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Proposed changes in the California stem cell agency's regulations that would have created loopholes allowing some businesses to avoid rules to ensure affordable access to therapies funded by public money have been thwarted.

I raised the alarm Tuesday and the looming loophole apparently has been slammed shut.  I got a call from stem cell agency chairman Bob Klein this morning telling me about the decision. Here's what happened:

The board of the California Institute for Regenerative Medicine (CIRM) has been writing the rules to govern who owns and controls the discoveries that result from projects it funds. The agency's first intellectual property (IP) rules covered nonprofit research institutions.  Next came rules covering commercial entities.  Last December the board, the Independent Citizens Oversight Committee (ICOC), approved combining the two polices in one document.  CIRM staff was charged with formalizing the regulations that would implement the already agreed policies.

As part of California's Administrative Law process, the proposed regulations were posted for public.  The third version of the proposed regulations, drafted under the supervision of CIRM General Counsel Elona Baum, a former Genentech associate general counsel, changed the definition of Exclusive Licensee. The insertion of the word "directly" opened a loophole virtually big enough to drive the entire biotech industry through.

When I learned of the problem, I immediately filed comments pointing out the problem. The period for comment on the proposed regulation closed at 5 p.m. Tuesday, the eve of the ICOC meeting where the regulations were set for a vote. The California Stem Cell Report outlined the issue.

This morning Chairman Klein called to tell me that after an "internal analysis"  my concerns were found to be valid and the decision was made not to open the loophole and stay with the original definition of Exclusive Licensee.

Great news, but what I'm still wondering is what prompted Elona Baum to make such a substantive change.  She's getting $250,000 a year from California taxpayers -- more than the state attorney general --  and doesn't seem to realize who her client is. For the record, it's the people of California.