Stem Cell Agency's Lobbyist Now Ranked No. 1 in California

The $3 billion California stem cell agency likes to align itself with the very best science. And as of today it is also hooked up with the best lobbyist in California – at least based on earnings.

CIRM hires many firms to perform work, given its unusual needs, rather than building a large and relatively permanent staff. The tasks of the outside contractors range from publishing the annual report to grant review matters. Today Laurel Rosenhall of The Sacramento Bee reported that one of the firms that CIRM has hired now ranks as the No. 1 lobbyist in California, based on its earnings.

The firm of Nielsen, Merksamer, Parrinello, Gross & Leoni pulled down nearly $5 million during the first three quarters of this year. The firm knocked KP Public Affairs out of the top spot, which it had held for at least the last 10 years.

Nielsen has had a contract with CIRM since its earliest days in 2005, but it doesn't amount to much in the scope of Nielsen's business. According to the latest CIRM report on outside contracting, Nielsen was paid $79,984 during the fiscal year 2010-2011 for services that also extended into the current fiscal year. The report did not list payments for earlier years, but it is our recollection that Nielsen was paid about $50,000 every year since 2005. It is not known whether the firm continues to hold a contract for the current fiscal year.

One of Nielsen's partners, Gene Erbin, was one of the drafters of Prop. 71, the ballot initiative that created the California stem cell agency in 2004. Merck and Pfizer, in addition to CIRM, are among the firm's clients.

High Speed Rail and California Stem Cell Agency on Same Lobbying Track

The California stem cell agency has a number of things in common with the California High Speed Rail Authority. Both generate a certain amount of controversy. Both use billions in money borrowed by the state. And both are among the rare state agencies with a federal lobbying effort.

The rail authority was created by California voters in 2008 when voters approved $8 billion in bond funding. It already has snagged $3.5 billion from the feds, but needs many billions more.

The stem cell agency is all but ready to spend about $180,000 on outside lobbying help in Washington during the next 12 months. The rail authority has already spent $40,000 on lobbying in the first three months of this year, according to a story in The Sacramento Bee on June 12.

Where they diverge – so far – is the news coverage about their lobbying efforts. The Bee's story said that state Sen. Doug LaMalfa, R-Richvale, has begun an investigation into whether lobbying restrictions have been violated by the rail authority. LaMalfa said the publicly funded lobbying is "outrageous" and "inappropriate, at the very least."

No similar sentiments have been heard from state legislators about CIRM's federal lobbying foray. But one reader left this anonymous comment on The Bee's rail story.

"It should be illegal for any government enity to lobby with our tax money.... They take our tax money and spend it to ask for more of our tax money...... Is it any reason our government is a mess and corrupt?"

One difference currently exists between the rail and the stem cell lobbying. CIRM is not proposing at this point to ask for federal assistance, although outgoing CIRM Chairman Robert Klein talked up a massive, $10 billion package in 2009 that would help CIRM and the biotech industry.

CIRM Headed for Another Federal Lobbying Effort

After an abortive attempt in 2009, the $3 billion California stem cell agency is moving forward once again with a significant commitment – for CIRM – in the lobbying game in Washington, D.C.

Yesterday the directors' Finance Subcommittee indicated that it favored spending $180,000 during the coming fiscal year to hire a lobbyist, which would make CIRM one of the rare California agencies with its own federal advocate. The move comes at a time when Gov. Jerry Brown is slashing the Washington lobbying office for the entire financially troubled state from six persons to two.

The CIRM directors' committee did not have a quorum so it could not vote, said Don Gibbons, chief communications officer for CIRM, but he said that the committee informally supported the proposal by outgoing CIRM Chair Robert Klein and co-vice chair Art Torres, a former state lawmaker. The plan will go to the full board later this month in San Diego.

Two years ago, CIRM hired a flamboyant but well-connected lobbyist, Tony Podesta, for $240,000 for 10 months work. The latest public accounting shows that he was ultimately paid less than $21,000. Klein began that lobbying effort only after debate about mission creep at CIRM and whether CIRM could really make a difference on issues where it is only a tiny, tiny player.

In a memo made available to the public only yesterday, CIRM noted that the directors' Legislative Subcommittee on Monday voted to oppose patent "reform" legislation now before Congress. The battle over the bill involves some of the largest pharmaceutical companies in the world and has already resulted in millions of dollars in lobbying expenditures by affected enterprises.

The CIRM memo said the bill and other federal proposals

"...could have a substantial impact on CIRM’s mission, ranging from a bill that would fundamentally change U.S. patent law to a bill that would support regenerative medicine through funding for research and commercial development of regenerative medicine products and development of a regulatory environment that enables rapid approval of safe and effective products."

"In addition, the Sherley v. Sebelius litigation, regardless of outcome, is likely to lead to
additional efforts by opponents or proponents of human embryonic stem cell research to push legislation regarding federal funding for human embryonic stem cell research."

The memo continued,

"To ensure that the chair and vice chairs have the support necessary to keep abreast of new developments and to protect and advance CIRM’s interests, it is critical that CIRM have the support of a government relations firm in Washington, D.C."

Patent Reform Critics Say Legislation is 'Constitutionally Infirm'

The California stem cell agency yesterday posted its analysis of federal patent legislation that pits General Mills against the National Small Business Association, Merck against the Institute of Electrical and Electronics Engineers and, in California, SangamoBioSciences against CONNECT.

On Monday, the CIRM directors' Legislative Subcommittee will take up the wide-ranging and technical legislation with an eye to endorsing or opposing it.

The analysis was written by Scott Tocher, staff counsel to CIRM Chairman Robert Klein. It said,

"CIRM’s interest in the health and productivity of the patent system in general is clearly a vital interest of the agency. CIRM’s mission requires dual goals of academic openness and the need to bring scientific advances to the public via commercialization. A robust and fair patent system will ensure that the fruit of CIRM-funded research is propelled through the development process and reaches patients."

Tocher's analysis indicates the key point of the battle over the legislation involves a matter that critics say makes the legislation "constitutionally infirm."

Tocher wrote,

"For the first time since its genesis in 1790, U.S. patent law will award patents to the first person to file for a patent rather than to the first person to arrive at an invention. All other major patent offices in the world already award patents on a first-to-file basis. Though equitable, the first-to-invent system leads to disputes that the Patent Office has been forced to resolve through complicated Interference proceedings. Under the new system, filers will still have to show possession of the invention, and will still have to establish novelty. They will not, however, face concerns that others may have arrived at the invention first and simply not have filed yet. There will no longer be Interference proceedings, and applicants will no longer be able to 'swear behind' prior art cited against them by giving evidence that, despite their later filing date, they arrived at the invention first."

Tocher continued,

"This is by far the Act's most significant change, and will likely increase the pressure for all entities to file for patent rights as soon as an invention is made. This change will also increase the risk in electing to forego patent rights in favor of maintaining an invention as a trade secret."

Tocher wrote,

"If enacted, this provision almost certainly will face a legal challenge in light of the United States Constitution’s provision that 'Congress shall have power … To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.' To the extent that a first-to-file system awards a patent in some cases not to an 'inventor' in the common understanding of that word, but to a person who is first to file, critics argue the legislation is constitutionally infirm."

Tocher listed some of the enterprises for and against the measure. Backers include General Mills and Merck. Sangamo BioSciences, a CIRM grant recipient, is also in favor. One of the opponents is CONNECT, a San Diego business development organization, whose CEO is Duane Roth, co-vice chairman of the stem cell agency.

Also posted on the CIRM agenda yesterday was an item from the California Stem Cell Report dealing with the patent legislation.

Prieto on Patent Reform

The vice chair of the CIRM Legislative Subcommittee, Francisco Prieto, has offered a brief comment on the subject of patent reform, a matter that will come before the panel on Monday.

Prieto, a Sacramento physician, said in an email last night to the California Stem Cell Report,

"I'm not sure we'll take a position, but we do want to be informed, and have a pretty serious interest. The outcome affects the ultimate result of most of the fruits of our labor: whether and how any treatments developed from CIRM funded research are able to be developed and marketed. That ultimately will decide whether any treatments or cures ever actually make it to the clinic and into patients who need them."

Meanwhile, CIRM has provided links on the meeting's agenda to the text of the complex legislation and two items offered by advocates in the fray. CIRM has yet to produce its own analysis, a rundown on the pros and cons and an explanation of how CIRM's position would make a difference in the outcome.

In a related matter, the Finance Subcommittee, three days after the meeting on patent reform, is scheduled to consider hiring a federal lobbyist, which would make the stem cell agency one of the rare state departments with its own national lobbyist.

Here is a list of the members of the Legislative Subcommittee, which is chaired by Art Torres, co-vice chair of the agency and former head of the California state Democratic Party.

CIRM Plans for Lobbyist to Push Patent Reform Position

Shades of Tony Podesta. The other shoe is dropping at the $3 billion California stem cell agency.

This time it comes in the form of open-ended approval for the chairman of the agency to hire federal lobbyists. No details are yet available on the CIRM web site. But on June 9, the directors' Finance Committee will convene for 30 minutes to act on the proposal.

All that is known about the matter at this point is the verbiage in the agenda item:

"Consideration of augmentation of budget of the Office of the Chair to fund, as necessary, contract for federal governmental relations support."

The matter dovetails nicely with the plan to push CIRM into the stormy patent reform battle in Washington.

Some of you may recall that CIRM hired the well-connected, powerful and flamboyant Podesta – he wears red shoes – for $240,000 for 10 months in 2009. (See here, here and here.) Podesta was ultimately paid only $20,077.92, according to a CIRM document. No public explanation has been provided for the difference.

The lobbying effort in 2009, pushed hard by outgoing Chairman Robert Klein, was not without controversy. It made CIRM one of the rare state agencies with its own lobbyist. (See here and here.)

One can only speculate on what will emerge next week. But one would wonder why there is any need to act on the lobbying plan or much less even schedule a meeting on it until a new chairman is elected later this month.

hESC Patents Piece from San Diego Researchers

The foray by the California stem cell agency into the tricky and arcane world of patent reform triggered a note today from the acting director of the San Diego Consortium for Regenerative Medicine, Xuejun H. Parsons.

She pointed out that the San Diego Regenerative Medicine Institute has a short piece on its web site about the patentability of human embryonic stem cells. CIRM was created by California voters in 2004 to fund hESC research because the federal government would not, but the agency has drifted away from a sharp focus on hESC.

The web site item briefly discusses the need for patents and links to a more comprehensive article by Parsons, Yang D. Teng, Dennis A. Moore and Evan Y. Snyder. The piece  in the journal "Recent Patents on Regenerative Medicine" is a technical overview of the science linked to the patents. It may be of interest to CIRM directors as they ponder whether to take a stand in the savage fight in Congress over patent reform legislation.

The California Stem Cell Agency and Multimillion Dollar Machinations in Washington

The directors of the California stem cell agency are preparing to jump into a brutal political fray in the hallowed halls of Congress that pits, in the views of some, a "global corporatist elite" against American entrepreneurs and inventors.

It is all about patent law and so-called reform. More than 100 lobbying firms representing at least 267 organizations have already joined the battle. Millions of dollars are being spent to influence the outcome.

Patent law is one of the more arcane subjects in the public policy arena. The CIRM directors Legislative Subcommittee is being asked to make a considered judgment on the controversial emotional and technical issues during a brief, 90-minute meeting on Monday that includes other significant matters.

And with only three business days before the meeting, CIRM has not publicly presented a summary of the legislation and issues. No analysis, no pros and cons and no rationale for why the state agency should be involved are available. The meeting agenda does not even state that patent reform is the matter to be discussed.

It is exceedingly unlikely, to put it mildly, that CIRM's position for or against the legislation will make a dime's worth of difference, given the vast number of players and their global importance. Directors should step back and rethink their policy on lobbying legislation either at the national or state level. CIRM has more than enough to do running a research program that will cost California taxpayers $6 billion, including interest.

The Podesta Watch: White House Visits, Red Shoes and 61 Percent Gains

Tony Podesta, the California stem cell agency's man on the Potomac, is making news again, largely for flashy fundraising and access to the Obama White House.

Podesta was hired as a federal lobbyist by CIRM last February under a 10-month, $240,000 contract. California state agencies, rarely if ever, hire federal lobbyists, although the state does maintain a lobbyist on the state payroll in Washingon.

Podesta visited the White House five times in six months, but the clients were not identified. Our guess is that they did not include CIRM. So far, CIRM Chairman Robert Klein has not reported publicly to his board of directors on what California taxpayers are receiving for their money. Podesta's contract with CIRM is due to expire in December but could be extended.

Here is a rundown on recent Podesta stories:

“Podestas Rule Washington and Obama Guest List” – US News and World Report – The story says it shows “the power of the Podesta family. Between them, Obama adviser and former Clinton Chief of Staff John Podesta; his brother, lobbyist Tony Podesta; and Tony's lobbying wife Heather made 25 visits. By comparison, House Speaker Nancy Pelosi made one visit.”

“Holdouts to Obama's Vow to Change” – Commentary by Albert R. Hunt, formerly of the Wall Street Journal and now of Bloomberg, “Heather and Tony Podesta are conscientious objectors to the culture of change in Washington. The husband and wife, with separate lobbying firms, are raking in millions from the insurance and drug industries, tobacco companies and corporate interests fighting changes to labor laws or the overhaul of the student-loan program.” In New York Times also.

Tony Podesta Scoops Up Nearly $19 million in Third Quarter, Up 61 percent – National Journal

"Tony Podesta has happy feet for 65th birthday” – Washington Examiner - Podesta and friends celebrate his birthday at a high-profile fete wearing red shoes.

“Big money buys seats at lawmakers' dinner tables” – Washington Times --Heather Podesta, wife of Tony and a lobbyist herself, throw fundraiser at her $2 million home

Then there is this paean to Heather Podesta in the Washington Post in August that had, as they say, tongues wagging along the Potomac.

Releasing the names of the White House visitors was a first. The Bush administration refused to do so. Initially Obama adopted that position but wisely changed his mind. The release of the list attracted a great deal of coverage because of its novelty but that will diminish.

Here is a link to the White House list of Podesta visits.

As readers may recall, we have raised questions about the effectiveness and propriety of CIRM's efforts to become a player in Washington politics. We do not object to CIRM making its voice heard in Congress nor particularly in Sacramento. But CIRM has more than enough laundry to take care of in the Golden State. Attempting to become a major influence in Washington will require funds and time that CIRM cannot afford.

Here is a link to one article on the subject. You can also search on the terms “podesta” and “lobbying.”

CIRM Backs Public Option in Health Care Reform

The board of the California stem cell agency has endorsed a public option as part of the national health care insurance reform effort, a move that a backer said would help with affordable access to any stem cell therapies developed with taxpayer funds.

The board took the position last week on a motion by director Jeff Sheehy, a communications manager for UC San Francisco. He sits on the board as a patient advocate. Sheehy said,

"It's a way to keep private insurance companies honest and is essential to holding down costs in insurance."

The action was praised by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca. In an item on his organization's blog, he said,

“I certainly haven't agreed with everything the ICOC has done, but they sure got this one right. Let's just hope they expend as much effort making this action known in Washington, D.C., as has gone into touting their biotech-friendly, anti-consumer position on biosimilar drug legislation.”

Support for Public Health Care Option, but "Nyet" to Hoover

SACRAMENTO – The California stem cell agency appears to be on track to reject nearly all of the recommendations for improvements in its operations made by the state's good government agency, the Little Hoover Commission.

Meeting yesterday in a teleconference session, the directors' Legislative Subcommittee concluded its discussion of the Hoover report with a consensus “nyet” to the commission.

The panel earlier last month rejected the most sweeping recommendations, including reducing the size of the board of directors from 29 to 15 and trimming the powers of its chairman. The action was taken based on an opinion from the CIRM's outside counsel that the legislature could not make those changes.

Yesterday, the subcommittee went along (no vote was taken) with the CIRM staff response, which can be found here and here. The panel did agree to poll its scientific grant reviewers on whether they would resign if their statements of economic interests were made public. It also agreed to post vote tallies in the future by the board of directors on grant applications.

Art Torres, chairman of the subcommittee and a former state legislator, will prepare a report on the group's discussion and present it to the full board at its meeting Aug. 19-20 for ratification.

The Legislative Subcommittee, on a 6-3 vote, also expressed support for a public option in the national health care reform legislation. Director Jeff Sheehy, a UC San Francisco communications manager and AIDs activist, and Torres backed the effort.

Sheehy said access to health care and future stem cell therapies is critical to CIRM's mission. Duane Roth, co-vice chairman of the board of directors, opposed the endorsement, citing problems elsewhere in the world with government-run health care plans.

The endorsement will come before the full board at its meeting later this month.

Also meeting yesterday was the full CIRM board, again in a teleconference session, to discuss a proposal by President Alan Trounson connected to finding a replacement for Chief Scientific Officer Marie Csete, who has resigned.

Trounson plans to create a new vice president for research and development to enhance CIRM's engagement with industry. The title and additional responsibilities could also make it more appealing to possible job candidates.

Trounson's proposal does not require board approval but he is obviously taking care to ensure support from the CIRM board.

The plan hit a bump when Claire Pomeroy, dean of the UC Davis School of Medicine, raised questions about reporting ambiguities in Trounson's organizational chart, which seemed to conflict with the reporting lines in the job description dealing with basic science research.

Sherry Lansing, chairperson of the Governance Subcommittee and former head of a Hollywood film studio, indicated that the plan seemed to justify the creation of a third VP. In that case, the executive director of scientific activities would be designated as a vice president.

In other action, the board added Gerald Levey, dean of the UCLA School of Medicine, and Ted Love, a Bay Area biomedical businessman, to the newly created Evaluation Subcommittee. Levey was then elected chairman of the committee and Francisco Prieto, a Sacramento physician, vice chairman.

The full list of committee members can be found here, minus the Levey and Love additions.

For the record, we should note that some of the material for yesterday's two meetings was posted extremely late on the CIRM web site. One memo dealing with the Hoover report was not available at teleconference location in Sacramento, although it may have been posted on the Web at the time of the meeting. The staff's discussion draft of the Hoover report did not appear until the day before the meeting. Likewise for the organizational chart.

CIRM Dwarfed in Biotech Patent Fight

The battle to protect the biotech industry from generic drug makers, a war in which CIRM is a dogface, is going swimmingly, according to an article this week by The Associated Press.

In a piece headlined “The influence game: Biotech drug lobbying war,” Alan Fram wrote that the weapons include “millions of dollars in lobbying, thousands in campaign contributions and uncounted visits to members of Congress. And one noteworthy letter.”

His conclusion?

“The lobbying battle has so far been one-sided. The Senate health committee voted 16-7 for a 12-year (patent) protection period last month, while (Rep. Henry) Waxman's House energy panel voted 47-11 for 12 years of protection last Friday on an amendment by Rep. Anna Eshoo, D-Calif., who has numerous biotech firms in or near her Silicon Valley district.”

CIRM is a decidedly bit player on this stage, given the vast stakes and expenditures involved. The agency has written a letter – NOT the one cited by Fram – after directors, over the last few months, debated whether a state-funded agency should lobby to protect the biotech industry. That letter in turn generated another letter from U.S. Sen. Dianne Feinstein. (Both can be found here.)

CIRM also has hired a Washington lobbying firm, the Podesta Group, an unusual step for a state agency, paying it $240,000 for 10 months work. But Podesta's assignments from CIRM seem to involve more than patent protection.

All of CIRM's efforts are hardly a dribble on the health care reform playing field, where all the action is taking place. The Associated Press article, distributed nationally, spells out how money talks when it comes to locking up intellectual property. Fram described a “huge disparity” in cash. He wrote,

“Representing biotech companies, the Biotechnology Industry Organization has spent $3.7 million lobbying so far this year. Their ally, (the Pharmaceutical Research and Manufacturers of America), has spent $13.1 million — the second most of any group that lobbies in Washington.

“The main group opposing them, the Generic Pharmaceutical Association, has spent $1.1 million lobbying this year. Another group, a coalition of generic drug companies, insurers and large employers, has spent another $180,000, though most of its members — like AARP and the General Motors Corp. — are more focused on the overall (health reform) bill and are devoting few resources to the generic fight.”

Fram continued,

“All that money has let the biotech industry launch a lobbying blitz, with targets including lawmakers from biotech-heavy states like California, Maryland, Massachusetts, New Jersey and North Carolina.

“The biotech organization has brought its CEOs to Washington, and has run print and radio ads in the states of pivotal lawmakers. The pharmaceutical association has helped organize lobbying by universities that conduct biotech research and venture capitalists who invest in such firms, and paid for a Duke University study that concluded biotech firms need 12 to 16 years of protection from generic competitors to break even.”

All of which brings us to a business maxim of Jack Welch, the fabled executive who once led General Electric. He did not mess with enterprises in which GE could not be No. 1 or No. 2. Even today, his Web site says that maxim “stopped the decades-long practice of sprinkling money everywhere.”

The California stem cell agency is not even close to being No. 1 or No. 2 in the biotech patent protection game. That is something for CIRM directors to think about as they consider their priorities later this month when they deal with their strategic plan. Their grant portfolio is just about to hit $1 billion. They have only a tiny staff to oversee those expenditures and to hand out another $2 billion over the next few years. They will soon launch a new $210 million grant round, the largest research round ever for CIRM. And they will enter new, uncharted waters with a risky $500 million biotech lending program. A sharper focus on essentials may be in order.

Sizzling Month for Biotech; More on Patent Protection for Biotech

Good news is surfacing in the biotech industry. One industry watcher on Monday reported that the sector was “hot” during July, but warned that challenges remain including the fate of patent protection for biotech drugs – a matter also of concern to the California stem cell agency.

Burrill & Co., the San Francisco life sciences merchant bank, said the sector was propelled by “drug data, positive drug sales/earnings and partnering and M&A deals.”

But Steven Burrill, CEO of the company bearing his name, also said,

“We don’t yet believe biotech is fully back on track as many companies are still struggling to find the necessary funding to maintain their operations, almost half of US public biotechs have market caps below $100 million and we are seeing companies still consistently turning off their lights for the last time. It is important to remind ourselves that the biotech industry is undergoing a major transition, a process that will likely continue for many months yet.

“This is because we do not know how President Barack Obama’s proposal for health care reform will fully impact the biotechnology industry and the status of biosimiliar legislation (follow-on biologics) is also still unresolved and there are fears that these issues will drive the prices of innovative drugs lower and eat away at biotech company profits.”

CIRM, a taxpayer-funded organization, is lobbying Congress on the biosimilar patent protection legislation. Last month it sent a letter to to U.S. Sen. Diane Feinstein, D-California, backing lengthy, 12 to 14 year patent protection periods, also an industry-supported position.

Without that protection, CIRM said “patient access to this promising technology will de delayed or eliminated and California's biotechnology sector will suffer.” Feinstein sent the letter along to the key Democratic negotiators on the health care reform legislation, urging support of the CIRM position. You can a find copy of both letters here.

The Podesta Watch: Public Health Care Option and Loans to College Students

Tony Podesta, the “legendary Democratic fundraiser” who is now CIRM's go-to guy in Washington, made the news during the last few days for roles in connection with the public option in the national health care legislation and aiding Sallie Mae, the nation's largest provider of student loans.

Podesta, who is under a $240,000, 10-month lobbying contract with the California state agency, was mentioned on the nationally broadcast PBS program, Bill Moyer's Journal, on Friday. The program was a scathing look at lobbying efforts by the health insurance industry against the public option in national health care reform legislation. On Thursday, CIRM directors will be asked to endorse the public option.

The guest on the Moyers' program was Wendell Potter, a former health insurance executive who is now an advocate for health care reform.

Here is how the Podesta's name came up, according to the transcript:

Moyers:

"I mean, they (former Congressional staffers) left the government. They go to work for the industry. Now they're back with an insider status. They get an access, right?"

Potter:

“Oh, they do, they do. And these lobbyists' ability to raise money for these folks also is very important as well. Lobbyists, many of the big lobbyists contributed a lot of money themselves. One of the lobbyists for one of the big health insurance company is Heather Podesta, the Podesta Group, and she's married to Tony Podesta, who's a brother of John Podesta.”

Moyers:

“Who used to be the White House chief of staff."

Potter:

“Right. Right. And they're Democrats. And my executives wanted to meet with — and when I say my, the people I used to work for-- “

Moyers:

“At CIGNA.”

Potter:

“Yeah, wanted to meet with Hillary Clinton, when she was still in the Senate and still a candidate for president. Well, that's hard to do. That's hard to pull off, but she did. That just shows you that you can, through the relationships that are formed and that the insurance industry pays for, by hiring these lobbyists, you can your foot in the door. You can get your messages across to these people, in ways that the average American couldn't possibly.”

Danielle Knight, in a special report to the Huffington Post Investigative Fund, mentioned the Podesta Group in a piece headlined, “Lobbying Showdown Over The Future Of Student Loans." The article discussed Sallie Mae's efforts to position itself as the “clear winner” in multibillion dollar fight over the private student loan industry. Knight wrote that in March,

“(S)allie Mae retained the Podesta Group, founded by Tony Podesta, a legendary Democratic fundraiser whose brother headed the Obama transition team. In addition to Podesta himself, the firm, which was paid $110,000 for its work in the first half of the year, assigned at least four of its lobbyists to push Sallie Mae's case on Capitol Hill: Paul Brathwaite, the former executive director of the Congressional Black Caucus and a former Clinton Labor Department official; Israel 'Izzy' Klein, a former aide to Sen. Charles E. Schumer of New York and Rep. Edward J. Markey of Massachusetts, both Democrats; Lauren Maddox, a former assistant secretary for communications and outreach at the Education Department in the Bush administration; and Donni Turner, a former aide to Sen. Richard Durbin of Illinois, Rep. David Scott of Georgia, and former Sen. Max Cleland of Georgia, all of them Democrats.”

Linda Stamato of nj.com also mentioned Podesta in connection with Sallie Mae.

CIRM Adds Info on Possible Endorsement of Public Insurance Option

The California stem cell agency has posted a host of wide-ranging links to documents dealing with the public health insurance option that it will consider endorsing at its Legislative Subcommittee meeting next Thursday.

They range from Wall Street Journal and New York Times articles to pieces in support and against the plan, which is being considered by Congress as part of the national health care reform legislation.

The posting of the documents well ahead of the meeting is another instance of giving both the public and CIRM ample time to consider the issues involved.

However, the background material does not address several questions that CIRM directors should consider. Is this sort of broad national issue something that CIRM should be chasing? If so, how many votes can CIRM deliver for or against the plan? The latter may be the most important question in the real world of politics. Third, is this something that CIRM's high-flying federal lobbyist, the Podesta Group, can weigh in on appropriately? It has several other clients that have a major stake in the legislation. And those clients may have interests at odds with whatever position CIRM chooses to take.

If you would like to take part in the CIRM debate over the plan, you can do so via teleconference locations throughout the state. They include San Francisco, Los Angeles, Healdsburg, Mountain View, Palo Alto, Irvine, La Jolla and Sacramento. The specific addresses can be found on the agenda.

You can also weigh with comments on this Web site. Just click on the term "comments" below. Anonymous postings are permitted.

The Podesta Watch: Mother's Milk, Appreciation and CIRM

Lobbyist Tony Podesta, CIRM's man in Washington, garnered some headlines this month with a stunning financial performance, heavy duty fundraising and even a note on his delinquent property taxes.

Podesta is being labelled a “king of K Street” and a powerhouse. He could be on his way to lobbying superstar status. Podesta knows the truth of the axiom that money is the mother's milk of politics. He conducts weekly fundraisers at his home. “People appreciate the fact that you have given of yourself,” he says.

His firm, the Podesta Group, is earning $240,000 for 10 months of work for the California stem cell agency. But the CIRM contract is piddling compared to the performance of his business.

Zachary Abrahamson of politico.com reported that the Podesta Group took in $11.6 million for the first half of this year, a 57 percent increase from the same period last year.

One reason is the family name. Chris Frates, also of politico.com, reported,

“Lobbyist Tony Podesta has a long history in Democratic politics and is a prodigious fundraiser. His wife, Heather, is a powerhouse lobbyist in her own right. Tony’s brother, John — a co-founder of their namesake lobbying firm — was the co-chairman of the Obama transition and is the founder and president of the Center for American Progress, which many people credit with crafting much of the Obama administration’s policy blueprints and staffing its ranks.

“With a pedigree like that, it’s no surprise that Tony Podesta’s lobbying firm has emerged as a king of K Street.”

Podesta told Frates,

“You meet people in the middle of political campaigns, and they appreciate the fact that you’ve given of yourself to get them elected. I’ve helped a lot of the folks who are in Congress politically, and helped them in many ways, and that’s a thing which people are grateful about.”

Kevin Bogardus of TheHill.com wrote that Podesta, “has bundled campaign contributions for several powerful Democratic lawmakers over the first six months of the year,” including “donations of close to $100,000 on behalf of Rep. Henry Waxman (D-Calif.), Sen. Patty Murray (D-Wash.), Senate Majority Leader Harry Reid (D-Nev.) and the Democratic Congressional Campaign Committee (DCCC).”

Andrew Miga of The Associated Press, reported that Sen. Christopher Dodd, D-Conn., one of key players on health care, was a Podesta beneficiary. Miga wrote,

“Anthony Podesta, one of Washington's best-known Democratic lobbyists, contributed $500 (to Dodd). The Alliance for Quality Nursing Home Care paid Podesta's firm, the Podesta Group, $120,000 for the quarter.

“Podesta's wife, Heather Podesta, hosted a $1,000 per person fundraiser in March for Dodd at the Podestas' home in the affluent Woodley Park neighborhood of Washington.

“Her firm, Heather Podesta + Partners, was paid $50,000 this year by HealthSouth Corp., one of the country's largest health care service providers.”

Earlier this month, Arthur Delaney of the Huffington Post wanted to take a first-hand look at a $1,000-a-plate Podesta fundraiser. The Podestas declined even to allow him to bus the dirty dishes and booted him from the premises of their 6,600-square-foot house.

As for the home, the Huffington Post carried this headline on one item: “Lobbyist Tony Podesta Among Delinquent Property Owners In D.C."

The reference was to a Washington Examiner story by Michael Neibauer in which he reported that Podesta owed paid only $33,935 of his $34,483 property tax bill, a shortfall of $696.32. Podesta was quoted as saying,

“We don’t even pay the taxes. They’re paid by the bank. If they sell my house, I’m going to sue the bank.”

It is unusual for a state agency to have a lobbyist in Washington, although the governor's office does have a staffer in the capital to watch out for statewide issues. Some CIRM directors have expressed reservations about CIRM's lobbying efforts, suggesting that it is an exercise in hubris and a bit of mission creep.

Federal Lobbying and the CIRM Mission

The California stem cell agency opened a huge door earlier this spring when it decided to back industry legislation in Washington to protect biotech therapy patents against development of generic equivalents.

Now marching across that portal is a bid to have the directors of the $3 billion state research institute engage in even broader lobbying efforts. Specifically they are being asked to take a position on one of the most sweeping and controversial parts of the national health care legislation -- the public health care option.

Why not, ask some?

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., said,

“CIRM should never have hired a lobbyist; it should never have taken a position on biosimilar (patent) legislation. But now that the board has gone down that ill-conceived route, the only responsible position is a full endorsement of a public option in health insurance reform. Anything else would demonstrate that the ICOC listens to industry, but ignores consumers.”

The public option question will come before the CIRM directors' Legislative Subcommittee on Aug. 6. It was placed there by Art Torres, vice chairman of the board of directors and chairman of the subcommittee, at the request of director Jeff Sheehy, a communications manager for UC San Francisco.

Sheehy brought up the subject following a report on the patent legislation during a subcommittee meeting on July 16. He noted that the patent legislation is part of the healthcare reform act.

According to the transcript, Sheehy said,

“Since that is now on the table, I would like to ask that the board formally consider supporting the adoption of a public plan as part of that measure since we've already opined on one element of that plan....”

Sheehy continued,

“Given that basically the biosimilars bill was a sop to industry in order to get buy-in (on health care reform) to make sure that everybody in America can have access to care, we should have support as a board for the key element of ensuring that people won't be excluded for prior conditions.

“I know as a person living with HIV, I'm basically trapped within my job because I could never be insured. The only way to guarantee that I would have access to insurance and access to these therapies as we develop them -- and I'm perfectly fine letting industry get all that they need for biosimilars for stem cell research -- but we need a public plan as part of the health reform act to ensure that there is a guaranteed access plan for all Americans, including all Californians.”

Torres promptly replied,

“Well put.”

He said he would place Sheehy's proposal on the agenda for the next meeting.

CIRM Chairman Robert Klein did take issue with Sheehy's description of the patent legislation as an industry sop. Here is how the dialogue went.

Klein:

“I'd just like to say that it's important to remind everyone that ours was not a political judgment, but rather one committed to our mission.”

Sheehy:

“And I agree, but I think ultimately none of this means a thing if patients can't get access to these therapies."

Torres:

“Hear, hear.”

Klein:

“I think that's a very, very important debate that Mr. Sheehy is bringing us to focus on. And thank you, Jeff.”

The public can participate in the subcommittee meeting at teleconference locations in San Francisco, Los Angeles, Healdsburg, Mountain View, Irvine, Palo Alto, La Jolla and Sacramento. You can find the specific addresses on the agenda.

‘Boiling Blood,’ Biotech and Rainmaking

The headline in the Wall Street Journal this morning read “Blood Boils Over Bill to Protect Biotech Drugs.”

And on Friday, the story on Politico.com was about a “king of K Street” in Washington, D.C., the man who is the $240,000 federal lobbyist for the California stem cell agency.

Both stories are related to the agency’s lobbying efforts in Congress on behalf of an industry-backed bill to stall competition from generic companies that may seek to duplicate biotech drugs.

The WSJ story indirectly makes it clear how picayune is the CIRM lobbying effort. The bill endorsed by the agency is not even mentioned. The players are many and powerful. The stage is vast, encompassing the Obama administration’s sweeping health plan effort.

Reporter Alicia Mundy focused on a proposal by Sen. Ted Kennedy that would give biotech firms 13.5 years of protection from generic competition on what the WSJ called “lucrative” drugs. That is about twice as long as proposed by President Obama, who is wrapping the IP legislation into his health care package.

Mundy reported that Kennedy’s effort “may prevail because it would help keep the pharmaceutical industry on board with the (Obama) overhaul, said industry lobbyists and Senate staffers.”

Also involved in this is Tony Podesta, an accomplished rainmaker and CIRM’s Washington lobbyist(the agency has another lobbyist in Sacramento). Chris Frates of Politico.com wrote that “in the age of Obama, it’s a particularly good time to be named Podesta.”

Frates recounted the Podesta family ties to Obama, including brother John Podesta’s co-chairmanship of the president’s transition team.

Frates said Tony Podesta is active in campaign fund-raising, hosting a recent event that funneled $500,000 to the Democratic Senatorial Campaign Committee.

Some CIRM directors and others have questioned the agency’s lobbying effort as largely meaningless given the vast issues in play in Washington. However, $240,000 would not be meaningless to a stem cell researcher in California looking for help to push science along to finding a cure for one of the array of ailments many believe could be alleviated through stem cell therapy.

Assuming that protecting the biotech industry from generic competition is the correct position for a California state agency, the question remains: What do the people of California get out of the expenditure of $240,000, which does not even buy a bleacher seat in the Capitol? And that amount does not count the additional staff and directors time, travel and expenses. Does any of it change the outcome?

CIRM directors will receive a briefing on Thursday on the legislation at a teleconference meeting of their Legislative Subcommittee. The public can participate in session at locations in San Francisco, Elk Grove, Healdsburg, La Jolla (2), Irvine and Palo Alto. Specific addresses can be found on the agenda.

(Editor’s note: The WSJ article is only available to online subscribers. If you would like a copy, please email djensen@californiastemcellreport.com.)

More Info on CIRM's Finances and its Federal Patent Lobbying Position

The California stem cell agency today posted several major background information pieces for its board meeting, including details and justification for its proposed budget and an analysis dealing with its endorsement of industry-backed patent protection legislation.

The documents came as the agency is scheduled to begin a two-day meeting tomorrow in San Diego, which can heard via the Internet(instructions on the agenda).

We have not had a chance to read all the material carefully, but the budget documents go a long way in answering the questions we raised on Friday and presumably the earlier requests for more details from CIRM board members.

The budget material includes more year-to-year comparisons, a commentary explaining some of the assumptions in the budget, a justification for extensive travel and more. All of the items can be found through links on the agenda

In addition, Nancy Koch, one of CIRM's outside attorneys, wrote a three-page analysis of a Federal Trade Commission report last week that dealt with many of the issues involved in the federal patent legislation on biotech therapies.

Koch wrote:

“Lengthy market exclusivity periods (like those proposed by Rep. (Anna) Eshoo in HR 1548), according to the FTC, are not necessary and could actually dampen innovation.”

The Eshoo bill has been endorsed by the CIRM board, which is likely to vote again on the measure during its meetings during the next two days.

Koch performed a careful analysis of the FTC study, reaction to it and its impact on the CIRM position, including exploration of the FTC report's assumptions and weaknesses.

She wrote that the FTC “analysis sidesteps the financially daunting circumstances faced by smaller companies.”

Koch said,

“For CIRM, this last point is particularly significant. Even if the FTC's prediction were generally correct, stem cell research and the market for stem cell therapies would seem to fall outside the agency's analysis.”

Whether you agree or disagree with Koch's analysis or the budget justification and plans, all are important tools for CIRM directors tomorrow. The information also adds significantly to the understanding of the public and parties interested in CIRM's $3 billion operation.

The $10 Billion Patent Litigation Bill

As the directors of the $3 billion California stem cell agency this week reconsider their endorsement of an industry-backed, patent protection bill, they may want to think about some of the issues raised in an article in Monday's Wall Street Journal headlined “Why Technologists Want Fewer Patents.”

The opinion piece was written by L. Gordon Crovitz, former publisher of the Journal, and discusses the current state of patent law and intellectual property.

He wrote,

“The Patent Office now gets some 500 million applications a year, leading to litigation costs of over $10 billion a year to define who has what rights. As Judge Richard Posner has written, patents for ideas create the risk of 'enormous monopoly power (imagine if the first person to think up the auction had been able to patent it).' Studies indicate that aside from the chemical and pharmaceutical industries, the cost of litigation now exceeds the profits companies generate from licensing patents.”

Crovitz continued,

“The Supreme Court may decide that more progress would be made with narrower definitions of what is patentable. A book on the U.S. approach to patents, 'Jefferson vs. the Patent Trolls' by Jeffrey Matsuura, makes the key point that 'intellectual property rights were not goals in and of themselves, but were instead a mechanism through which society attempted to facilitate creative collaboration.'"

Some of you may recall that zealous stem cell patent protection has blocked research at Childrens Hospital of Orange County. And some have pointed to excessively tight control of IP as a main reason why nearly all biotech companies have been unprofitable for decades.

The three scientists who founded the company, Stem Cells Inc. of Palo Alto, Ca., which holds the patents in the Childrens Hospital case, have never spoken publicly on the issue, and we do not expect to hear from them.

It is unclear whether the Crovitz piece is available to non-subscribers. If you would like a copy, please email djensen@californiastemcellreport.com.