Thursday, May 17, 2007

State high court declines to review previous ruling

By Terri Somers

May 17, 2007

The state Supreme Court yesterday delivered a final, fatal blow to the legal challenges that have prevented California from issuing bonds to fund stem cell research since 2005.

The state's high court declined to review a lower court ruling that upheld the constitutionality of the California Institute for Regenerative Medicine, created when 59 percent of voters approved a $3 billion ballot measure in November 2004.
“The California Institute for Regenerative Medicine has lift-off today,” said Robert Klein, a lawyer and patient advocate who wrote the initiative known as Proposition 71 and later was chosen to lead the institute's governing board.

Proposition 71 was promoted as an avenue for California taxpayers to circumvent federal funding restrictions on human embryonic stem cell research, which proponents say has the potential to lead to therapies for some of the world's most devastating diseases.

The research is controversial because it destroys human embryos. Taxpayer advocacy groups with ties to individuals who oppose abortion had challenged the constitutionality of the initiative, and the stem cell institute it created, because the money it would be distributing was not under the direct control of state officials.

Since that argument was centered on state issues, lawyers on both sides agreed yesterday that it could not be pursued in federal courts. The state treasurer's office therefore can begin to issue the bonds to fund the stem cell institute.

“The taxpayers are the real losers here,” said Dana Cody, a lawyer with Life Legal Defense Fund who represented the People's Advocate, one of the initiative's challengers. Also challenging the initiative were the California Family Bioethics Council and the National Tax Limitation Foundation.

The court's decision allows $3 billion in taxpayer money “to go down the rabbit hole,” Cody said. “But voters voted for it, so what can I say?”

Cody said there could be other issues on which to base future legal challenges. “My client will probably continue to look at what is going on as far as (the institute's) spending,” she said. “Its first audit was just completed not too long ago, and it was pretty questionable.”

Gov. Arnold Schwarzenegger said yesterday the will of the voters had finally prevailed.

“(The court's) decision reaffirms voters' will to keep California on the forefront of embryonic stem cell research,” he said. “California's leadership gives the best promise of finding a cure for deadly and debilitating diseases.”

Under Proposition 71, the state treasurer's office can be authorized to sell up to $350 million in bonds annually to fund the stem cell institute. If the institute does not use all that funding in a given year, what is left can be rolled over to the following year.

Last year, the state authorized the treasurer's office to sell $250 million in bonds for the institute as soon as the legal challenges were resolved. Those bonds will now be sold, Klein said.

Funds raised through the bond sale will be used to repay $153 million in state loans and $45 million in loans from private individuals and foundations that were made to the stem cell institute to help it start operations and issue its first grants while the legal challenges played out, Klein said.

Among those who made loans were Padres owner John Moores and Qualcomm founder Irwin Jacobs. If the state had lost the legal challenges, their loans would have become donations to the institute.

“It's gratifying to know the legal system works,” Moores said after hearing about the court's decision.

He said the “mean-spirited” challenges were a delaying tactic of which “the impact on humans is incalculable, because these scientists are going to do great things with that bond money.”

As for his loan, Moores said he always intended for those funds to go to stem cell research. His refund check, he said, would likely go to the Scripps Research Institute, of which he is chairman.

To date, the stem cell institute has approved $158.8 million in research and training grants, making it the world's largest funder of embryonic stem cell research, Klein said. However, most of that money has been promised to cover multiyear grants and has not actually been distributed.

The institute has the available funds to cover another $48.5 million in grants that it plans to award this year for the construction of research lab space that can be shared by scientists pursuing stem cell research, Klein said.

In August, the institute plans to issue a request for applications for $220 million in grants that will be awarded for the creation of major research facilities. Applicants for these grants will be required to show that they can provide matching funds, which means another $440 million will be directed to advancing stem cell research, Klein said.

The availability of funds will also allow the institute to hire more staff. Since its inception in January 2005, the institute has been able to hire less than half of the 50-member staff allowed under Proposition 71.

The current staff has put together the documentation and support needed to fight the lawsuits, as well as accommodate more than 90 public meetings of the institute's governing board and its subcommittees. It has also been involved in creating the agency's medical and ethical standards and conducting due diligence on those awarded grants.

Taxpayer advocates, who monitored and critiqued the institute for the past two years as its standards and policies were formulated in public meetings, lauded the court's decision, but remained cautions.

“Like anyone else interested in stem cell science, I am delighted with the court's decision,” said John Simpson, of the Foundation for Consumer and Taxpayer Rights in Santa Monica. “But I hope in light of the understandable exuberance that everyone at the institute must be feeling that they don't forget the very solid procedures that they have put in place . . . and hand money willy nilly out the door.”

Klein said that while the institute would intensify its funding of stem cell research, it would continue to fund only the most promising science and scientists.

Some institute watchdogs said they thought the funding delay may have been positive for the institute.

At the institute's first meeting, in January 2005, Klein said he wanted the first round of grants to be made by May of that year, recalled Jesse Reynolds of the Center for Genetics and Society.

“I think the lawsuit, although we didn't support it, was a blessing in disguise because it put the brakes on, so they could get policy in place before the big bucks started going out,” Reynolds said.

But longtime Proposition 71 supporters scoffed at that argument. The institute would have had a full staff and found a way to do it right, said Larry Goldstein, an embryonic stem cell researchers at the University of California San Diego.

Goldstein was a member of the initial group of politicians, patient advocates and scientists who came up with the idea of asking state taxpayers to fund stem cell research.

“It's not that we would have come up with a new therapy or cure in those two years,” he said. “It's that we are starting two years behind. And if it takes 15 years total to come up with a cure, it's going to take us 17 years. And that is going to affect whoever gets sick 10 years from now.”

“It's a real human cost when you score it.”

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