Pharma

The Book of the Week is “Pharma– Greed, Lies, and the Poisoning of America” by Gerald Posner, published in 2020.

In 2016, the “superbug” Enterobacteriaceae turned out to be resistant to 26 different antibiotics. About half of patients who contract it, die. There are a bunch of other similar bacteria in the world. The author warned that in the future, a bacterial pandemic was on the way, for which there would be no antibiotic cure. Apparently, there can be a viral pandemic, too– one that cannot be treated with antibiotics at all.

For, antibiotics kill only bacteria, if that. Yet, in the United States, for decades, antibiotics have been prescribed to treat (mild!) viral illnesses. That is one major reason that superbugs have become a trend. And there has been an epidemic of diabetes type II. And many other adverse consequences.

Anyway, the author recounted the history of big-name drug companies, which began selling morphine to soldiers during the American Civil War. In the second half of the 1800’s, Pfizer, Squibb, Wyeth, Parke-Davis, Eli Lilly, and Burroughs-Wellcome began mostly as family proprietorships that sold highly addictive, unregulated drugs. Bayer produced heroin in 1898. The twentieth century saw Merck put cocaine in its products; other companies jumped on the cocaine bandwagon.

In 1904, the head of the United States government’s Bureau of Chemistry, Harvey Wiley, was concerned about contaminants in the nation’s food supply. Consumers were being sickened by chemicals that were supposed to retard spoilage or enhance the appeal of foods. They included, but were far from limited to: borax, salicylic acid, formaldehyde, benzoate, copper sulfate and sulfites. Trendy patent medicines were also doing harm to consumers. The word “patent” gave the impression of approval or regulation of some kind, but actually meant nothing.

Through the first third of the twentieth century, the government continued categorizing, monitoring and taxing drugs, but the pharmaceutical companies continued using trade groups and legal strategists to protect their profits. The 1930’s saw the big drug companies start research laboratories. Finally in 1938, the government established the Food and Drug Administration, and began to require extensive product-testing and labeling, and factory inspections. That same year, the Wheeler-Lea Act prohibited false advertising of drugs, except for previously manufactured barbiturates and amphetamines.

After Pearl Harbor was attacked in December 1941, America sought to manufacture penicillin in volume. For, the newly introduced antibiotic would be very helpful to the war wounded. But the drug’s fermentation process required a rare ingredient. In spring 1942, one patient who had friends in high places was cured. That largely used up the penicillin supply in the entire country. Other kinds of antibiotics were produced in the next decade, but their profitability was hampered by the bureaucratic processes of patent applications and FDA approval applications.

In the late 1940’s, Arthur Sackler and his brothers founded a family drug-company dynasty. The author revealed excessive trivia from FBI files on them and other greedy characters whose tentacles pervaded all businesses that could help sell (translation: maximize profits of) the family’s healthcare goods and services. This meant consulting, advertising, publishing, charities, public relations, database services, etc. The parties failed to disclose countless conflicts of interest.

In the early 1950’s, drug companies successfully lobbied the U.S. Patent and Trademark Office to allow drugs with strikingly similar molecular structures to be deemed different so that they could be granted separate patents. A higher number of drugs could then be rushed to market sooner, and make the most money.

In 1952, farmers fed Pfizer’s antibiotics to their animals so that they grew bigger (both Pfizer and the animals). In the mid-1950’s, Pfizer, Lederle, Squibb, Bristol and Upjohn engaged in an illegal tetracycline price-fixing scheme. They reaped hundreds of millions of dollars in earnings. The FDA chief was in Sackler’s back pocket. So when violations came to light, the FTC and FDA gave the offenders a slap on the wrist. However, senator Estes Kefauver was a thorn in their side.

Kefauver led an investigation as to why America’s drug prices were so excessively high when compared with those in other nations. In fighting back, the drug industry smeared Kefauver as a liberal pinko, claiming he had designs on forcing socialized medicine on the United States. The nineteen drugmakers under the gun gave bogus excuses. The real reason is that America’s drug prices and patents are subjected to minimal or no regulation, unlike everywhere else.

In 1956, Americans were told they were stressed, but a wonder drug called “Miltown” would help calm them down. The mild tranquilizer became a best-seller, until it was counterfeited and appeared on the black market, and its adverse side effects gave it bad publicity. Oh, well.

Then in the 1960’s came the culture-changing birth control Pill, and Valium– also called “mother’s little helper” that was marketed as a weight-loss aid. The next game-changer was thalidomide. Kefauver used the worldwide backlash against this drug to push through some drug safety and effectiveness regulation in the United States in 1963. For a change. Even so, in 1972, when the U.S. Supreme Court confirmed certain regulatory powers conferred on the FDA, drugmakers merely sought additional markets for their products on other continents.

In 1976, there was a swine flu epidemic in America. Healthcare companies were reluctant to develop a vaccine for it, fearing an orgy of litigation from victims if any harm was done. So the government unwisely agreed to foot any legal bills. Sure enough, some vaccine recipients developed cases of Guillain Barre syndrome, and neurological complications. The (taxpayer-funded) Justice Department took the hit. Other parties piled on. “The CDC had exploited ‘Washington’s panic’ to ‘increase the size of its empire and multiply its budget.’ “

Moving on, the author told the whole sordid story of the “opioid crisis” in America. In a nutshell: in May 2002, Purdue Pharma, maker and unethical marketer of OxyContin, hired Rudy Giuliani’s firm to defend it against the firestorm from its host of illegal activities. The firm collected a $3 million fee per month. Purdue collected $30 million per week from OxyContin sales. To be fair, Purdue and the Sackler family were the poster-scapegoats of the crisis. Numerous other parties aided and abetted them: other pharmaceutical companies, doctors, FDA bureaucrats, and pain management “experts” and pharmacists. The far-reaching consequences have caused a lot of trouble for society as a whole in the areas of: increased healthcare costs, criminal justice, social services, drug rehabilitation services, lost productivity and earnings, etc.

Read the book to learn an additional wealth of details and the details of wealth of the healthcare industry’s evolution into a hegemonic legal behemoth / excessive profit center, in the form of a series of cautionary tales in various topic areas– drug advertising, blood donations, biotech, epidemics, pharmacy benefit managers– that wrought major good and bad (mostly bad) cultural and regulatory changes (including the Hatch-Waxman Act and the Orphan Drug Act); plus the family battles following the sudden death of Arthur Sackler.

See Nothing and Nobody – BONUS POST

SEE NOTHING AND NOBODY

DOWN BY THE SCHOOLYARD

sung to the tune of “See Me and Julio Down By the Schoolyard” with apologies to Paul Simon.

President Trump said reopen schools.

So did the czar of education.

When the teachers found out they began to shout,

which started the litigation.

Teachers said naw! Teachers said naw!

A lot of sick we saw.

There ought to be a law.

Florida’s gov stood his ground, said we’re not bound

to conform to the convention.

Other govs said you must open schools or we’ll legally quash your dissension.

We’ve lost our way.

Don’t know where we’re going.

We’ve lost our way.

Law takes its time. Don’t know where…

Goodbye democracy, via the scourge of Corona.

See nothing and nobody down by the schoolyard.

See nothing and nobody down by the schoolyard.

Oh oh, people are saying they’re going to take school away and have online and home education.

And when the special interest groups have total control,

we’re gonna have an airheaded nation.

We’ve lost our way.

Don’t know where we’re going.

We’ve lost our way.

Law takes its time. Don’t know where…

Goodbye democracy, via the scourge of Corona.

See nothing and nobody down by the schoolyard.

See nothing and nobody down by the schoolyard.

See nothing and nobody down by the schoolyard.

Embattled Wall

The Book of the Week is “Embattled Wall, Americans United: An Idea and a Man” by C. Stanley Lowell, published in 1966.

Separation of Church and State requires a zero-tolerance policy, lest little things open the floodgates to bigger things, one thing leads to another, and those little things eventually lead to the Spanish Inquisition, or some other theocracy as is seen in many countries in the Middle East and Central Asia.

Besides, there are other reasons for separation of Church and State:

  • Religious entities that pay no taxes have a competitive advantage if they provide goods and services the same way tax-paying capitalist entities do. This includes private education services, and
  • Citizens probably don’t want their taxes to financially assist institutions associated with a religion other than their own.

After WWII in the United States, the power of the Catholic Church was on the increase. Beginning in 1947, the Church began to aggressively request government subsidies for its parochial school system. The author wrote, “…The National Catholic Welfare Conference… [were] like professional lobbyists… actually assisting in the drafting of legislation… cajoling, promising, threatening.”

Protestants felt that money was earned through work, not subsidies, so initially, they were against public funding for their schools. Thus, when over-achieving attorney Glenn Archer founded the group, Americans United— which litigated for separation of Church and State– Protestants assisted him.

The actual full name of the organization was “Protestants and Other Americans United For Separation of Church and State” (hereinafter referred to as “AU”). Other groups that supported them included Seventh Day Adventists and Christian Scientists. Jews mostly avoided the fray, but they were offended that the group had the word “church” in its name.

The Catholics launched a smear campaign against Archer and AU. Catholic publications trotted out the usual righteously indignant accusations, “bigot, religious prejudice, Ku Klux Klan, Communist, racist,” etc. The language in Jesuit propaganda was open to multiple interpretations (among many other examples):

“Freedom of choice in education”

which, in AU’s words, translated to:

Canon Law 1374 denies freedom of choice in education to Catholic parents, ordering them to send their children to Catholic schools.” In other words, the Catholic Church strongly believes that its worshippers should follow religious law before civil law whenever there is a clash between them.

Jesuits: “Justice for children”

AU: “Subsidies for Catholic schools”

The author also described a Catholic rabble rouser: “His posture of outraged purity impressed the majority who had no understanding of the real issues in the case.”

When American president Harry Truman proposed the appointing of an ambassador to the Vatican, AU protested that this was a violation of separation of Church and State, as the leader of the Vatican (the Pope) was a worldwide religious leader. AU and a sufficient number of individual complainants helped put the kibosh on that appointment.

The State Department was peeved because it could have used the Catholic Church (which had many houses of worship around the world) to assist with espionage– er, uh, fostering friendly relationships with nations that had Catholic citizens.

In 1958, the world got a new Pope, thanks in part to votes cast by Catholic cardinals in America. AU cited 8 U.S. Code 1481 of the Immigration and Nationality Act as a reason to revoke the citizenship of those cardinals. For, any American citizen who votes in a foreign country could be stripped of his citizenship.

The Church weakly counter-argued that the Pope is primarily a religious leader, and secondarily a national leader. However, AU produced support for its own arguments in the form of a few previous legal cases of citizenship revocations, plus American government documentation that showed the Vatican to be a political entity.

During the 1960 presidential election between Richard Nixon and the Catholic John F. Kennedy, AU asked questions to determine JFK’s positions on separation of Church and State. The U.S. Supreme Court, AU and JFK were all in agreement.

A few different laws were passed through the years, that granted subsidies pursuant to state laws, in addition to ongoing student loan programs:

  • 1948, the Taft Bill
  • 1958, Defense Education Act
  • 1963, Higher Education Facilities Act (which allowed a university– even that run by a religious institution– to acquire property at a fire-sale price from the government, and then to get permission to construct campus buildings with public funds), and
  • 1965, Elementary and Secondary Education Act

During those years, in effect, federal taxpayers were financially aiding Catholic education more than that of any other religion, as 95% of religious schools were Catholic.

In the late 1950’s, Franklin County in Missouri won a great legal victory against the Catholic Church. The court ruled that, “…schools were not in fact free public schools and were not entitled to be supported by public school money or public funds.”

In a Burlington, Vermont lawsuit, AU cited the First and Fourteenth Amendments because the vague language of the Vermont Constitution regarding separation of Church and State allowed for loopholes.

Read the book to learn about the practice of “captive schools” and a wealth of additional information on the tenor of the times in connection with legal fights over public funding for religious education.

Killers of the Flower Moon / Heist

The First Book of the Week is “Killers of the Flower Moon, The Osage Murders and the Birth of the FBI” by David Grann, published in 2017. This volume described in suspenseful anecdotes– a political, social and cultural system suffused with evil– and it highlighted what happened to just one of countless families whose members were victims of the conspiracy.

In 1870, the Osage Native Americans were forced by light-skinned Americans to flee from their homeland in Kansas, to wasteland in northeastern Oklahoma. In 1893, the United States government’s Indian Affairs Department ordered that all children on the Osage reservation attend school. One consequence was that the young people in the area adopted the ways of the “white man.”

On September 16, 1893, the U.S. government shot a gun to kick off a land-grab. The Cherokee Outlet, territory bordering on the Osage’s that was bought by the U.S. government, was handed over to the Cherokees on a first-claimed via physical presence, first-owned basis.

About 42,000 members of the Cherokee nation waited on the border for days until the appointed time of the free-for-all. The fight for land ended in a massacre galore. The government didn’t bother to repeat the above process with the Osage reservation.

Yet, by the very early 1900’s, oil was discovered on the Osage’s land; this opened a Pandora’s box. In 1912, the Department of the Interior auctioned off the then-super-valuable parcels, to which the Osage had mineral rights. The Osage became millionaires overnight, paid royalties by the oil barons.

The local (white) politicians of the oil-rich lands stuck like leeches to the Osage residents, under the guise of regulating commerce. They deemed that (white) guardians of the property be appointed for full-blooded Osage people, as the Native Americans weren’t sufficiently educated or competent to manage their own money. Unsurprisingly, the guardians were thieves and worse.

Read the book to learn about a statistics-defying (but not uncommon among the Osage) rash of deaths (by poisonings, shootings and explosives) that occurred in one Osage family due to the “system” and the growing-pains the Wild West experienced as it evolved into a civilized, law-abiding society with the help of a national law enforcement organization now known as the FBI.

A more recent example of exploitation of Native Americans was described in the Second Book of the Week, “Heist, Superlobbyist Jack Abramoff, His Republican Allies, and the Buying of Washington” by Peter H. Stone, published in 2006. Yet again, the hypothetical board game “Survival Roulette” could be applied to this scandal: Native American Exploitation Edition (See “Highly Confident” post).

There have been countless ultimate winners of this game through the centuries: all the people never caught for committing crimes against Native Americans. The vast majority have gone unpunished, including several people mentioned in the book, whose names have already faded from the public’s memory.

However, the most famous hypothetical losers of the game in this book were lobbyists Jack Abramoff and Michael Scanlon, and Congressman Tom DeLay. Instead of a Monopoly board, in keeping with the casino theme, the central structure of the game could be an actual roulette wheel, whose ball could land on spaces that describe the financial crimes of: bribery, money laundering, fraud, disclosure failures and influence peddling. Plus tax evasion. Just for good measure.

In short, with Abramoff as the ringleader, during the course of three years, the gang milked six Native American tribes for $82 million– that paid for political bribes, funding for a school, lavish gifts, and entertainment and recreation expenses– disguised as lobbying and public relations services on behalf of the tribes.

In this slim volume, the author dispensed with suspense by revealing up front that, when they got caught, Abramoff and his sidekick Scanlon accepted plea deals for their unethical opportunism, unconscionable greed and unmitigated hubris. The author then failed to explain why the Texas state government closed a casino run by the Tigua Indians in February 2002, but did explain later on.

Nevertheless, the story thereafter unfolded in more or less chronological order, starting with backstory from the 1990’s. The Tigua casino actually stayed closed, despite Abramoff’s fat fee, part of which he circuitously funneled through nonprofit organizations that ended up as political donations, and paid for a luxurious golf vacation in the United Kingdom for himself and his cronies.

Abramoff’s shamelessness knew no bounds. He had his friends, in order to service one of his tribal clients, marshal support from the likes of the Christian Coalition to convince the U.S. government that gambling was against their religion, and a reason to close the Tigua casino. At the same, he was lobbying on behalf of the Tiguas through illegal means, to reopen the casino (!) For that, he made megabucks from both sides.

Abramoff also helped to quash legislation that would have taxed his Choctaw client, and would have imposed tougher labor laws on his offshore client that manufactured clothing in the Marianas.

Kevin Sickey, who represented an Indian tribe that hired Abramoff, described the lobbyist’s propaganda thusly: “They exaggerated political threats and they exaggerated economic threats. Then they exaggerated their ability to deal with threats.”

Read the book to learn what led to the start of investigations by the Senate Indian Affairs Committee and the Justice Department; Abramoff’s and Scanlon’s early-career adventures; and details of their and others’ punishments, among other nothing-new-under-the-sun type political opportunism, greed and hubris.

As an aside, the dollar value of political wrongdoing has reached dizzying heights in the past few decades, and it has been the same kind of wrongdoing, over and over again– committed mostly by alpha males. People who have an insatiable need for power and money apparently never learn from others whose stories have been well-publicized!


Highly Confident

The Book of the Week is “Highly Confident, The Crime and Punishment of Michael Milken” by Jesse Kornbluth, published in 1992. This volume described a situation that lends itself to the hypothetical board game “Survival Roulette: Wall Street Edition” (See “Blind Ambition” post).

There have been countless ultimate winners of this game through the decades: all the people never caught for securities-industry crimes. A million lawbreakers a day go unpunished. That doesn’t mean the crimes didn’t happen.

However, the most famous hypothetical losers of the game in this book were Ivan Boesky (an independent bond trader in New York) and Michael Milken (bond-trading executive at Drexel Burnham Lambert in Los Angeles). Other losers could include Dennis Kozlowski, Bernie Ebbers, Kenneth Lay, Steve Jobs and Richard Scrushy.

The board spaces could include Go To Jail (of course), and describe the financial crimes of: insider trading, Free Parking (or “stock parking”), disclosure failures, material misstatements, accounting irregularities, re-pricing stock options, and fraudulent conveyance, but also specific actions of conscience-salving philanthropy in which Milken engaged– such as throwing money at cancer research, and volunteering to teach math to nine and ten year-olds.

In August 1986, the U.S. Attorney’s Office of the Southern District of New York began an investigation into Securities and Exchange Commission (SEC) violations in the bond industry. By October 1986, the head federal prosecutor there, Rudolph Giuliani, was taping phone calls between Boesky and Milken. This, because Boesky had immediately accepted a plea deal to turn state’s evidence in exchange for a slap-on-the-wrist, country-club jail sentence. Boesky was one of the game’s lesser losers, to be sure. He was the king of lying, cheating and stealing.

Milken was a creative workaholic math genius whose meteoric career-rise allowed him to head an entire bond-research department in his mid-twenties. But he had zero ability for honest introspection.

Milken was a master at controlling his environment and other people, but he deceived himself about his “breaking the rules of the game” in his industry. He thought he was helping people all the time, but didn’t see how others were indirectly hurt by his actions. This kind of hubris syndrome is not uncommon in alpha males.

In 1978, Milken initiated the push to have Drexel underwrite junk-bond deals that financed hostile corporate takeovers. This wasn’t illegal in itself, but Boesky persistently badgered Milken until, by the early 1980’s, the latter was eventually manipulated into breaking the law.

Milken had a history of selfless philanthropy, yet his business actions gave rise to obscenely high fees made by his employer, an obscenely high income for himself, and crushing debt load for his clients. This led to extremely adverse financial and social consequences for thousands upon thousands of laid-off American employees of merged companies, subjected to disrupted lives and untold stresses.

The mood of the securities industry could be described thusly: “… with the election of Ronald Reagan… All that mattered was an ability to make money — without concern for risk, without regard for regulation.”

The investigation and resulting plea deals had the law enforcement agencies patting themselves on the back for convincing the perpetrators (other than Milken and Boesky) to implicate others, but the immunity deals the perpetrators got were a joke, considering that they themselves had serious credibility problems, and serious violations. It was a kangaroo court.

Nonetheless, the following parties launched investigations: Drexel and its attorneys, Milken and his attorneys, the U.S. Attorney’s Office, and the SEC. Those last two, of course, engaged in fierce rivalry. By September 1991, there was an orgy of litigation against Milken. The roll call involved fifty-eight lawyers (!)

Around the same time, Wedtech was another 1980’s scandal borne of out-of-control greed. In that case, a personal injury attorney generated billing documents that purported to show charges for legal services, that were actually for lobbying. Wedtech’s executives bribed politicians for the purpose of influence peddling, and swindled shareholders. This kind of crime is not uncommon.

Along these lines, if, for instance, a real-estate mogul declared business bankruptcy repeatedly throughout his business career, why did investors trust him with their money again and again and again and again and again?? Perhaps there was influence peddling. The politicians were his puppets who eventually passed legislation favorable to them all. It was worth it to them to risk losing all their chump-change investment to get access to future (much more) profitable contacts and politicians who did their will.

Anyway, Milken hired a team of lawyers who were the cream of the crop of Northeastern elitists. Yet, unfortunately for him, the media and law enforcement made him the poster-boy / scapegoat for the greed of the 1980’s.

Ben Stein, a wannabe Hollywood writer, was, according to the author, an individual who fueled public outrage against Milken. He was unwisely hired to write articles for Barron’s (a major Wall Street publication) after Milken was indicted. The nature of his utterances in print were “Shocking, unsubstantiated, never-proven assertions made with absolute certainty.” Stein claimed his taking of the drug Halcion caused him to produce such libelous garbage.

Strangely enough, insider trading wasn’t what Milken was jailed for, but rather, a minor disclosure failure. The judge in his case was ridiculously misguided, considering that the court calculated the dollar value of damages Milken caused was a mere $318,000. But the court saw that the revenues generated by him and his firm were in the hundreds of millions of dollars. So the court fined him $600,000,000.

Read the book to learn of Milken’s prison sentence and numerous other details of the whole tabloid-crazy affair.