Published in CommPro.biz 2013.04.30

A Better People

 

OK! We get it. We understand that manufacturing economics too often makes outsourcing the creation of goods a necessity, especially when a major hand assembly component is involved. And when horrific calamities strike in faraway places, such as the building collapse last week (2013.04.24) in Savar, a suburb of Dhaka, the capital of Bangladesh, the American companies whose goods come from these factories wring their hands and say they are doing everything they can. That is simply untrue.  There is an alternative.

A low wage outsourcing model that works indefinitely better. It’s better for the workers and still allows the production of goods at competitive price levels. Born in the mid-1960s – 30 years before NAFTA – the Maquiladoro concept continues to be a cost-effective outsourcing alternative for American manufacturers. This concept flourishes along the US border with Mexico. American companies build factories in Mexican free trade zones. The workers and most managers are Mexican nationals, but the working conditions and standards are firmly in the hands of the American owners.

That’s very different from the 5,000 +/- factories in Bangladesh. Their owners, Bangladesh nationals, are driven by nothing but cost. The disaster that saw an eight-story building collapse in a pile of rubble came one day after cracks in the building made it apparent that it was unsafe. The owners were told to close it, an order they simply ignored. This calamity that took hundreds of lives cannot be ignored by the brands that used this facility and others like it.

It’s not enough for these brands to promise to put pressure on the factory owners. It’s time for them to build their own factories in countries where labor costs are favorable. It’s time for the major global clothing companies, Walmart, Gap, Sears, Tommy Hilfiger and all the rest, to act. They owe it to the more than three million workers in Bangladesh that sew their goods for minimum wage, under $40.00 a month. It’s not enough for Apple to say that FoxConn, a manufacturer in China, is making improvements. Apple could buy out FoxConn and make things right for the workers in those factories. Americans can afford the tiny bump up in prices that these ethical moves would bring.

The Maquiladoro concept works. For half a century most Maquiladoro workers have had clean, safe working conditions. Many have access to free healthcare on site, to nutritious meals at reasonable cost, to simple things like showers that we take for granted. While their wages are low by American standards, they make what is a living wage in their society, and we benefit from the cost of the goods they produce. Ethically, how can we accept anything less in the creation of what we wear on our backs and carry in our pockets? We have been blessed with much. How can we see those who make these goods suffer, even die to save us pennies? We are a better people than that.

Doctor Owned Device Firms

It’s not easy these days for those who practice medicine. Physicians are standing on shifting sand. It’s a tough and demanding profession. They have to be super smart and go through a grueling educational process that too often leaves them staggering under a mountain of debt. The traditional Fee For Service model that dominates American medicine pushes doctors to see more and more patients and tack on as many services as possible. It’s not a giant leap from there for doctors to have a financial interest in a medical entity or device. Makes sense, we invest in what we know. And there is nothing wrong with that.

But therein lies an ethical and legal quagmire. Let’s say a surgeon specializes in implantable pacemakers and defibrillators. It wouldn’t be unusual to favor and use a particular manufacturer’s models exclusively; nothing wrong with that. The red flags go up when a cozy relationship with the manufacturer evolves into a deal netting the doctor a profit on each device sold. The potential for doctors to call the shots on medical supply purchases is defensible when their motivation is to maintain high quality goods and services. It is indefensible when they have a financial interest.

While blatantly ethically challenged behavior of this nature would seem rare in a profession like medicine, apparently it is common enough to trigger last month’s (2013.03.26) “Special Fraud Alert: Physician-Owned Entities,” from The Office of the Inspector General of the Department of Health and Human Services. Their concern on this issue dates to the late 1980s when they issued their first fraud alert under a statute covering kickbacks in the medical field. While the current alert covers implantable devices, the kickback statute looks at any situation where medical personnel have an interest in a device or facility resulting in usage or referrals that puts money in their pocket.

In addition to the smarmy side of these issues there is an obvious concern that healthcare costs will be driven up by a proliferation of physician owned facilities. Costs driven by an excess number of such facilities where there is little market supply and demand restraint. And when the doctors own the imaging facility, the testing laboratory, the dialysis facility, or any other medical service that they can feed patients into, there is a potential for abuse. It shouldn’t have to be a federal case, but those who will not live within their own ethical boundaries can expect a visit from the law.

Published in CommPro.biz 2013.04.30

Whose $$$$s Anyway?

Two decades ago, John O’Shea, a National Institutes of Health (NIH) scientist at the taxpayer supported entity, was pursuing JAK3, a protein that attaches itself to immune cells. Dr. O’Shea and his team at the NIH thought JAK3 might be used to fight autoimmune disease, specifically arthritis. In 1993 the NIH contacted Pfizer to see if the Pharma giant might have an interest in partnering with Dr. O’Shea in this research. Pfizer said “no thanks” because under the rules in place back then they would have had to share any resulting revenue from the collaboration with the taxpayers who fund the NIH.

Big Pharma’s “K” Street lobbyists had that requirement removed in 1995 and so Pfizer signed on in 1996. Fast forward twenty years and the FDA (Food and Drug Administration) approves Pfizer’s new arthritis medication Xeljanz® (tofacitinib citrate). Three cheers all around says the NIH for the teamwork made possible by Dr. O’Shea’s discovery of JAK3, and his team’s collaboration over twenty years with the folks at Pfizer that led to Xeljanz®.

Big surprise, Pfizer doesn’t see it that way. They say that the good doctor’s work moved into the public domain when it was published in 1994, that anybody could have used it. So far as the cooperative research with Dr. O’Shea goes, Pfizer didn’t end up with anything they could patent, so it was of no value. It was all the work and the more than a billion bucks Pfizer invested that resulted in a new arthritis drug, Xeljanz®. Pfizer is charging Medicare over $2,000 a month for each and every patient on Xeljanz®, a mind-numbing $25,000.00 taxpayer bucks a year.

This whole scenario is so outrageous you wouldn’t believe it if you didn’t know it’s true. A private entity takes the work of a government researcher; brushing a deal aside they made to work with the NIH. They take all the credit for developing this drug, adding the standard boilerplate claim that they sunk a billion bucks into the effort, yada, yada, yada.

A figure debunked last year in a British Medical Journal study. All these billion plus drug development claims start with a half billion they might have earned had they invested in some once-upon-a-time index fund over the same twenty-year period. Then there is $300-$400 million they get in tax credits. At the end of the day Pfizer has maybe a couple hundred million in Xeljanz®, no small amount but nothing close to a billion. Talk about corporate welfare or voodoo economics. It’s time for this nonsense to stop. Without Dr. O’Shea’s team at the NIH there would be no Xeljanz®.  We want our share of the bucks.

The stranglehold Big Pharma has over the Congress is shameful. From endorsing the theft of taxpayer funded science to an outrageous ban that prevents Medicare and Medicaid from negotiating what they pay for drugs, the corrosive impact of corporate spending in our democratic process is overwhelming. It has to stop.

Published in CommPro.biz 2013.05.06

The Disposable Bankers

Matthew Marshall Taylor is probably on his way to jail. The 34-year-old took a wire fraud plea deal for making up stuff to cover some wild trades that cost his employer, Goldman Sachs, $118 million. The charges against Taylor are not as serious as they might be because his crime did not put Goldman Sachs’ financial existence at risk and he followed his usual work patterns. Understand, Taylor didn’t steal anything; he just threw Goldman Sachs’ dice for more bucks than he was authorized to put at risk. He was trying to look good by making a big killing and maybe increase his take home pay. Apparently he was having trouble getting by on the over a million and a half he was paid in 2007 when all this came down.

While we understand that Goldman Sachs couldn’t allow this kind of reckless behavior –they had no choice but to prosecute Taylor– it does, however, seem ironic that a minor player goes to jail for covering up reckless financial behavior at, of all places, Goldman Sachs. The same outfit that crafted investment vehicles referred to within the firm as “Crap” so they would look like good stuff, then pressured the rating agencies to bless this crap with top notch ratings. While Matthew Marshall Taylor never put the stability of Goldman Sachs at risk with his $118 million loss, in the same time frame Goldman Sachs put the World Economy at risk with reckless bets that went bad crashing that economy.  

Nobody from Goldman Sachs is facing jail for those bad bets. In fact their head honcho is so arrogant as to claim that he is “Doing God’s Work.” He feels free to mock the members of a Congressional Committee and lie through his teeth while testifying under oath – a felony. He is not facing prison time, nor are any of the other monster bank executives whose reckless behavior, in concert with Goldman Sachs, drove the world economy off the cliff. Not only are they not headed for jail they are right back playing the same reckless games. Why wouldn’t they? They are livin’ large, taking home carloads of money, secure in the knowledge that if they blow it the taxpayers will come to their rescue again, and again, and again.

The Dallas Federal Reserve Bank has a proposal to break these monsters up and take the taxpayers off the hook. In a Bloomberg View OP-ED, Joshua Rosner, a financial research guru takes another tack. He picks up on the monster banks’ defensive position that frames them as part of a worldwide system. Rosner suggests “outsourcing” these fragile monsters, urging them to move to some other country whose citizens don’t mind crazy bankers. These banks do little or nothing for America. There are thousands of slightly smaller banks more than able to support our banking needs. Banks that would no longer have to compete with the Las Vegas style banking model the monster banks represent.

We like it. Let the monster banks set sail, and as they disappear over the horizon taking their risky behavior with them, we can all breathe a sigh of relief.

Murdoch Again?

The Murdoch slime machine slithered into the news cycle again. Their people in China reportedly laid some hefty “gifts” (entertainment and travel) on sources over there. If true, that would seem to be a big no-no under US law. Wall Street Journal staffers in China were tagged with the bribery charges. They deny everything and say outsiders hired to investigate gave them a clean bill. They could have saved their money; hopefully our authorities will do the investigation and if it turns out that the Journal is clean, it will not cost Murdoch a penny. But if our investigation goes the other way, it will cost him big time. The FBI and the Justice Department are not commenting on these bribery charges.

However, this is not the only instance of the Murdoch empire being looked at for possible violations of our Foreign Corrupt Practices Act (FCPA). That’s the law that makes it illegal for American entities to bribe folks outside our borders as Murdoch has in Great Britain. His minions were nailed for unconscionable telephone hacking schemes and laying thousands of British pounds on police and other public servants for scoops. Murdoch is a US citizen and his organization is based in the United States; that would seem to put his London crew under FCPA.

That could be the least of Murdoch’s worries. The FCPA violations would go away after some healthy fines; just a cost of doing business for the ethically challenged like Rupert Murdoch. More serious is the finding of a committee of the British Parliament that Murdoch is "not a fit person" to run a major international entity like News Corp. Where that spills over into News Corp’s home in America is when Murdoch’s broadcast licenses come into play. He owns a couple dozen broadcast stations in America.  

Citizens for Responsibility and Ethics in Washington (CREW), a nonpartisan watchdog group, has been bugging the Federal Communications Commission (FCC) to revoke his licenses as the Communications Act would seem to dictate. Should that happen Murdoch’s American broadcast properties would be reduced to some used office furniture, used electronics gear and real estate. The tens of millions these facilities are worth would be gone, poof, just like that. We’ll see what the FCC does. They have had this issue before them for a couple years; it is past time for them to act.

Meanwhile the DOJ is juggling the FCPA implications raised by Murdoch’s bribery activities in Great Britain. The Brits have arrested Murdoch minions by the dozen including Rupert’s darling, Rebecca Brooks, who formerly headed all his smarmy Fleet Street newspaper operations. The DOJ ought to be arresting Murdoch executives here in the United States, perhaps even Murdoch himself, certainly his son James, who headed News Corp at least in theory. Don’t hold your breath, however. In the end the FCC and the DOJ will probably chicken out and do nothing; a pity.