Dancing To Big Pharma’s Tune

Two researchers writing in the British Medical Journal have concluded that despite what they say, Big Pharma is putting peanuts into developing new drugs. Joel Lexchin, MD, York University Toronto, and Donald Light, PhD, University of Medicine and Dentistry Cherry Hill, N.J. claim that most of the big drug makers put the bulk of their bucks into “tweaking” their big sellers in an effort to stretch their patent rights out as far as possible and that, much more, the real big bucks go into marketing. 

Additional research published by Dr. Lexchin along with Marc-André Gagnon, Université du Québec, Montreal, adds to the evidence that the drug makers’ claims that they spend more, on developing new drugs than in pushing existing best selling drugs are nonsense. The oft quoted $1.3 billion cost to bring a new drug to market breaks down quickly under the researchers’ lens. Half of that figure is what the drug company could have earned had they invested their bucks in a high flying index fund over a 15-year period. Tax deductions and credits make up another quarter (that’s our money), whittling the cost down to $330 million. Wait, even that figure is based on the most expensive new drugs, the top twenty percent. When you figure in all new drugs they come in at about $90 million a pop; a lot of money but a long way from $1.3 billion dollars. 

Meanwhile the real money goes into marketing. While the big drug companies make it really hard to come up with any numbers, Lexchin and Gagnon dug deep into multiple sources and concluded that the most modest estimate they could come up with had the drug companies spending twice as much on promotion as on R&D. This shell game behavior is nothing new; fifty years ago Senator Estes Kefauver came to roughly the same conclusions at the end of his Senate hearings. 

The tons of cash Big Pharma’s “K” Street agents pour into the pockets of the Congress have road-blocked any progress. A House Committee recently blamed FDA regulations for crucial drug shortages. A survey of doctors put the blame on the drug companies. These people are playing with our lives and driving up the cost of healthcare. Senator Bernie Sanders has a great idea; instead of the tax breaks we give the drug companies, offer grants to companies that develop new drugs. The drug companies would score big profits immediately; an incentive to keep working on more new drugs. Drugs that would be available in generic form immediately.

As opposed to a system that now has the drug companies making deals with generic manufacturers that end up holding generics off the market for years. The so-called "pay-for-delay" scheme has generic makers challenging the name brand Pharmas’ patents in court. Then settling for a deal that keeps the patent holder out of the generic market once the patent does expire. The FTC has been fighting this scam for years. Congress even tried to bar the practice, but the “K” Street types cut those efforts off at the pass. And in the end the alley cat ethics of Big Pharma leave us with the bill.                                                                                                 © 2012 GLG

Iran? Really?

Hearings scheduled for this week (2012.08.15) by the NY State Department of Financial Services will examine alleged money laundering on behalf of Iran by a British bank, Standard Chartered. They are accused of using their US Branch to clean up some 60,000 transactions totaling $250 billion, a quarter trillion dollars for Iranian customers.

The seriously damning evidence seems to come from Standard Chartered itself. Published reports have its CEO responsible for US operations warning that the Iranian deals could, “cause very serious or even catastrophic reputational damage to the group.” His bosses in London replied, “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”

But even that isn’t the worst of it. The bank is alleged to have a manual detailing how to automatically cover up the illegal transactions. They even devised a fancy code name for the scam, “Project Gazelle.” When sanctions were imposed during the Clinton administration, the bank is alleged to have set up a plan to dodge the restrictions and to have warned that this scheme must not be sent to the United States to prevent prosecution.

Standard Chartered has, of course, brushed off the charges out of hand, a course hard to understand when their own records show that they were well aware that what they were doing was illegal all the way back to the mid-nineties when the United States first imposed sanctions on Iran. That would seem to put the bank in the position of deliberately breaking the law. And it wasn’t just our sanctions on Iran. Standard Chartered is said to have routinely ignored sanctions on Libya, Myanmar, the Sudan and any others it could make a buck from. Reportedly the FBI has an ongoing investigation into this bank.  

Off shore banks with operations in the United States seem to feel that they can ignore our rules, and they can, just not while they are doing business here. In the last few years our laws regarding sanctions against doing business with Iran and other nations have snared a batch of these banks. Typically they walk with a fine that amounts to a slap on the wrist. That seems to have emboldened them to push the limits more and more until we are looking at wide ranging nasty stuff such as the alleged dealings with criminal organizations by HSBC.

It’s time to take the gloves off; to go after the folks running these banks. We need to treat them as the criminals they are. We need to kick these foreign banks out of the country if they don’t abide by our laws. The arrogant response of the Standard Chartered executives in London to their New York folks’ red flag, makes it clear that nothing is going to change over there. That’s reason enough to give them the boot. We have enough arrogant bankers in the United States, we don’t need to import any more from London.

What’s It Take? RICO?

George Lundberg, MD, a physician and medical journalist, has a fresh approach to deal with outrageous practices by the pharmaceutical companies, RICO. In an opinion piece in Med Page Today he points out that a $3 billion dollar fine Glaxo Smith Kline (GSK) has agreed to pay is probably a fraction of the profit generated by the no-nos that triggered the fine.

In published reports GSK is said to have poured huge bucks into goodies for doctors, delivered by those well-dressed attractive professionals who whisk into your doc’s office with their sample case in tow, while you wait for hours to see the doc. They have tons of neat stuff, vacations meetings in exotic locations, dinners, speaking engagements with fat fees, prime seats at entertainment events, and on, and on. Of course most of this is out of bounds according to their industry code, but GSK reportedly ignored the rules as some of the pharma giants do.

GSK is said to have used the access thus gained to promote drugs for uses outside FDA approved boundaries. Once a drug is on the market doctors aren’t limited to its approved uses; they can prescribe it for anything they choose. Pharmas take advantage of this loophole to increase sales of their drugs. GSK is said to have pushed this opening to the limits, including in one case urging docs to prescribe a drug not approved for children, teens and young adults because in clinical trials the drug had triggered a small number of this demographic to become suicidal. Adults became suicidal in small numbers on this drug as well. However, suicidal kids and teens are not at all the same thing; they are already too prone to dark thoughts.

Are fines or industry codes going to reduce the level of bribery some pharmas practice? A practice that’s illegal everywhere except New Zealand and the USA. Pharmas pour billions into marketing in America; more than three-quarters of it into an effort to influence the drugs doctors prescribe. To be fair, many docs do not allow the pharma hustlers into their office. But too many welcome them and happily accept their bribes goodies even though they will swear these pharma bribes goodies have no effect on the scripts they write,,,,,, yea, right.

It is obvious that fines do not work; the pharmas look at them as a “cost of doing business.” What is it going to take to put a stop to these outrageous practices? Dr. Lundberg suggests that we recognize this scourge for what it is, racketeering, and go after those responsible –top pharma executives, maybe some docs– under the RICO Act. If these egregious activities threatened to trigger some serious jail time for the “Dons” of the pharmaceutical world, we’re pretty sure they would clean up their act. And we would all be much the better for it.

In fact, if the ethically challenged leaders in several sectors of our economy were to face RICO charges for their shenanigans, we would all be much the better for it.  For openers think LIBOR and rigging bond auctions.

HSBC – 

Banking Around The World

Little did we know that the HSBC slogan, “Bank as easily around the world as you do at home” was to be taken literally. That terrorists, drug cartels, even ordinary crooks and other slimy types could take advantage of the HSBC operations in the United States to convert their holdings to spanking new American dollar bills for use anywhere that currency is accepted – like everywhere!

Al Rajhi Bank in Saudi Arabia, reportedly a favorite of various terrorists, has also been a favorite of HSBC. Al Rajhi is said to have been the bank of choice for some of the 9/11 hijackers. This bank also handles funds for the International Islamic Relief Organization (IIRO) considered a funder of terrorist activities and a source of support for suicide bombers. HSBC was happy to stock up Al Rajhi with Indian rupees. Hmmmm? Rupees perhaps that financed terrorist attacks in Mumbai?

Investigators uncovered information indicating that HSBC green-lighted the movement of billions in shady dollars into the United States from Mexico, Saudi Arabia etc., etc., etc., without the kind of oversight the law and common sense dictates. 

It would appear that HSBC engages in every shady aspect of banking that one could imagine. Laundering money for terrorists, providing currency du jure no matter where the bad guys want to blow something up. Giving the drug cartels lots of US dollars to enjoy the fruits of their murderous ways. Even Russian organized crime lords found HSBC to be a great help in laundering their cash.

Of course HSBC is into rigging LIBOR rates big time, impacting our credit cards, mortgages and literally every form of bank related credit. Don’t forget their role in rigging municipal bond auctions adding to the cost of public infrastructure from schools, to highways, to sewers, not to mention the taxes that pay off those bonds.

This is far beyond ethics. Like the crooks they serve, they should be prosecuted. And not just the little guys who make the dirty deals and rig the rates, but the guys at the top, the people who created this culture. It’s not organized crime without a “Boss” –or a “Bankster” as the Economist famously labeled them– calling the shots. HSBC executives, the folks at the top –gangsters with a “B”– enabled this massive criminal enterprise. And we all know where organized crime leaders belong, in the slammer. We’ll see if law enforcement authorities around the world will bring them to justice.

Who Got The “Death Penalty”?

Twenty-five years ago Southern Methodist University (SMU) was found to be paying student members of their football team from $50 to as much as $725 a month from a slush fund maintained for that purpose. The sports powerhouse was on NCAA (National Collegiate Athletic Association) probation at the time for earlier violations. As a result, the NCAA slapped SMU with a cancellation of their upcoming season and all home games the next year, along with a handful of other penalties, an action dubbed the “Death Penalty.” 

So for adding cash payments to the other perks provided big time college football players, like scholarships, jobs they rarely if ever show up for, etc., etc., the NCAA shuts down the SMU football program long enough to derail it for twenty years. It is pretty hard to find any harm in what went on at SMU beyond the negatives that maintaining a semi-pro football team does to any institution theoretically focused on learning. In the SMU case a university that is an arm of a church. 

After due consideration the NCAA chose to ratchet down the level of punishment meted out to Penn State. After all Penn State didn’t break any NCAA rules; they just ignored report after report that they had a pedophile in a senior position in their football program. Starting with two janitors, who saw Jerry Sandusky rape a little boy in a Penn State shower room 14 years ago. One said he had seen some awful things while in the service in Korea, but nothing as horrific as that. But fear of Sandusky kept the janitor from going to the authorities, so he just told his boss. 

Sandusky was allowed to retire, but he kept his office in the sports complex and his access to the shower rooms. He kept right on taking boys to Penn State away games and keeping them in his hotel room. Ignoring one incident after another, the top officials at Penn State agreed among themselves to hush up the Sandusky “problem.” The football culture at Penn State is so powerful it erased all common sense and decency for nearly fifteen years. 

But they will play football at Penn State this fall; no NCAA “Death Penalty” for Happy Valley. The University will pay a massive $60 million dollar fine, and they will not be eligible for a bowl game for the next four seasons. The number of free riders will be cut by twenty; Penn State will only be allowed to have 65 football scholarship players on their roster instead of the 85 currently allowed. There are additional slap-on-the-wrist penalties but nothing that will cause too much pain. 

An immediate chorus of whines emanated from Penn State supporters. The most frequent, “It’s worse than the Death Penalty.” Nonsense! Who knows how many little boys this monster violated? Little boys carrying the lifelong “Death Penalty” Sandusky left on their very being. If Penn State’s penalty matched that of the victims of its football culture, there would never be another Penn State football game, not this fall, not ever.  

Banks Behaving Badly

“We’re doing what a bank is supposed to do.” That’s JP Morgan Chase CEO Jamie Dimon before a US Senate Committee after a two billion dollar gambling loss that has since grown to nearly six billion and is forecast to hit even higher numbers. Dimon was much harder on himself than were the Senators, or the members of a House Committee in a subsequent hearing. 

No surprise, members of Congress have good reason to be friendly. Dimon has pitched millions into Congressional war chests -more to Republicans, but lots to go around. The committee members understandably tossed softball questions. Dimon was decked out in cuff links with the presidential seal just so everyone would know where he was coming from. 

Unbelievably nobody called him on his, “We’re doing what a bank is supposed to do” line. This from a “Bankster,” as the Economist has labeled the out-of-control leaders of our financial sector. The billions lost on bad bets placed by one of its traders (AKA gamblers) in London are the least of the problems Dimon is facing. 

Chase is ensnared in the evolving Libor scandal that has a group of international banksters fixing interbank lending rates, impacting every loan rate imaginable. 

The incredibly complex Libor rate fixing scheme crosses civil and criminal legal lines. Dimon was fully aware of his bank’s involvement in this racket when he delivered his “What a bank is supposed to do” line; so we must assume that he thinks juggling interest rates worldwide is what banks do. 

That isn’t even the worst it. When Dimon was flaunting his control over those we send to Washington to do our business, he was fully aware that Chase had just shelled out a seventy-five million dollar fine for rigging a bid on a three billion dollar sewer bond deal that pushed Birmingham, Alabama into bankruptcy. A deal they cinched with a three million dollar bribe to Goldman Sachs. Chase and a host of other banksters have been rigging municipal bond auctions for decades.

This all came out when the Feds convicted three minor players from GE Capital they nailed rigging bond auctions. The Feds got their hands on recordings of telephone conversations between banksters making highly illegal deals to pass municipal bond business around among the banks. In addition to the bankster types from GE who are going to jail, scores of others from virtually every major bank in America and many international banks as well have taken a plea deal. 

Let’s be clear about what’s going on here. 

Between the Libor racket and the municipal bond rigging scam- the banksters have ripped off everyone in America to the tune of untold billions. JP Morgan Chase is not alone in these Mafia style rackets, but if that’s what Jamie Dimon thinks “banks do” then he has a different ethical standard than most of us hold.

What Would Sam Do?

It was as warm-down-homey as could be imagined at Wal-Mart’s Annual Meeting (12.06.01). Thirty miles from Wal-Mart World Headquarters in the University of Arkansas Basketball Arena, Robson Walton, eldest child of founder Sam Walton, strolled onto a mock-up of his daddy’s first store and brought his bother Jim and his sister Alice on stage for a chat about what it was like growing up and working with Sam Walton. A driven retailer Sam Walton remained a down-to-earth hard working guy who didn’t take himself too seriously, as indicated by a famous quote at a time when he was listed as the richest person in America: “I still can't believe it was news that I get my hair cut at the barbershop. Where else would I get it cut? Why do I drive a pickup truck? What am I supposed to haul my dogs around in, a Rolls-Royce?”

He seems a no-nonsense guy as well, a trait that makes one wonder how he would have reacted to the bribery mess Wal-Mart is now mired in. A mess it’s hard to imagine ever happening on Sam Walton’s watch. It appears that his son Rob, his heir and Chairman of the retail behemoth, along with the rest of the corporate hierarchy, turned a blind-eye to a growing culture of bribery in Mexico. Given the zillions of dollars that are alleged to be involved, it’s hard to imagine that someone pretty far up the food chain wasn’t signing off on this practice. It’s even harder to imagine that the company would be “investigating” years after these kind of allegations hit Mr. Sam’s desk.

And yet when the Walton siblings walked off the replica of Daddy’s first store and the Annual Meeting continued, that was the response every time the question of the bribery scandal was raised, “We’re investigating.” It doesn’t seem possible given the size of the scandal in Mexico and the passing of time since it came to their attention, that Wal-Mart’s leaders still have no results. It’s been six weeks since an in-depth article in the New York Times blew the lid off the scandal in a big way.

Seven years ago in 2005 a former Wal-Mart de Mexico executive sent an email with in-depth details of hundreds of bribes to Wal-Mart headquarters. Not a big investigative task. Either the cash left the hands of Wal-Mart de Mexico on the dates and in the amounts he claimed to the individuals he claimed, or not. That’s not a complicated investigation, nor one that takes a lot of time.

One can’t help but wonder what Sam Walton would have done. According to an Associated Press report on the meeting, Rob Walton said, his father "didn’t measure success by financial achievement, but rather by the lives we improve." We fail to see that goal advanced by any of this nonsense. Wal-Mart seems to have lost Sam’s moral compass, to be drifting, ignoring his ethical standards. We would guess that Rob Walton has all the money he could ever use. It would seem a perfect time for him to pick up the family flag and use his position to make his daddy’s company what Sam Walton would want it to be.