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CIRM's Klein Proposes $100B Biomed Program

SAN DIEGO UNION-TRIBUNE
http://www.utsandiego.com/news/2015/feb/22/klein-peters-cirm-ucsd-science/

The main architect of California's groundbreaking 2004 stem cell initiative has proposed a $100 billion international bond program in life sciences, to speed up research and clinical testing of disease therapies. The program would be focused on stem cells and genomics.

Bob Klein, a real estate developer who spearheaded the creation of the California Institute for Regenerative Medicine, unveiled his proposal at last Thursday's UCSD Moores Cancer Center symposium.

The United States and a few other countries would jump-start the program and other countries would join, said Klein, a real estate investor. He likened the international participation to that already taking place with CIRM, created by the 2004 initiative, Proposition 71. CIRM got $3 billion from that initiative; the total to be repaid by taxpayers is $6 billion, including interest.

The stem cell agency has partnered with 14 other countries to co-fund international research projects. Foreign partners fund scientists in their own countries, while CIRM funds California-based scientists. Klein was CIRM's first chairman. Although he left the agency's governing board in 2011, he remains involved in advancing the agency's objectives.

This partnership leverages funding to create a much greater total impact, Klein said in an on-stage interview with Rep Scott Peters, D-San Diego. Peters, one of the post prominent supporters of federal biomedical funding in Congress, represents much of San Diego's biotech heartland of La Jolla and Sorrento Valley. Beside the financing issues, they also discussed ways to increase political support for biomedical research.

Klein drew from his real estate knowledge of crafting bonds to describing how the program would work. The bond program would be seeded by a much smaller amount of seed funding through government-supported agencies, creating leverage.

"Just to give you (an idea) of the multiple effect of bringing critical funds upfront in the process, $100 million (a year) in bonds at the World Bank borrowing rate creates about $2.5 billion in bonds that are supported," Klein said. "At a time of scarce resources for Congress, if they would appropriate on a long term commitment to support international bonds, we could really leverage up to maybe a $100 billion program."

Under that program, each participating country would be allocated an amount of upfront financing to pay.

"Because the borrowing is so much cheaper than anything a country can do, from the surplus funds we raise, which are about 35 percent to 40 percent more than most countries can raise from the same amount of money, we can have an international pool, where we can collaborate and compete through peer review," Klein said.

It's not clear how much support the proposal can gain from other countries that already partner with CIRM. The Ontario Institute for Cancer Research, a CIRM partner in Toronto, Canada, declined comment.

Is it justified?

Klein pointed to the International Finance Facility for Immunization as an international public-private partnership as a financial model. Using long-term government pledges as collateral, the agency can raise capital as needed from the bond markets.

The finance facility is a vehicle to help fund Gavi, an international agency that combines government and private sector members such as vaccine manufacturers to provide routine immunizations in countries that can't afford it. Gavi gets direct contributions, but also can draw from the proceeds of bond financing provided by the finance facility.

The biggest contributor to the financing facility, the United Kingdom, has pledged $2.980 billion over a 23-year period. The next biggest, France, has pledged $1.899 billion over 20 years. (The United States doesn't make long-term pledges because of its budgeting process, but has directly contributed to Gavi).

The advantage of bond financing for immunizations is that the money is available up front, providing help when it is most needed. The payoff is expected to materialize in lower disease rates in coming years.

Klein's proposal has a similar goal. Presumably, improvements in disease treatments will yield social and economic dividends down the road in better health and increased productivity. That rationale was offered as a reason for funding California's stem cell program in 2004 with $3 billion in state bond money, along with another $3 billion in interest payments over the bonds' life.

However, John Simpson a longtime observer and frequent critic of California's stem cell program, sounded baffled by the proposal. Simpson, of the Santa Monica-based nonprofit activist group, Consumer Watchdog, said such a proposal is unwise on several counts. It would lock money into areas of research regardless of the state of the science, bond interest would make it more expensive than paying upfront, and it would be immensely cumbersome to administer.

"I don't understand how this could possibly work," Simpson said in a Monday interview. "The logistics of getting together such a coalition boggles the mind."

It's also unrealistic to think that funding stem cell and genomics research through bonds would generate enough of an economic return and medical advances to justify it, Simpson said.

"That's the same premise as he's tried to argue with Prop. 71, and I don't think that's been true at all," Simpson said. While the program has resulted in some major research advances, it hasn't yet generated enough of an economic return and proven treatments to justify it, he said.

"Pay as you can afford to pay," Simpson said. "I think that's a better approach to research, generally. That's what democratically elected governments are supposed to do, is come up with appropriate funding for the various things they're faced with. If you had this kind of money to throw at certain problems, it's not entirely clear to me, by any means, that stem cells would have the biggest impact. You might do a hell of a lot more with simple things like malaria eradication."

Political diversity needed

The benefit of this new proposal is that scientists could accelerate research and get potential treatments into early clinical trials faster, Klein said at the UCSD cancer symposium. When treatments reach the enormously expensive Phase 3 stage, major biopharmaceutical companies would be invited to purchase commercialization rights and bring successful products to market.

Klein said supporters of increased biomedical research funding, including patient advocates and biomedical scientists, need such unitary programs to rally around, or they will negate much of their effectiveness competing with each other.

"We long term have a real difficulty in holding these interest groups together," Klein said. "In California, with Prop. 71 they way we approached that is you have a unitary decision, you're either for the bond or against the bond."

If the disease groups allied on a national scale like they did in California, it would be possible to increase annual National Institutes of Health funding from about $30 billion to $100 billion, Klein said.

Peters said he's been pushing to increase NIH funding from the $30 billion annual level to about $40 billion, to bring funding more in line with the historical funding based on GDP.

Peters also said scientists must broaden their political base beyond their traditional bastions if they wish to become more influential. Patient advocates are key.

"When we're fighting for NIH funding, a lot of the voices for that come from people who are in universities and in areas of science, and a fairly narrow political spectrum," Peters said. "Frankly, they tend to be people from Boston, and San Francisco and San Diego, who don't always vote the same way that people from West Texas, or Kansas or rural Wisconsin vote. "So patient advocates provide a huge input for folks from all across the country."

Klein recounted an example of how that coalition succeeded in keeping diabetes research money flowing in 2002 when that funding was threatened with interruption. He said the bill, which required unanimous consent, got through the House with the support of then-House Speaker Denny Hastert, an Illinois Republican, who had a staff member with Type 1 diabetes.

"He understood that if this bill didn't get through, the NIH appropriations would be cut by 30 percent for juvenile diabetes," said Klein, who has a son with Type 1 diabetes. Half of it was for Type 1 diabetes, half of it was for keeping clinics open for Native Americans. About 50 percent of Native Americans over 50 in the United States have Type 2 diabetes, and their clinics were to be wiped out for a lack of funding.

But getting unanimous consent proved harder to get in the Senate's special session, Klein said. The Juvenile Diabetes Research Foundation focused on getting support from Don Nickles, a Republican who was then U.S. Senator from Oklahoma and the incoming chairman of the Senate Budget Committee. Nickles had placed a hold on the legislation.

"Oklahoma is not a hotbed of scientific support, but through a weekend effort, JDRF was able to get 25,000 emails generated," Klein said. "But more importantly, the patient advocates working as informed advocates with the scientists from the Type 1 research and clinical areas got to enough chairmen of the boards and board members and CEOS of major corporations in Oklahoma that they shut down the switchboards of Sen. Nickles' offices in Oklahoma and Washington D.C. with calls."

Nickles released his hold on the bill.

"We had unanimous consent of the U.S. Senate, two hours before the end of the special session, because scientists informed and teamed up with patient advocates ... " Klein said. "Champions like Scott Peters are not going to prevail unless they have that kind of support."

The UCSD Moores Cancer Center symposium at which Klein and Peters spoke mainly discussed scientific advances and challenges in cancer treatment, but included the political discussion, and an appearance by a cancer patient rescued by an experimental drug, to present different perspectives on issues in biomedical research.