancellors of the University of California at San
Francisco, Davis, San Diego, Los Angeles, and Irvine, shall each
appoint an executive officer from his or her campus.
   (2) The Governor, the Lieutenant Governor, the Treasurer, and the
Controller shall each appoint an executive officer from the following
three categories:
   (A) A California university, excluding the five campuses of the
University of California described in paragraph (1), that has
demonstrated success and leadership in stem cell research, and that
has:
   (i) A nationally ranked research hospital and medical school; this
criteria will apply to only two of the four appointments.
   (ii) A recent proven history of administering scientific and/or
medical research grants and contracts in an average annual range
exceeding one hundred million dollars ($100,000,000).
   (iii) A ranking, within the past five years, in the top 10 United
States universities with the highest number of life science patents
or that has research or clinical faculty who are members of the
National Academy of Sciences.
   (B) A California nonprofit academic and research institution that
is not a part of the University of California, that has demonstrated
success and leadership in stem cell research, and that has:
   (i) A nationally ranked research hospital or that has research or
clinical faculty who are members of the National Academy of Sciences.

   (ii) A proven history in the last five years of managing a
research budget in the life sciences exceeding twenty million dollars
($20,000,000).
   (C) A California life science commercial entity that is not
actively engaged in researching or developing therapies with
pluripotent or progenitor stem cells, that has a background in
implementing successful experimental medical therapies, and that has
not been awarded, or applied for, funding by the institute at the
time of appointment. A board member of that entity with a successful
history of developing innovative medical therapies may be appointed
in lieu of an executive officer.
   (D) Only one member shall be appointed from a single university,
institution, or entity. The executive officer of a California
university, a nonprofit research institution or life science
commercial entity who is appointed as a member, may from time to time
delegate those duties to an executive officer of the entity or to
the dean of the medical school, if applicable.
   (3) The Governor, the Lieutenant Governor, the Treasurer, and the
Controller shall appoint members from among California
representatives of California regional, state, or national disease
advocacy groups, as follows:
   (A) The Governor shall appoint two members, one from each of the
following disease advocacy groups: spinal cord injury and Alzheimer's
disease.
   (B) The Lieutenant Governor shall appoint two members, one from
each of the following disease advocacy groups: type II diabetes and
multiple sclerosis or amyotrophic lateral sclerosis.
   (C) The Treasurer shall appoint two members, one from each of the
following disease groups: type I diabetes and heart disease.
   (D) The Controller shall appoint two members, one from each of the
following disease groups: cancer and Parkinson's disease.
   (4) The Speaker of the Assembly shall appoint a member from among
California representatives of a California regional, state, or
national mental health disease advocacy group.
   (5) The President pro Tempore of the Senate shall appoint a member
from among California representatives of a California regional,
state, or national HIV/AIDS disease advocacy group.
   (6) A chairperson and vice chairperson who shall be elected by the
ICOC members.  Within 40 days of the effective date of this
act, each constitutional officer shall nominate a candidate for
chairperson and another candidate for vice chairperson.  The
chairperson and vice chairperson shall each be elected for a term of
 six   four  years  , the terms to be
staggered  . The chairperson and vice chairperson of ICOC shall
be full or part time employees of the institute and shall meet the
following criteria:
   (A) Mandatory Chairperson Criteria
   (i) Documented history in successful stem cell research advocacy.
   (ii) Experience with state and federal legislative processes that
must include some experience with medical legislative approvals of
standards and/or funding.
   (iii) Qualified for appointment pursuant to paragraph (3), (4), or
(5) of subdivision (a).
   (iv) Cannot be concurrently employed by or on leave from any
prospective grant or loan recipient institutions in California.
   (B) Additional Criteria for Consideration:
   (i) Experience with governmental agencies or institutions (either
executive or board position).
   (ii) Experience with the process of establishing government
standards and procedures.
   (iii) Legal experience with the legal review of proper
governmental authority for the exercise of government agency or
government institutional powers.
   (iv) Direct knowledge and experience in bond financing.
   The vice chairperson shall satisfy clauses (i), (iii), and (iv) of
subparagraph (A). The vice chairperson shall be selected from among
individuals who have attributes and experience complementary to those
of the chairperson, preferably covering the criteria not represented
by the chairperson's credentials and experience.
   (b) Appointment of ICOC Members
   (1) All appointments shall be made within 40 days of the effective
date of this act. In the event that any of the appointments are not
completed within the permitted timeframe, the ICOC shall proceed to
operate with the appointments that are in place, provided that at
least 60 percent of the appointments have been made.
   (2) Forty-five days after the effective date of the measure adding
this chapter, the State Controller and the Treasurer, or if only one
is available within 45 days, the other shall convene a meeting of
the appointed members of the ICOC to elect a chairperson and vice
chairperson from among the individuals nominated by the
constitutional officers pursuant to paragraph (6) of subdivision (a).

   (c) ICOC Member Terms of Office
   (1) The members appointed pursuant to paragraphs (1), (3), (4),
and (5) of subdivision (a) shall serve eight-year terms, and all
other members shall serve six-year terms. Members shall serve a
maximum of two terms.
   (2) If a vacancy occurs within a term, the appointing authority
shall appoint a replacement member within 30 days to serve the
remainder of the term.
   (3) When a term expires, the appointing authority shall appoint a
member within 30 days. ICOC members shall continue to serve until
their replacements are appointed.
  SEC. 3.  Section 125290.30 of the Health and Safety Code is amended
to read:
   125290.30.  Public and Financial Accountability Standards
   (a) Annual Public Report
   The institute shall issue an annual report to the public which
sets forth its activities, grants awarded, grants in progress,
research accomplishments, and future program directions. Each annual
report shall include, but not be limited to, the following: the
number and dollar amounts of research and facilities grants; the
grantees for the prior year; the institute's administrative expenses;
an assessment of the availability of funding for stem cell research
from sources other than the institute; a summary of research
findings, including promising new research areas; an assessment of
the relationship between the institute's grants and the overall
strategy of its research program; and a report of the institute's
strategic research and financial plans.
   (b) Independent Financial Audit for Review by State Controller
   The institute shall annually commission an independent financial
audit of its activities from a certified public accounting firm,
which shall be provided to the State Controller, who shall review the
audit and annually issue a public report of that review.
   (c) Citizen's Financial Accountability Oversight Committee

   There 
    (1)     There  shall be a Citizen's
Financial Accountability Oversight Committee chaired by the State
Controller. This committee shall review the annual financial audit,
the State Controller's report and evaluation of that audit, and the
financial practices of the institute. The State Controller, the State
Treasurer, the President pro Tempore of the Senate, the Speaker of
the Assembly, and the Chairperson of the ICOC shall each appoint a
public member of the committee. Committee members shall have medical
backgrounds and knowledge of relevant financial matters. The
committee shall provide recommendations on the institute's financial
practices and performance. The State Controller shall provide staff
support. The committee shall hold a public meeting, with appropriate
notice, and with a formal public comment period. The committee shall
evaluate public comments and include appropriate summaries in its
annual report. The ICOC shall provide funds for  all costs
associated with commissioning the performance audit,  the per
diem expenses of the committee members  ,  and for
publication of the annual report. 
   (2) The State Controller, under the guidance of the committee,
shall annually commission a performance audit of the institute's
activities and the activities of the ICOC from a certified
independent auditing firm, which shall also be provided to the State
Controller, who shall review the performance audit and include that
review in its annually issued public report. The performance audit
shall include a review of policies and procedures established by the
ICOC to determine whether the ICOC has established a suitable
structure for administering the institute, whether those policies and
procedures comply with relevant laws and regulations and best
practices, and, to the extent possible, whether the institute is
complying with those policies and procedures. The audit shall
include, but not be limited to, the following:  
   (A) The strategic policies and plans developed by the institute
and the ICOC.  
   (B) Policies and procedures for issuance of contracts and grants
and a review of a sample of contracts and grants executed by the
institute and the ICOC.  
   (C) Policies and procedures relating to protection or treatment of
intellectual property rights associated with research funded or
commissioned by the institute. 
   (d) Public Meeting Laws
   (1) The ICOC shall hold at least two public meetings per year, one
of which will be designated as the institute's annual meeting. The
ICOC may hold additional meetings as it determines are necessary or
appropriate.
   (2) The Bagley-Keene Open Meeting Act, Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the
Government Code, shall apply to all meetings of the ICOC, except as
otherwise provided in this section. The ICOC shall award all grants,
loans, and contracts in public meetings and shall adopt all
governance, scientific, medical, and regulatory standards in public
meetings.
   (3) The ICOC may conduct closed sessions as permitted by the
Bagley-Keene Open Meeting Act, under Section 11126 of the Government
Code. In addition, the ICOC may conduct closed sessions when it meets
to consider or discuss:
   (A) Matters involving information relating to patients or medical
subjects, the disclosure of which would constitute an unwarranted
invasion of personal privacy.
   (B) Matters involving confidential intellectual property or work
product, whether patentable or not, including, but not limited to,
any formula, plan, pattern, process, tool, mechanism, compound,
procedure, production data, or compilation of information, which is
not patented, which is known only to certain individuals who are
using it to fabricate, produce, or compound an article of trade or a
service having commercial value and which gives its user an
opportunity to obtain a business advantage over competitors who do
not know it or use it.
   (C) Matters involving prepublication, confidential scientific
research or data.
   (D) Matters concerning the appointment, employment, performance,
compensation, or dismissal of institute officers and employees.
Action on compensation of the institute's officers and employees
shall only be taken in open session.
   (4) The meeting required by paragraph (2) of subdivision (b) of
Section 125290.20 shall be deemed to be a special meeting for the
purposes of Section 11125.4 of the Government Code.
   (e) Public Records
   (1) The California Public Records Act, Article 1 (commencing with
Section 6250) of Chapter 3.5 of Division 7 of Title 1 of the
Government Code, shall apply to all records of the institute, except
as otherwise provided in this section.
   (2) Nothing in this section shall be construed to require
disclosure of any records that are any of the following:
   (A) Personnel, medical, or similar files, the disclosure of which
would constitute an unwarranted invasion of personal privacy.
   (B) Records containing or reflecting confidential intellectual
property or work product, whether patentable or not, including, but
not limited to, any formula, plan, pattern, process, tool, mechanism,
compound, procedure, production data, or compilation of information,
which is not patented, which is known only to certain individuals
who are using it to fabricate, produce, or compound an article of
trade or a service having commercial value and which gives its user
an opportunity to obtain a business advantage over competitors who do
not know it or use it.
   (C) Prepublication scientific working papers or research data.

   (3) The institute shall include, in all meeting minutes, a summary
of vote tallies and disclosure of each board member's votes and
refusals. The institute shall amend past minutes to include a summary
of vote tallies and disclosure of each board member's votes and
refusals. 
   (f) Competitive Bidding
   (1) The institute shall, except as otherwise provided in this
section, be governed by the competitive bidding requirements
applicable to the University of California, as set forth in Article 1
(commencing with Section 10500) of Chapter 2.1 of Part 2 of Division
2 of the Public Contract Code.
   (2) For all institute contracts, the ICOC shall follow the
procedures required of the Regents by Article 1 (commencing with
Section 10500) of Chapter 2.1 of Part 2 of Division 2 of the Public
Contract Code with respect to contracts let by the University of
California.
   (3) The requirements of this section shall not be applicable to
grants or loans approved by the ICOC.
   (4) Except as provided in this section, the Public Contract Code
shall not apply to contracts let by the institute.
   (g) Conflicts of Interest
   (1) The Political Reform Act, Title 9 (commencing with Section
81000) of the Government Code, shall apply to the institute and to
the ICOC, except as provided in this section and in subdivision (e)
of Section 125290.50.
   (A) No member of the ICOC shall make, participate in making, or in
any way attempt to use his or her official position to influence a
decision to approve or award a grant, loan, or contract to his or her
employer, but a member may participate in a decision to approve or
award a grant, loan, or contract to a nonprofit entity in the same
field as his or her employer.
   (B) A member of the ICOC may participate in a decision to approve
or award a grant, loan, or contract to an entity for the purpose of
research involving a disease from which a member or his or her
immediate family suffers or in which the member has an interest as a
representative of a disease advocacy organization.
   (C) The adoption of standards is not a decision subject to this
section.
   (2) Service as a member of the ICOC by a member of the faculty or
administration of any system of the University of California shall
not, by itself, be deemed to be inconsistent, incompatible, in
conflict with, or inimical to the duties of the ICOC member as a
member of the faculty or administration of any system of the
University of California and shall not result in the automatic
vacation of either such office. Service as a member of the ICOC by a
representative or employee of a disease advocacy organization, a
nonprofit academic and research institution, or a life science
commercial entity shall not be deemed to be inconsistent,
incompatible, in conflict with, or inimical to the duties of the ICOC
member as a representative or employee of that organization,
institution, or entity.
   (3) Section 1090 of the Government Code shall not apply to any
grant, loan, or contract made by the ICOC except where both of the
following conditions are met:
   (A) The grant, loan, or contract directly relates to services to
be provided by any member of the ICOC or the entity the member
represents or financially benefits the member or the entity he or she
represents.
   (B) The member fails to recuse himself or herself from making,
participating in making, or in any way attempting to use his or her
official position to influence a decision on the grant loan or
contract.
   (h) Patent Royalties and License Revenues Paid to the State of
California
   The ICOC shall establish standards that require that all grants
and loan awards be subject to intellectual property agreements that
balance the opportunity of the State of California to benefit from
the patents, royalties, and licenses that result from basic research,
therapy development, and clinical trials with the need to assure
that essential medical research is not unreasonably hindered by the
intellectual property agreements.  All revenues received through
the intellectual property agreements established pursuant to this
subdivision shall be deposited into the General Fund. 
   (i) Preference for California Suppliers
   The ICOC shall establish standards to ensure that grantees
purchase goods and services from California suppliers to the extent
reasonably possible, in a good faith effort to achieve a goal of more
than 50 percent of such purchases from California suppliers.
  SEC. 4.  Section 125290.40 of the Health and Safety Code is amended
to read:
   125290.40.  ICOC Functions
   The ICOC shall perform the following functions:
   (a) Oversee the operations of the institute.
   (b) Develop annual and long-term strategic research and financial
plans for the institute.
   (c) Make final decisions on research standards and grant awards in
California.
   (d) Ensure the completion of an annual financial audit of the
institute's operations.
   (e) Issue public reports on the activities of the institute.
   (f) Establish policies regarding intellectual property rights
arising from research funded by the institute.
   (g) Establish rules and guidelines for the operation of the ICOC
and its working groups.
   (h) Perform all other acts necessary or appropriate in the
exercise of its power, authority, and jurisdiction over the
institute.
   (i) Select members of the working groups.
   (j) Adopt, amend, and rescind rules and regulations to carry out
the purposes and provisions of this chapter, and to govern the
procedures of the ICOC. Except as provided in subdivision (k), these
rules and regulations shall be adopted in accordance with the
Administrative Procedure Act (Government Code, Title 2, Division 3,
Part 1, Chapter 4.5, Sections 11371 et seq.).
   (k) Notwithstanding the Administrative Procedure Act (APA), and in
order to facilitate the immediate commencement of research covered
by this chapter, the ICOC may adopt interim regulations without
compliance with the procedures set forth in the APA. The interim
regulations shall remain in effect for 270 days unless earlier
superseded by regulations adopted pursuant to the APA.
   (l) Request the issuance of bonds from the California Stem Cell
Research and Cures Finance Committee and loans from the Pooled Money
Investment Board.
   (m) May annually modify its funding and finance programs to
optimize the institute's ability to achieve the objective that its
activities be revenue-positive for the State of California during its
first five years of operation without jeopardizing the progress of
its core medical and scientific research program.
   (n) Notwithstanding Section 11005 of the Government Code, accept
additional revenue and real and personal property, including, but not
limited to, gifts, royalties, interest, and appropriations that may
be used to supplement annual research grant funding and the
operations of the institute. 
   (o) Under the guidance of the ICOC, the institute shall create a
succession plan addressing changes in leadership of both the
institute and the ICOC designed to minimize disruption and adverse
impacts to the activities of the institute. A copy of the succession
plan shall be transmitted to the Governor, State Controller and the
Legislature within 30 days of its completion. The succession plan
should include, but is not limited to:  
   (1) A statement of commitment to prepare for inevitable leadership
change.  
   (2) A statement of commitment to assess leadership needs before
beginning a search.  
   (3) An outline of succession procedures, including, but not
limited to, timeframe for making the interim appointment, timeframe
for appointing a board transition committee, and the roles of the
transition committee that would include, for example communication
with stakeholders, identifying a transition management consultant,
conducting an organizational assessment, and designing the search
plan.  
   (4) Strategies to ensure successful knowledge transfer. 
  SEC. 5.  Section 125290.45 of the Health and Safety Code is amended
to read:
   125290.45.  ICOC Operations
   (a) Legal Actions and Liability
   (1) The institute may sue and be sued.
   (2) Based upon ICOC standards, institute grantees shall indemnify
or insure and hold the institute harmless against any and all losses,
claims, damages, expenses, or liabilities, including attorneys'
fees, arising from research conducted by the grantee pursuant to the
grant, and/or, in the alternative, grantees shall name the institute
as an additional insured and submit proof of such insurance.
   (3) Given the scientific, medical, and technical nature of the
issues facing the ICOC, and notwithstanding Section 11042 of the
Government Code, the institute is authorized to retain outside
counsel when the ICOC determines that the institute requires
specialized services not provided by the Attorney General's office.
   (4) The institute may enter into any contracts or obligations
which are authorized or permitted by law.
   (b) Personnel
   (1) The ICOC shall from time to time determine the total number of
authorized employees for the institute,  up to a maximum of
50 employees,  excluding members of the working groups
 ,  who shall not be considered institute employees.
The ICOC shall select a chairperson, vice chairperson and president
who shall exercise all of the powers delegated to them by the ICOC.
The following functions apply to the chairperson, vice chairperson,
and president:
   (A) The chairperson's  primary   role is to
provide leadership to the ICOC   and does not include 
 tasks associated with the day-to-day management of the
institute.   The chairperson's  responsibilities
 are to manage   shall be  determined 
by the majority of the board and may include providing oversi 
 ght   of  the ICOC agenda and work flow including
all evaluations and approvals of scientific and medical working group
grants, loans, facilities, and standards evaluations,  and
to supervise all annual reports and public accountability
requirements; to manage and optimize   managing and
optimizing  the institute's bond financing plans and funding
cash flow plan;  to interface   interfacing
 with the California Legislature, the United States Congress,
the California health care system, and the California public;
 to optimize   and optimizing  all
financial leverage opportunities for the institute  ; and to
lead negotiations for intellectual property agreements, policies, and
contract terms  . The chairperson  shall 
 may  also serve as a member of the Scientific and
                                       Medical Accountability
Standards Working Group and the Scientific and Medical Research
Facilities Working Group and as an ex-officio member of the
Scientific and Medical Research Funding Working Group. The vice
chairperson's primary responsibilities are to support the chairperson
in all duties and to carry out those duties in the chairperson's
absence.
   (B) The president's  primary responsibilities are
  role is to manage the day-to-day operations and 
to serve as the chief executive of the institute  ; to
recruit   . The president's tasks may include, but are
not limited to, recruiting  the highest scientific and medical
talent in the United States to serve the institute on its working
groups;  to serve   serving  the institute
on its working groups;  to direct   directing
 ICOC staff and participate in the process of supporting all
working group requirements to develop recommendations on grants,
loans, facilities, and standards as well as  to direct and
support   directing and supporting  the ICOC
process of evaluating and acting on those recommendations, the
implementation of all decisions on these and general matters of the
ICOC;  to hire, direct, and manage   hiring,
directing, and managing  the staff of the institute;  to
develop   developing  the budgets and cost control
programs of the institute;  to manage  
managing  compliance with all rules and regulations on the ICOC,
including the performance of all grant recipients;  leading
negotiations for intellectual property agreements, policies, and
contract terms;  and  to manage and execute 
 managing and executing  all intellectual property
agreements and any other contracts pertaining to the institute or
research it funds.
   (2) Each member of the ICOC except, the chairperson, vice
chairperson, and president, shall receive a per diem of one hundred
dollars ($100) per day (adjusted annually for cost of living) for
each day actually spent in the discharge of the member's duties, plus
reasonable and necessary travel and other expenses incurred in the
performance of the member's duties.
   (3) The ICOC shall establish daily consulting rates and expense
reimbursement standards for the non-ICOC members of all of its
working groups.
   (4) Notwithstanding Section 19825 of the Government Code, the ICOC
shall set compensation for the chairperson, vice chairperson, and
president and other officers, and for the scientific, medical,
technical, and administrative staff of the institute within the range
of compensation levels for executive officers and scientific,
medical, technical, and administrative staff of medical schools
within the University of California system and the nonprofit academic
and research institutions described in paragraph (2) of subdivision
(a) of Section 125290.20.
  SEC. 6.  Section 125290.60 of the Health and Safety Code is amended
to read:
   125290.60.  Scientific and Medical Research Funding Working Group
   (a) Membership
   The Scientific and Medical Research Funding Working Group shall
have 23 members as follows:
   (1) Seven ICOC members from the 10 disease advocacy group members
described in paragraphs (3), (4), and (5) of subdivision (a) of
Section 125290.20.
   (2) Fifteen scientists nationally recognized in the field of stem
cell research.
   (3) The Chairperson of the ICOC.
   (b) Functions
   The Scientific and Medical Research Funding Working Group shall
perform the following functions:
   (1) Recommend to the ICOC interim and final criteria, standards,
and requirements for considering funding applications and for
awarding research grants and loans.
   (2) Recommend to the ICOC standards for the scientific and medical
oversight of awards.
   (3) Recommend to the ICOC any modifications of the criteria,
standards, and requirements described in paragraphs (1) and (2) above
as needed.
   (4) Review grant and loan applications based on the criteria,
requirements, and standards adopted by the ICOC and make
recommendations to the ICOC for the award of research, therapy
development, and clinical trial grants and loans.
   (5) Conduct peer group progress oversight reviews of grantees to
ensure compliance with the terms of the award, and report to the ICOC
any recommendations for subsequent action.
   (6) Recommend to the ICOC standards for the evaluation of grantees
to ensure that they comply with all applicable requirements. Such
standards shall mandate periodic reporting by grantees and shall
authorize the Scientific and Medical Research Funding Working Group
to audit a grantee and forward any recommendations for action to the
ICOC.
   (7) Recommend its first grant awards within 60 days of the
issuance of the interim standards.
   (c) Recommendations for Awards
   Award recommendations shall be based upon a competitive evaluation
as follows:
   (1) Only the  15  scientist members of the
Scientific and Medical Research Funding Working Group shall score
grant and loan award applications for scientific merit. Such scoring
shall be based on scientific merit in three separate
classifications--research, therapy development, and clinical trials,
on criteria including the following:
   (A) A demonstrated record of achievement in the areas of
pluripotent stem cell and progenitor cell biology and medicine,
unless the research is determined to be a vital research opportunity.

   (B) The quality of the research proposal, the potential for
achieving significant research, or clinical results, the timetable
for realizing such significant results, the importance of the
research objectives, and the innovativeness of the proposed research.

   (C) In order to ensure that institute funding does not duplicate
or supplant existing funding, a high priority shall be placed on
funding pluripotent stem cell and progenitor cell research that
cannot, or is unlikely to, receive timely or sufficient federal
funding, unencumbered by limitations that would impede the research.
In this regard, other research categories funded by the National
Institutes of Health shall not be funded by the institute.
   (D) Notwithstanding subparagraph (C), other scientific and medical
research and technologies and/or any stem cell research proposal not
actually funded by the institute under subparagraph (C) may be
funded by the institute if at least two-thirds of a quorum of the
members of the Scientific and Medical Research Funding Working Group
recommend to the ICOC that such a research proposal is a vital
research opportunity. 
   (2) All grant applications received by the institute shall be
sent, upon receipt, to the Scientific and Medical Research Funding
Working Group for peer review prior to any other review process,
unless the process is only to determine completeness of the
application. 
  SEC. 7.  Section 125290.80 is added to the Health and Safety Code,
to read:
   125290.80.  (a) The intellectual property standards that the ICOC
develops shall include a requirement that each grantee and the
licensee of the grantee submit a plan to the institute that will
afford uninsured Californians access to any drug that is, in whole or
in part, the result of research funded by the CIRM.
   (b) The ICOC shall require submission of the plan required by
subdivision (a) before a drug is placed into commerce. The plan shall
be subject to the approval of the CIRM, after a public hearing and
opportunity for public comment.
   (c) (1) A plan created pursuant to subdivision (a) shall require
each grantee and any licensee of the grantee that sells drugs that
are, in whole or in part, the result of research funded by CIRM to
provide those drugs to California state and local government funded
programs at one of the three benchmark prices in the California
Discount Prescription Drug Program (Division 112 (commencing with
Section 130500)), as it exists on December 31, 2010.
   (2) Paragraph (1) shall not preclude a public agency from
obtaining prices that are lower than the price determined as
described in paragraph (1) through negotiation, bulk purchasing, or
another purchasing arrangement and shall not be construed to conflict
with, or preempt, any other provision of state or federal law or
regulation that would result in lower drug prices.
   (d) For purposes of this section, "drug" includes an article
recognized in the United States Pharmacopeia or the National
Formulary, as those documents exist on December 31, 2010, an article
intended for the diagnosis, cure, mitigation, or prevention of
disease in humans or animals, or an article intended for use as a
component thereof, and shall include therapeutic products, including,
but not limited to, blood, blood products, cells, and cell
therapies.
   (e) The ICOC may waive the requirement in subdivision (c) only
when both of the following conditions are met:
   (1) Either of the following:
   (A) The drug shall be used for the diagnosis, cure, mitigation, or
prevention of a rare disease or condition, as recognized by the
federal Food and Drug Administration under Section 360bb of Title 21
of the United States Code, by individuals who would not otherwise
have access to the drug through private insurance or public programs,
the number of individuals who will have increased access to the drug
represent a significant proportion of the individuals in California
who have that rare disease or condition, and the ICOC has made a
determination that, in the absence of the waiver, development of the
drug will be impeded.
   (B) The grantee commits, in writing, to provide expanded access to
a drug under its access plan to a class of patients who would not
otherwise receive access to the drug, including working uninsured
individuals who do not qualify for any public program or private
health plan or policy that provides coverage of the drug and the ICOC
anticipates that the waiver will provide significant benefits that
equal or exceed the benefits that would otherwise accrue to the state
through the pricing requirements set forth in subdivision (c).
   (2) The ICOC has conducted a public hearing prior to adopting the
waiver.
   (f) All revenues derived from patents, royalties, and licenses
generated as a result of intellectual property agreements entered
into pursuant to this subdivision shall be deposited into the General
Fund.
  SEC. 8.  Section 125291.90 is added to the Health and Safety Code,
to read:
   125291.90.  Under the guidance of the ICOC, the institute shall
create a transition plan addressing the expiration of current bond
funding by January 1, 2014. A copy of the transition plan shall be
transmitted to the Governor, the State Controller and the Legislature
within 30 days of its completion.