Texas eyes another $3 billion round of cancer research bonds

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DALLAS — Twelve years after voters created the Cancer Prevention Research Institute of Texas with $3 billion of bond authority, lawmakers are considering whether to repeat the effort.

State House Appropriations Committee chairman Rep. John Zerwas, R-Richmond, introduced House Joint Resolution 12, which would call a referendum in November to approve another $3 billion in bonds for the institute. A competing resolution would mandate that the agency devise a strategy for self-sufficiency with no new state money.

In 2007 voters approved the constitutional amendment that authorized $3 billion in general obligation bonds for the research program designed to find the causes and possible cures for cancer. The measure was seen as a boon for the state’s growing medical research economy and a strong commitment to finding a cure.

Under that amendment, bond issuances were limited to $300 million per year, with proceeds providing grants from the Cancer Prevention Research Institute of Texas, known as CPRIT. Recipients could range from established medical facilities such as the M.D. Anderson Cancer Center in Houston to start-up companies designing new treatments.

“There are great strides being made here” in Texas, Zerwas said in introducing the 2019 resolution. “We have seen the fruits of our investment in cancer research already, and we have the opportunity to see that continue over the next decade.”

During the 85th Texas Legislature in 2017, CPRIT’s sunset review date, the date at which the institute would be shuttered barring new legislative authorization, was extended by two years to 2023 to allow the agency to use all funds approved by Texas voters.

Debt service on previously issued bonds will cost Texas $120.6 million in the 2019 fiscal year that ends Aug. 31, according to CPRIT. With its bond capacity diminishing, the agency is seeking $164 million over the next two fiscal years if new bonds are not authorized.

“Without 2019 reauthorization 96,000 Texans won’t get lifesaving prevention clinical services in 254 counties as programs are dismantled for lack of funding,” CPRIT said in a prepared statement. “Advances made for Texas to become the ‘Third Coast’ for biotechnology and biomedical research would be set back. And Texas would lose $720 million per year in direct gross product and over 10,000 permanent high-quality jobs.”

In August, the Texas Public Finance Authority issued $300 million of taxable general obligation bonds for CPRIT that carried the state’s triple-A general obligation rating from four ratings agencies.

State Sen. Charles Schwertner, R-Georgetown, in January introduced Senate Bill 200, which would require CPRIT to become self-sufficient when state funding runs out.

Schwertner, an orthopedic surgeon, is chairman of the Senate Committee on Health and Human Services that sets public health policy for the state, regulating physicians and other health professions, and providing legislative oversight of the state's health-related agencies. Schwertner is also a member of the Senate Committees on Finance, Administration, Business and Commerce and State Affairs.

In 2013, Schwertner was also named to the 12-member Sunset Advisory Commission that is charged with providing a comprehensive periodic review of more than 150 state agencies. In 2015, Schwertner introduced a measure similar to his current bill that would have forced CPRIT off taxpayer funding.

CPRIT spokesman Chris Cutrone said agency officials have studied Schwertner’s proposal since its 2015 introduction.

“Self-sufficiency is not a feasible solution because Texas’ portion of grantee profits will not be at a level necessary for many years to serve as a sustainable, predictable funding source,” Cutrone said.

“Nowhere in law or the constitution is self-sufficiency contemplated for CPRIT. Had it been, self-sufficiency would have radically altered our research investment strategy. We would have given no prevention grants, minimal if any academic research grants, and instead of funding early stage translational work in product development we would have invested in late stage Phase 3 and 4 clinical trials thereby competing with the private sector.”

CPRIT’s longstanding investments are improving outcomes in childhood cancer, the agency says.

“With continued support, Texas is poised to be the world leader in childhood cancer research,” its officials say.

Although cancer researchers can claim some advances in the 40-year-old war on cancer, some experts acknowledge that much of the progress has come from prevention efforts such as the campaign against smoking.

In her 2012 book “A World Without Cancer,” Dr. Margaret Cuomo, sister of New York Gov. Andrew Cuomo, wrote that the National Cancer Institute alone has spent about $90 billion on research and treatment.

“Some 260 nonprofit organizations in the United States have dedicated themselves to cancer — more than the number established for heart disease, AIDS, Alzheimer’s disease, and stroke combined,” Cuomo wrote. “Together, these 260 organizations have budgets that top $2.2 billion.”

Cuomo’s book advocates improved coordination among government and academic research efforts and an elimination of unnecessary bureaucracy.

In July, the Cancer Prevention Institute of California, a San Francisco Bay Area independent, nonprofit cancer research institute, announced that it would disband as an independent cancer research institute 44 years after its founding.

Over the years, CPIC researchers have moved to other institutions, including the University of California at San Francisco and Stanford University.

“While CPIC will no longer operate as the independent organization that has existed for 44 years, we take great comfort in knowing CPIC’s legacy will live on since all of CPIC’s scientific and community education programs are being preserved, and will carry on either at UCSF or at Stanford,” said Matt O’Grady, interim chief executive of CPIC. “We’re also thankful very few jobs will be lost as a result.”

In Texas, CPRIT survived a political scandal shortly after its creation. The institute was forced to defend its grant-making processes after a company funded by a top donor to then Gov. Rick Perry, now U.S. Energy secretary, was flagged for receiving money without passing through the usual screening process.

Perry was the chief advocate for creating CPRIT.

In 2012, the Dallas Morning News reported CPRIT had awarded an $11 million grant to Peloton Therapeutics, a biotech company, without required scientific review. A major investor in Peloton was also a top contributor to Perry, according to news reports.

The Travis County public integrity unit, which at the time investigated public corruption, opened an investigation into CPRIT officials. Perry later vetoed funding for the public integrity unit, claiming that he did so to force the district attorney to resign after a conviction for driving while intoxicated. That led to a 2014 felony indictment of Perry for abuse of official capacity and coercion of a public servant. Those charges were later dismissed by the Texas Court of Criminal Appeals.

Amid the controversy, state leaders placed a moratorium on new CPRIT grants in December 2012, and when lawmakers convened for the 2013 legislative session, they restructured the agency’s grant award processes and made changes to improve oversight and prevent conflicts of interest. In October, the moratorium was lifted.

Schwertner’s Senate Bill 197 that failed to pass in the 2015 session would have ended state support for CPRIT by 2021.

“In the face of so many other competing funding priorities that legislators must consider, it is prudent for the institute to prepare to rely on other funding sources,” Schwertner said as he introduced the bill.

With its future in doubt, CPRIT must plan for two possible outcomes in the current session.

“Although CPRIT plans to fully commit the $3 billion in bond proceeds prior to the agency’s sunset, some portion of the bonds will remain for the state to issue for grant disbursements,” Cutrone said. “The state’s plan for staff and resources necessary to monitor the drawdown of grant funds post 2023 and coordinate with the Texas Public Finance Authority and the Bond Review Board is a topic that will be discussed in the 2023 legislative session.”

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Taxable bonds Healthcare-related legislation Texas Public Finance Authority State of Texas Texas