Month: July 1998

General Strike

A labor column specifically for workers.

The Unknown Autoworkers

As summer weather sears the southwest and Kenneth Starr continues to grab headlines in the daily papers, a more important story is languishing in the back pages of the business section: the GM strike. So far, coverage of the strike on the evening news has focused only on a shortage of new cars for people to buy, with scenes of car salesmen lounging around like well-fed slackers in their three-piece suits. But beneath such trivial slop lies a vital struggle between General Motors and the United Autoworkers (UAW) union over the right for employees to strike when they know that their jobs and health are at risk.

The strike began on Friday, June 5th, when 3,377 UAW workers walked out of a key parts factory in Flint, Michigan. The metal-stamping plant makes parts for a redesigned line of pickups, the company’s most important product launch in years, and it also supplies bumpers, hoods, and body parts for large cars in various GM lines. But it was GM who made the first move: as if to antagonize the union, GM had removed crucial stamping dies from the plant over the Memorial Day weekend and sent them to another metal-stamping plant in Mansfield, Ohio. Employees blocked the parking lot and vehicle entrances to prevent more equipment from leaving. After deliberating over this and the company’s recent announcement to cut 11,000 jobs in Flint in the next two years, the workers went on strike.

As if to prove the union’s claims, a memo was leaked from GM headquarters the following Tuesday. The memo outlined GM’s plans to double production in Mexico, where wages are only a fraction of what workers make in the U.S. The next day, GM announced that it would close its big production plant in Lordstown, Ohio, where it manufactures small cars, and move the production facilities to a low-wage country.

The UAW’s response was swift: an additional 5,800 workers went on strike at a second plant on Thursday, June 11th. The Delphi Flint East plant produces instrument panels, spark plugs, speedometers, filters, and other electronic parts to most of GM’s assembly plants. Between the shutdown of these two parts plants, the UAW was able to completely halt GM’s production capacity–in the U.S., Canada, and Mexico–within two weeks. In effect, an estimated 297,000 workers are now off the job.

In the meantime, GM has refused to negotiate with the union, while simultaneously trying to force strikers back to work. GM is contending that the strike is illegal, because their current contract with the UAW forbids workers to strike over the issue of jobs being moved out of the U.S. The union, on the other hand, claims that the strike is about safety issues: GM has no concerns for workers’ safety within the plant while implementing “efficiency standards” that include not hiring replacements for workers who retire.

This is not the first time GM and its employees have butted head. In the past two years, the UAW has closed down or slowed down GM production nine times over issues of layoffs, attrition, and safety. GM has eliminated 39,000 blue-collar jobs since 1993, and may cut as many as 30,000 to 50,000 more to bring the company in line with its productivity goals.

GM is not a company in financial trouble. It’s the largest auto manufacturer in the U.S., with a 31% market share, compared to Ford’s 24%. Prior to the strike, GM was raking in record profits; last year it made a net profit of $2.3 billion. But the company isn’t satisfied with this, electing to push for “profit improvement.” This means more lay-offs, more out-sourcing, moving more jobs to Mexico or Canada, and manufacturing more expensive sport utility vehicles (which sell at a higher profit, but also use more gas and produce more greenhouse gases than smaller cars).

These moves to maximize profit at any cost are ones being played out in large companies all over the U.S.–indeed, all over the world. “Some profit” is not enough profit for GM to compete in the global marketplace, because shareholders are demanding a higher rate of return. As long as a competitor (Ford) is making a slightly higher profit margin, then shareholders will abandon GM stock to buy up Ford’s, eventually sending GM into a downward spiral. In a sense, the end product–GM cars and trucks–are only secondary to the performance of GM stock, which relies on how much profit GM can squeeze out of the consumer’s pocket and the pockets of the workers who make the cars. That’s the real story behind the GM strike, and the one that isn’t making the evening news.

 

Nukes: Zero Tolerance

Two important dates are fast approaching: August 6th and August 9th, the anniversaries of the atomic bombs dropped on Hiroshima and Nagasaki at the end of World War II. Last year on August 6th, Seafair officials welcomed a nuclear submarine to town as a tourist attraction for the Seafair crowd; the bitter irony of this was lost on the local media. Peace activists responded by holding a wake and vigil in a park across the street from the pier, and a smaller group later boarded the submarine tender to pour red paint (symbolizing blood) on the submarine itself. Although no nuclear subs are scheduled to be in town this year, we shouldn’t forget the U.S. government’s commitment to its nuclear arsenal and the problem of international nuclear proliferation.

So far, 1998 has brought eleven nuclear weapons tests in India and Pakistan and a continuation of weapons testing here in the U.S. Closer to home, inane politicians (Gary Locke and Patty Murray) have wanted to restart the Fast Flux Test Facility at Hanford, while private contractors (Fluor Daniels Hanford) have frittered away millions of dollars in clean-up funds without cleaning up a single ounce of radioactive waste, with the tacit approval of Gov. Locke and the Department of Ecology. Workers at Hanford were exposed to toxic chemicals and radiation during an explosion that brought to light serious safety violations by Fluor Daniels Hanford. The Department of Ecology has finally admitted that radioactive waste has leaked into the groundwater at Hanford. And now the Department of Energy wants to give $350 million to a French company to study the feasibility of vitrifying waste from Hanford (i.e., turning it into glass and encasing it in steel cylinders) over the next two years, as part of a privatization project. That’s two more years of waiting, while nothing gets done, and more money flows out of government coffers and into the hands of private companies.

Recently the Brooking Institute released the results of the first comprehensive study of the costs of the U.S. nuclear weapons program. The study placed the total figure spent since 1940 at a conservative $5.8 trillion, which included only direct costs, like research and development, manufacturing weapons and nuclear material, deploying and storage of weapons, and a low figure of $365 billion for environmental cleanup and waste management. The environmental figure was based on “average projected future-year costs,” not taking into account the myriad ways that government contractors milk money from the public without fulfilling their contracts. More disturbing is that the study obviously didn’t (and probably can’t) put a figure on the illnesses and deaths of downwinders and workers exposed to radiation, and the untold suffering of their children and families.

But reading the conclusions of the report can give us an accurate picture of the problem we face in getting rid of nuclear weapons and controlling proliferation. The U.S. alone produced 70,000 nuclear warheads from 1945 to 1990. The range of different types of U.S. warheads is staggering: 65 different types for 116 different weapons systems, including 14 different kinds of strategic bombers. The U.S. has produced 210 different nuclear-powered military vessels, many of which are still under production–including a new $4.5 billion nuclear-powered aircraft carrier named the Harry S. Truman, which was launched last Saturday in Norfolk, Virginia to great fanfare by President Clinton and a host of Democrats and supporters.

The current official figure of amounts spent to maintain the U.S. nuclear arsenal is about $35 billion per year, or about 15% of the bloated defense budget. And the current number of U.S. warheads is estimated at 10,635.

The odds seem stacked against folks who want to live in a peaceful world free of nukes. But here in Washington State we have two unique things that could make us the center for a movement to rid the world of its most dangerous weapons.

First of all, Washington State has the dubious distinction of having more warheads than four of the six known nuclear nations. In the next five years, Washington will have more warheads than any other state in the U.S. Furthermore, these warheads are concentrated in two places: at Fairchild Air Force Base in Spokane and at the Bangor Submarine Base across Puget Sound, over on Hood Canal. Bangor’s 8 submarines have 24 Trident I missiles per boat, and each missile has 8 warheads, for a total of 1,536. In addition, there are several dozen “spares” stored on the compound. At Fairchild, 85 nuclear gravity bombs are stored in a “reserve” nuclear depot.

The second advantage that we have is Washington’s vital anti-nuclear movement. From folks working at the lobbying level to groups working on the street level, there’s continuous pressure for the decommissioning of nuclear weapons and the safe cleanup of Hanford. And on the anniversary of the bombing of Hiroshima and Nagasaki, a small group of dedicated pacifist, anti-nuclear activists is sponsoring a weekend retreat to protest the continued deployment of nuclear weapons at the Bangor Submarine Base. To get involved, contact Ground Zero at or call the Nonviolent Action Community of Cascadia (NACC) at .

The U.S. nuclear arsenal has decreased from its peak size of 32,000 weapons during the 1960s, down to the current level of one-third that number, and much of the decrease is because of civilian resistance to the continuing insane threat of nuclear war or nuclear accident. The only sane goal is to bring that number down to zero.

 

Gambling On The Future

A lot of people in their 20s and 30s have suspected that Social Security will disappear before they reach retirement age. They have visions of a future controlled by aging ex-yuppie baby boomers spending their fat government checks as the younger generation slaves away to support them. But, if Congress and Wall Street get their way, a more accurate vision of the future will be a few (very few) people living well from their massive personal investments, while the rest of us fall into deep poverty in old age, trying to live on inadequate personal savings. That’s what privatizing Social Security would do.

Social Security as it works now is not perfect. In fact, a lot of the things that are very wrong with Social Security are the same things that are wrong with our society as a whole: too little money for those who really need it, and too much for those who have more than enough already. And it’s administered by the government, which doesn’t care who suffers if a check is lost or someone is accidentally cut off. But there’s no denying that, right now, a Social Security check is the only thing that keeps a lot of retired folks going, and no one with any common sense and empathy would want to return to the days when elderly people were abandoned by their overburdened relatives to die in poverty, live (just barely) on the street, or waste away in work houses.

Bill Clinton and members of Congress are exploiting the fears of younger people when they insist that Social Security will go bankrupt by the year 2028. Their calculations rely on the stupidest of presuppositions: that there will be no increase in the upper limit on wages taxed for Social Security.

Let me rephrase that. Most folks don’t understand how the Social Security payroll tax works. It’s the only tax that is completely phased out at an upper limit, and it has no lower limit. It’s arguably the most regressive tax in existence. No matter how little you make, you still pay it, but higher income people only pay tax on the first $68,400 in wages they make. Anything they make above that is off limits to the Social Security Tax. No one in Congress or the White House, however, has suggested that we reverse this situation and set a bottom limit so poor folks don’t have to pay the tax, while wealthy and obscenely rich people pay according to their ability. Among people of all income levels who have been polled about solutions to the “Social Security Crisis,” raising the wage limit on the tax is the single most popular solution by far. And adding a small capital gains tax (i.e., taxing the money made from selling stocks, bonds, and property) could also rake in millions for the Social Security trust fund. So forget about the Social Security fund going bankrupt; it’s a lie being told by financial companies and politicians to push their own agenda.

The real problem with Social Security is the Congressional/Wall Street assault on the Social Security trust fund. Privatization schemes all call for returning the Social Security tax portion of workers paychecks back to workers to invest however they want. For many people, this is an invitation to just spend the money now, particularly as wages lag behind inflation and personal debt increases. Among those who don’t spend the funds, many will never invest them because of lack of money-management skills, fear or mistrust of banks and investment houses, and a reasonable fear of being ripped off by unscrupulous brokers and financial planners. On the other hand, some of us are eager to get our hands on the funds, because we’re sure we can do a better job of investing it than the government does. But, let’s look at that assumption for a moment.

Many people view the U.S. stock market as a guaranteed lottery: you buy your tickets and the stock market always pays out. In fact, it’s really a Ponzi scheme that favors the guys on top. Right now, the market is in a wild up-swing fueled by the faith of middle and upper-middle class people who are desperately and belatedly trying to save for retirement, their children’s educations, and to finance the “American Dream” by gambling on the stock market. But the market favors the very wealthy: people who can afford to tie up most of their money in very safe, relatively low-risk, low-return investments over a long period of time. People with lower incomes who need to make money quickly have to gamble on high-risk, high-return investments. They also will have to draw on those investments at specific times in the future, which will put them at heavy risk of being forced to sell when the market is down. Trying to time the market fails more often than it succeeds. For example, the market could easily enter a downturn the week before you retire. More likely, it could go into a prolonged slump just after you retire, and your savings may only last you three years, instead of three decades. You may think that you can move your investments from high-risk ones into low-risk, low-return ones as you near retirement, but again this involves a risky timing factor–you still have to accumulate a lot of money early on, and you will have to invest in high-risk investments to do that. If you lose a large portion of your savings when you’re 55 years old, you’re back to square one, and you’ll need to invest in those high-risk, high-return securities again.

The advantage of Social Security is that it pools your retirement money together with millions of other people’s and keeps it out of the stock market, so the risk that it will disappear in a market downturn is nil. Of course, it also ties up that money so you can’t spend it on anything else or gamble it away…which is what Wall Street wants you to do.

Financiers want to get their hands on your retirement money for two reasons: they can make a big profits in administrative fees, and they are hoping that the billions of dollars now tied up in the Social Security trust fund if poured into the stock market will stave off a potential stock market collapse when the Asian financial crisis finally reaches the U.S. (the warning signs are already here). Even if you avoid hiring a financial planner and invest in so-called “no-load” mutual funds, you still pay administrative fees to fund managers that are deducted from your total capital gains and dividends for the year.

And consider where money goes when it’s invested in the stock market: into the pockets of corporations. If you buy bonds instead of stocks, you still may end up buying corporate bonds. If you select only government bonds, your money flows into the pockets of wealthy private interests. Just remember what projects here in Seattle have been funded through bond issues and other government largesse: a luxury parking garage, the new Nordstrom store, the Seahawks stadium, and a new symphony hall, just to name a few. Let’s keep in mind that Seattle politicians and media are against funding the monorail extension because local government can’t issue many more bonds for large-scale projects.

Social Security is not going broke, and should be left alone; although it’s certainly flawed, it’s much better than privatization would be. And there are a whole host of other ills that need to be “reformed” first. Let’s provide our elderly and younger folks with some necessary support services, such as: affordable and safe housing, healthy and safe food, low-cost or no-cost preventive healthcare, and reliable transportation. The stock market can’t and won’t provide these things for us.

 

Drug Company Guinea Pigs

We’re used to seeing advertisements for prescription drugs on TV followed by the “ask your doctor” tag. Many of us go to our doctors and demand a prescription, even telling them in no uncertain terms that we’ll go to someone else if we don’t get it. But if we knew more about how drug companies test their products, how the FDA approval process works, and what the side effects of prescription drugs are, we’d all be a lot more hesitant to demand a pill to solve our problems.

Before a drug company can apply to the FDA to approve a drug for sale, it must first test the drug for potency (to establish correct dosage), indications for usage (what illnesses the drug can be used to treat), and screen it for side effects and adverse reactions. These side effects may later be added to a special warning label that accompanies each prescription.

But the testing process is deeply flawed. There are no set standards for the minimum number of human subjects in each trial. There is no requirement for the company to test its drug in women, children, or the elderly–most volunteers are college-age men or, until recently, prisoners. And finally, there is little money or incentive for the FDA to check on the private laboratories where testing is done to make sure basic protocol has been followed.

As drug companies cut costs and try to improve profit margins, they’ve turned to contracting out the clinical trials of drugs to private laboratories. When volunteers at these labs complain of side effects from a drug, their complaints often never make it into the data collected on the drug. Private labs are continually under pressure to provide drug companies with the results they want and are paying for: no serious side-effects. This makes it easier for labs to dismiss any serious side effects as pre-existing conditions not related to the drug.

The whole clinical trial process has three distinct phases. Phase I includes the first human trials of a drug, where a small number of healthy people take the drug to screen it for side effects and establish a dosage (usually a maximum dosage, rather than a minimum). Most labs rely on healthy college-age male volunteers to establish dosages that later may be found to be too much for a smaller woman, child, or an elderly person with a slower metabolism to take.

Phase II is the testing of the drug on a small number of sick people. During this process, the dosage levels may be adjusted.

Phase III is supposed to be the first large-scale testing; it’s done on sick people at the dose or dosages at which the drug will be sold. Increasingly, Phase III trials are being done on ever smaller numbers of people to save money. Also, the trials are often done in foreign countries, where the FDA can’t send an agent to inspect the lab.

After Phase III, the drug company submits its application and data to the FDA. But the FDA’s scope is severely limited; they can only review the data that drug companies give them. An FDA medical officer can’t recommend changes in dosage or usages for the drug, and they can’t make recommendations to doctors about which drugs are safer to use for a particular illness. The best that an FDA medical officer can do is approve the drug, wait for adverse reactions to show up in the general population, then either force the drug company to do more trials or withdraw the drug from the marketplace. By that time, the damage has been done.

To add to this problem, doctors are not required by law to prescribe drugs only for their FDA-approved indications. Off-label prescribing is a very common practice worldwide and, while it helps many people, it nevertheless is an enormous uncontrolled experiment.

So there’s really a fourth phase to the clinical trials for any new drug: the daily, ongoing experiment that occurs once a drug comes to market and we begin taking it. This is truly the first, large-scale testing done on most drugs. Increasingly, drugs are being pulled off the market, only after a number of people have died or been irreparably damaged by them.

Take, for example, the drug Duract, a potent painkiller. It’s one of a number of “me-too” drugs which are widely prescribed for pain relief, especially after surgery. Since it hit the market in July of 1997, it’s been prescribed to more than 2.5 million people. But Duract has a big problem. If you take it for more than ten days, you risk a very high chance of death or liver damage. Most of the problems come from off-label prescribing by doctors who haven’t read the label or who can’t imagine that the FDA would approve such a dangerous drug. Indeed, when there are twenty other prescription painkillers already on the market, why would the FDA approve one that can so easily kill you?

Wyeth-Ayerst, a division of American Home Products, was forced to pull Duract from the market. But because of the faulty FDA approval process and sloppy drug company trials, there are other medicines on the market that are just now entering their Phase IV “trials.” Viagra, the penis pill, has been so popular that it’s been prescribed to almost 2 million men since it was released in March. Within three weeks of its release, Pfizer admitted to the FDA that about a dozen men had died while taking Viagra, but the company attributed the deaths to other health problems. In May, the press reported an estimated 24 deaths from Viagra. Now, according to Public Citizen Health Research Group, the death count is 31, with 174 men reporting severe side effects.

Furthermore, the rate of off-label prescribing is particularly high with this drug, which is commonly perceived as a “life-style enhancer.” In reality, Viagra is a pill being used to treat the side effects of many other drugs. Anti-depressants and blood pressure medications are notorious for causing male impotence; adjusting the levels of those medications may eliminate the problems. More ominously, impotence is an early sign of untreated heart trouble in older men. Prescribing Viagra to those men is unconscionable, given that diet, exercise, and lowering stress levels would have a greater long-term, overall health effect for these men than a pill that gives an instant short cut to an erection.

But the worst news is this: when a person has an adverse drug reaction (as over 3.7 million Americans do every year), it may never be reported by his or her doctor to the FDA. Doctors are required to report drug reactions by phoning them in to the FDA on an 800 line, or by filling out a form to mail to the FDA’s MedWatch program. But there’s no enforcement of this requirement, and compliance is poor. In fact, it often takes a patient’s family to threaten the hospital, doctor, or drug company with a lawsuit for the adverse drug reaction to ever be noticed by the FDA.

Things need to change. The FDA has been under attack from both drug companies (who have already seriously hobbled it) and conservative politicians who want to eliminate it entirely. But in countries where adverse drug reactions are few–such as The Netherlands–a strong government testing and monitoring system is a main priority for government spending. Of course, in The Netherlands, there’s also a very strong and vocal consumer group called the Health Action International (HAI), which keeps the pressure on to police drug companies.

Here in the U.S., Ralph Nader’s Public Citizen Health Research Group, based in Washington D.C., has long been working for more regulation of drug companies and drug testing. Other groups, from the American Association for Retired Persons (AARP) to the Gray Panthers, have also leapt into the fray.

Before you decide you need a pill to cure your problems, think twice about what that medicine might do to you. And consider volunteering to help fight for safer prescription drugs.

 

The Name Game

With new revelations of projected cost overruns on the Mariners’ stadium, the team must have been in a big hurry to sell naming rights; certainly they were on the lookout for a corporation with a steady income and high profit margins that wouldn’t default on its payments. Safeco was a natural choice for them: a large, scandalously profitable insurance company that could easily afford the $1.8 million per year for 20 years–an amount that is supposed to cover the Mariners’ share of construction costs (but not their share of cost overruns).

What the team didn’t bargain for was the disgust among fans. After paying for the bulk of the $417 million plus construction cost with taxpayer dollars, who can be surprised that one Public Facilities District board member wanted the name to reflect the public’s contribution to the project? Other members of the PFD, which is supposed to oversee the project, were warming to the idea and eventually may have considered “Facility for Blood Sucking Leeches on the Body Politic” emblazoned in neon lights over the stadium entranceway. But the best they could come up with was “Safeco Park at something…” The PFD board lawyer and Bellevue developer, Bob Wallace, called the proposal “populist crap” and whined about a potential lawsuit from Safeco and the Mariners; the board finally caved in and voted for the unimaginative “Safeco Field.”

Fortunately, that’s not the end of it. Two uppity women fans, Karen Fredericks and Kay Trepanier, are upset over the lack of public input into the naming process. They’re pushing to change the name to “Safeco Citizens Field” or “Safeco People’s Park,” which must have both Safeco executives and public space activists (who have long followed the struggle over public control of People’s Park in San Francisco) fuming. Bob Wallace responded: “it sounds like something that belongs in communist Russia.” To be strictly correct, Bob, it was “communist USSR” or “the communist Soviet Union”–and they would have dropped the “Safeco” part of the name after nationalizing the company. But we’ll give Wallace, et. al. a break–after all, what’s in a name except the truth about who really owns and controls the named object?

 

Legal Drug Pushers

Healthcare costs in the U.S. are the highest in the world because of an inefficient private system that ensures profits for hospitals, blood-sucking middlemen (insurance companies), and drug companies. Especially drug companies.

Pharmaceutical corporations are among the most profitable companies in the U.S. As an industry, they have the highest returns on revenue (their profits as a percentage of their total revenues), meaning that they take enormous markups on their products. Literally, they charge “what the market will bear,” which is quite a lot if you have a severe illness and need pain killers, or better yet, a terminal illness that can be arrested with a pill (or lots of them). In other countries with national healthcare, governments have enacted price controls on drugs to limit skyrocketing costs, because the government has to pay for the drugs. Not so in the good ol’ USA. Instead, you and I pay two times, three times, sometimes ten times more for our medicine than people do in Canada, for example.

How do pharmaceutical companies explain the high costs? They blame them on the cost to research and develop new drug therapies. R&D is expensive, but not as expensive as they want you to believe–certainly not as expensive as the cost to promote, market, and sell these drugs to hospitals, HMOs, and an estimated 600,000 practicing physicians. On average, companies spend about $200 million to develop a new drug therapy (which includes all the tests and trials of drugs and chemical combinations that never prove useful). Annual R&D costs for U.S. pharmaceutical companies totals $9 billion; yet, drug companies spend more than $10 billion per year just to promote their products in the private marketplace, and that cost is increasing exponentially.

Why do drug companies need to spend so much money pushing their products? If the need is there, doctors will prescribe it, right? Not true. More than half of the new drugs developed every year are not designed to treat new or untreated conditions, but to compete with drugs that are already on the market. Called “me-too” drugs, these are easier and cheaper for companies to develop, because much of the basic research on how the drug should work in the human body has already been done–it’s just a matter of finding a new, slightly different compound in the same class as the old drug. For the company to patent and market it, the new drug needs to be different, and if it is stronger and has different side-effects (hopefully fewer and less severe, but not always), so much the better. The motive behind the “me-too” phenomenon is simple: as a drug that’s been on the market for a number of years gets close the expiration of its patent, the company that owns the drug starts to panic. Once the patent expires, other companies can make generic versions of their best-selling, proprietary drug- -thereby forcing the price down. The company has to find a new, different, more powerful drug to replace it. Of course, when the new drug hits the market, the company has to spend millions to persuade doctors to stop prescribing the old, cheaper medication and switch their patients to the new one. It’s an endless cycle of skyrocketing costs fueled by the immoral, for-profit nature of the U.S. healthcare system.

We’re always hearing about HMOs, hospitals, and insurance companies seeking ways to cut costs, and keeping down the cost of prescription medications is part of that process. But while it’s becoming harder for drug companies to sell new, expensive, “me-too” drugs to doctors, they’ve started pushing their wares directly to consumers. In 1996, drug companies spent $600 million on direct advertising to consumers, which is twice as much as they spent in 1995 and almost ten times more than was spent in 1991. Direct to consumer advertising is banned in most other nations, and the World Health Organization’s Ethical Criteria for Medicinal Drug Promotion expressly forbids it. Yet U.S. pharmaceutical companies are more aggressively pushing for their medicines to be switched from prescription-only to the over-the-counter market, so consumers can be free to self-prescribe. More drugs were switched to over-the-counter status in 1997 than in the previous five years. Since 1986, the FDA has approved only 33 over-the-counter switches; over a third of those were done in 1995 and 1996. And in August 1997, the FDA finally gave in to drug company lobbyists and released new criteria for the advertising of drugs on TV, making it easier for drug companies to hock their wares directly to patients.

In addition to marketing costs, pharmaceutical companies take huge markups in devious ways. Most drug companies belong to a larger holding company that also owns a chemical company. The chemical company can make the drug chemicals in their own plant then “sell” it to their sister division, the pharmaceutical company, at a high markup. When consumers complain about prices, the pharmaceutical company then points to the high price it had to pay for “raw materials”–but they bought the chemicals from themselves and manufactured the high markup. This is called “transfer pricing,” and its impact on drug costs is enormous.

In addition to padding their pockets, pharmaceutical companies get a special tax credit from the U.S. government when they manufacture the “raw materials” into pill form. The Section 936 tax credit applies to any company that sets up a manufacturing plant in Puerto Rico. Other industries have benefited from this tax credit too, but more drug companies have relocated plants to Puerto Rico than all other industries combined. This little loophole saves the pharmaceutical industry over a billion dollars every year.

So beware of brand new, expensive drugs–the high cost is not an indication of efficacy. And when your doctor writes you a prescription, ask him how much it’s going to cost you. Ask him if there’s a generic drug that will do the same thing, or an alternative treatment that will be effective without the need for you to take a pill and support a drug company.

And remember that, for those of us who have serious conditions that need drug treatment on a continual basis, our private healthcare system really fails. Chronically ill people often can’t afford high drug prices, and end up suffering needlessly when they ration their medication or are forced to stop taking it. For their sake, if for no other reason, we need a single payer system and a limit on drug prices.

The main source for the statistics in this article is: “Bitter Pills: Inside the Hazardous World of Legal Drugs,” by Stephan Fried, Bantam Books, 1998.

 

Is the State GOP Cracking Up?

The Democrats are gearing up to win back the state House of Representatives and Senate from the Republicans. If they’re successful this year, it won’t be because of anything they’ve done to win voters over; it’ll be because the GOP is hampered by the threat of investigations, lawsuits, and defections from the party. How are they falling? Let me count the ways:

Sen. Jim West from Spokane, who is the lead budget writer in the state Senate, was arrested earlier this year when he left a death threat on a lobbyist’s answering machine. West only escaped criminal charges because of the leniency of Thurston County Prosecutor Bernardean Broadus, who in a flight of linguistic fancy, interpreted “You son of a bitch, you better get me, ’cause if you don’t, you’re dead” to actually mean “If you don’t get a candidate to beat me in November, your legislative agenda will be dead next session.” Maybe teachers and classmates made similar blunders over Kip Kinkel’s death threats–we’ll never know. At any rate, according to Broadus, Sen. West had a habit of making such threats: “West was fond of the phrase ‘dead’ and frequently said things like, ‘you’re dead,’ ‘he’s dead,’ or ‘they’re dead’ in a joking or angry manner.” After Broadus let West off the hook, Olympia City Attorney Mark Erickson stepped into the breach to file misdemeanor charges against him.

Meanwhile, the state Republican Party is under investigation by the Public Disclosure Commission (PDC) for violating campaign funding laws during the 1996 campaign season. Caught red-handed, the Republican party was forced to admit to illegally financing several legislative candidates with over $200,000 of soft money (which can only be used for general educational purposes, voter registration drives, and party building activities). State law limits how much money each candidate can accept for his/her campaign from any single source or group, including political parties. Benefactors of illegal Republican largesse include: Steve Hargrove of Poulsbo, Grant Pelesky of Puyallup, and Don Benton of Vancouver, who received $20,000 over the limit in soft money to pay for their campaign expenses. In spite of the cash infusion, Hargrove and Pelesky lost their races. Benton, however, was elected in a key district that the Republicans needed to get a majority in the House, proving that their horrible majority of 1997-98 has been a fraud from the beginning.

The state GOP also admitted to illegally contributing $84,000 of soft money to a Republican legislative political action committee, the Speakers Roundtable. In a bit of creative bookkeeping, it also shifted $104,023 from its soft money account into its “federal account,” where the funds were used to pay consultants for campaign work. In addition, the party accepted $24,250 of contributions over the legal limits from three organizations.

Particularly despicable is the way that these transactions were hidden. Roma Zubrod, former GOP deputy treasurer and a lifelong Republican (who resigned from office in April of this year), brought documents to the PDC that show how former party Executive Director Kelly Rogers prepared fake invoices to replace real ones in order to hide how the funds were spent. Rogers is now a lobbyist for the National Federation of Independent Businesses in Washington, D.C. In a paranoid move to prevent any more leaks, the state GOP recently hired an ex- cop to guard their headquarters in Tukwila.

But that’s not all. The Public Disclosure Commission found that the state Republican Party funded a $150,000 TV commercial that attacked Gary Locke during his race against Ellen Craswell for state governor in 1996. The commercial should have been paid for by Craswell’s campaign, but the party used soft money instead. IN a humorous switch, the state Republican party has denied that the commercial was made to support Craswell (which, if nothing else, is indicative of the party’s dislike for Craswell and her Christian Coalition, right-wing followers), but that hasn’t saved them from the PDC’s wrath.

There are also exciting indications that the party may be splitting in two. Ellen Craswell has decamped to the American Heritage Party, and is drawing a small number of former Republicans with her to run against Republican candidates this fall, which is sure to dilute the conservative vote in those districts. Linda Smith, a party “populist”, who represents most of the same ultra-right-wing, anti-government, Christian constituency that Craswell does, is running in a heavily contested Senate race against Democrat Patty Murray. Frighteningly, Smith may win. If she doesn’t, it’s only because her own party has been hesitant to support her: many Republicans have thrown their weight behind her GOP opponent in the primary, former King County Prosecutor Chris Bayley. Smith recently was forced to resort to stealing the party’s donor list to raise money for her campaign; some members of the state party are considering a lawsuit against her.

And last, but not least, the state GOP’s most prominent fundraiser, Thomas Stewart, was fined $5 million for illegal campaign donations only three months ago. As a result, his business, Food Services of America Corp., lost millions of dollars in federal government contracts for providing food to the military, and the GOP lost its best moocher.

And finally, the GOP’s populist mask is slipping; the state convention in Kennewick earlier this month brought few surprises. Some of the usual self-serving, pro-business, anti- populist positions in the party platform included: denouncing the tobacco bill in Congress (too tough on tobacco companies), opposition to the Kyoto Global Warming Treaty (too tough on local Aluminum companies and pulp mills), and a statement condemning campaign contribution limits, especially Initiative 134, which was sponsored by the GOP’s own Rep. Linda Smith and passed overwhelmingly by voters in 1992 by a more than 70 percent margin. (Since they can’t follow a law they sponsored, it’s obviously time to change it.) Equally convenient was a vote to delete a section of the platform that withheld support from any candidate or office holder who violates the law– clearly a nod to Sen. Jim West.

On top of a growing rift within the Republican Party ranks, all of the corruption, in-fighting, and hypocrisy may make Republican candidates go down in flames at the polls this year. We can only hope so.

 

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