Friday, May 7, 2021

Public Policy Law360 May 2021

 

The Biden administration's push for power lines to be built alongside highways may help address the siting issues and local opposition that frequently bedevil such projects, but experts say guidance recently issued by federal transportation officials is far from a silver bullet.

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Friday, May 7, 2021

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Analysis

Federal Highway Guidance No Power Line Project Panacea

The Biden administration's push for power lines to be built alongside highways may help address the siting issues and local opposition that frequently bedevil such projects, but experts say guidance recently issued by federal transportation officials is far from a silver bullet.

Read full article »

Analysis

CFPB May Fill Enforcement Gap After FTC's High Court Loss

As the Federal Trade Commission looks for a way forward after its bruising encounter with the U.S. Supreme Court last month, fintech firms and other non-banks could see the Consumer Financial Protection Bureau step in to pick up enforcement slack.

Read full article »

Analysis

FTC, DOJ Show No Sign Of Resuming Early Merger OKs

The U.S. Department of Justice and the Federal Trade Commission said their suspension of early ends to merger reviews wouldn't last long, but three months later, the agencies have given no sign they'll soon restore the early terminations granted to huge numbers of transactions.

Read full article »

3 Cos. Will Pay $4.4M Over Cribbed Net Neutrality Comments

Three marketing companies will pay a combined total of $4.4 million to settle claims that they flooded the Federal Communications Commission's net neutrality docket with comments that used stolen identities, New York's attorney general announced Thursday.

4 documents attached | Read full article »

GOP Sens. Want Cuomo Probed Over Nursing Home Deaths

A group of Republican U.S. senators on Wednesday called for a congressional probe of embattled New York Gov. Andrew Cuomo over his alleged undercounting of nursing home deaths due to the COVID-19 pandemic.

Letter attached | Read full article »

Trump Doc Subpoena Should Be Upheld, House Panel Says

A U.S. House committee seeking former President Donald Trump's personal and business financial records should be able to obtain the information now that he is no longer in office, the panel told a D.C. federal court.

Memorandum attached | Read full article »

Florida's New Vote-By-Mail Restrictions Hit With Multiple Suits

Minutes after Florida Gov. Ron DeSantis signed a bill Thursday that curbs mail-in voting and increases voter identification requirements, the state drew legal challenges from the NAACP, the League of Women Voters and others who claim the new law disproportionately impacts Black, Latino and disabled voters' ability to cast a ballot.

Complaint attached | Read full article »

BANKING & SECURITIES


5 Takeaways From Gensler's Debut In Congress As SEC Chair

Gary Gensler made his first official appearance before Congress as the top U.S. securities cop at a Thursday hearing, ostensibly geared toward so-called meme stock trading, that lawmakers used as a temperature check for the regulatory hawk's policy agenda.

Read full article »

ENERGY & ENVIRONMENTAL


9th Circ. Says National Forest Cattle Grazing Permits Lawful

The Ninth Circuit reversed a lower court's decision Thursday and held that the U.S. Forest Service rightfully imposed restrictions on cattle grazing operations in Montana's largest national forest to protect streams and vegetation.

Opinion attached | Read full article »

Biden Admin. Proposes Revoking Trump Migratory Bird Rule

The U.S. Department of the Interior on Thursday proposed a rule to undo the Trump administration's effort to curtail the federal government's power to prosecute companies that kill federally protected migratory birds.

Proposed Rule attached | Read full article »

Orcas Threatened By Alaska Commercial Fishing, Group Says

The federal government's approval of commercial fishing off the coast of Alaska has put an endangered killer whale community at risk, and efforts to mitigate that fact may be more of a hindrance than a help, an environmental group told a Washington federal court Wednesday.

Memorandum attached | Read full article »

Texas Backs Florida's Bid To Overturn CDC Cruise Ban

In a move to support the cruise industry during the COVID-19 pandemic, Texas has filed a motion to intervene in Florida's suit seeking to block the federal government from enforcing its now yearlong ban on cruises, following Alaska's lead in looking to join the case.

2 documents attached | Read full article »

HEALTH


Embattled NJ Jail Agrees To Review Of COVID-19 Conditions

A New Jersey federal judge signed off Thursday on appointing a special master to review conditions at the Cumberland County Jail under an agreement between county officials and pretrial detainees in the inmates' proposed class action over claims the facility has failed to adequately protect them against the spread of the coronavirus.

Read full article »

INTELLECTUAL PROPERTY


USPTO Eyes $1.17B In Unreleased Funds For Fee Relief

The U.S. Patent and Trademark Office wants to get its hands on $1.17 billion collected before the America Invents Act, in the hopes of expanding services and limiting fee increases, the agency's chief financial officer said Thursday.

Read full article »

SPORTS & BETTING


Ohio Lawmakers Lob Sports Betting Legalization In New Bill

Online and mobile sports betting could be coming to the Buckeye State as part of a comprehensive gaming bill introduced by a group of Republican lawmakers Thursday, which calls for as many as 40 licenses for online, mobile and brick-and-mortar sportsbooks.

Bill attached | Read full article »

TRANSPORTATION & INFRASTRUCTURE


Judge Eyes Standing In Clash Over FAA's Flight Paths Project

A petition to undo federal aviation regulators' decision to redraw flight paths in and out of Denver International Airport and nearby airports faced skepticism from a D.C. Circuit judge Thursday, who said the challengers have not shown that they have Article III standing by demonstrating how the project injured them.

2 documents attached | Read full article »

REAL ESTATE


Landlords, Trade Group Sue To Stop NY Eviction Protections

A group of small New York landlords and a major trade association are seeking to stop statewide eviction protections recently extended through August, claiming Thursday that legislation signed by Gov. Andrew Cuomo this week is unconstitutional.

Complaint attached | Read full article »

EMPLOYMENT & BENEFITS


CalSavers Defeats ERISA Preemption Challenge In 9th Circ.

A Ninth Circuit panel handed a victory to California's state-run retirement program Thursday in a suit that had challenged its right to exist, ruling that the state law that created CalSavers isn't canceled out by the federal Employee Retirement Income Security Act.

Opinion attached | Read full article »

NLRB Health Unit Closure Didn't Break CBA, Labor Panel Says

The federal agency that administers labor relations for government workers said the National Labor Relations Board did not violate its collective bargaining agreement with the NLRB Union by closing its in-house health facilities, but ordered the NLRB to reopen the units.

Decision attached | Read full article »

EEOC Commissioner Urges Industry-Specific COVID Guidance

EEOC Commissioner Keith Sonderling said Thursday that the agency should consider issuing guidance that addresses COVID-19 issues that are unique to specific industries, saying it would help employers make decisions without wondering if their actions are lawful.  

Read full article »

CYBERSECURITY & PRIVACY


Microsoft Says It Will Let EU Customers Keep Data Inside Bloc

Microsoft committed Thursday to allowing businesses and government entities that use its cloud services in the European Union to store all of their data locally, amid lingering uncertainties about how to legally transfer data outside the bloc. 

Read full article »

NY AG Aims To Join Suit Over Calls Targeting Black Voters

New York Attorney General Letitia James on Thursday asked to join a federal lawsuit against conservative conspiracy theorists Jacob Wohl and Jack Burkman for allegedly sending "threatening" robocalls aimed at suppressing Black voters ahead of last year's presidential election.

Letter attached | Read full article »

TAX


Online Taxes Hurt Small Digital Cos., Industry Rep Says

Taxes on online revenue will hurt small and medium-size digital businesses, even if they're not directly affected, a representative of small technology companies said Thursday at hearings held by the U.S. Trade Representative's office.

Read full article »

BANKRUPTCY


11th Circ. Says Use Of Biz Account Bars Ch. 7 Debt Discharge

A man who used his company's business account to "get by financially" after being hit with a $20 million judgment and more than $300,000 in back taxes can't get those debts discharged in bankruptcy, the Eleventh Circuit has ruled.

Opinion attached | Read full article »

IMMIGRATION


Baltimore Presses Biden For Essential Worker Citizenship

The Baltimore City Council unanimously passed a resolution asking President Joe Biden to create a pathway to citizenship for immigrant essential workers as part of a federal economic recovery program.

Read full article »

WHITE COLLAR


Ex-Fla. Rep. Gets New Trial After Removal Of Faith-Led Juror

The Eleventh Circuit ordered a new trial Thursday for former U.S. Rep. Corrine Brown, ruling that the trial court had improperly removed a juror who believed the Holy Spirit had told him the ex-Florida congresswoman was innocent of corruption charges.

Opinion attached | Read full article »

Ex-Mayor's Fraud, Bribery Case Nears End As Defense Rests

A Massachusetts federal jury could begin deliberations as soon as Monday in the fraud and corruption trial of the former mayor of Fall River, after the ex-politician presented a brief defense against claims he drained investor cash from his startup and extracted bribes from cannabis entrepreneurs looking to open in the city.

Read full article »

NATIVE AMERICAN


Tribes Drop Keystone XL Fight In Light Of Biden Veto

Two tribes, the developer of the Keystone XL pipeline and the Biden administration joined together to inform a Montana federal court they all agree an executive order canceling the presidential permit for the project brings about the end of litigation over the approval.

Notice attached | Read full article »

TELECOMMUNICATIONS


FCC Can't Trump California Net Neutrality Law, 9th Circ. Told

California's top legal officer has urged the Ninth Circuit to swat down an industry challenge to the state's net neutrality rules, saying the Federal Communications Commission's repeal of a similar regime does not prevent states from pursuing their own open-internet laws.

Brief attached | Read full article »

House Hearing Deepens Divide Over Broadband Subsidies

House Democrats and Republicans further deepened their split over the best way to expand broadband access on Thursday, as liberal members called for local government partnerships and consumer price limits while conservatives pushed to preserve the current private-sector subsidy model.

Read full article »

CANNABIS


Ex-Mass. Pot Regulator Joins Vicente Sederberg

One of Massachusetts' first cannabis regulators has taken a position at cannabis-focused law firm Vicente Sederberg LLP as its first director of regulatory policy, the firm recently announced.

Read full article »

EXPERT ANALYSIS


Rethinking Investment Treaties As Latin America Goes Green

As Latin America pivots toward renewable energy, governments should reshape bilateral investment treaties to allow incentives for new technologies and improve dispute settlement mechanisms, while also providing both new and established energy companies with certainty and fair treatment, say attorneys at GST.

Read full article »

The Biden Administration Is Sharpening The TSCA's Sword

The Trump administration implemented the 2016 amendments to the Toxic Substances Control Act in a way that critics felt benefited chemical companies, but the Biden administration can be expected to use the amendments to broaden risk reviews and impose new requirements on the regulated community, say attorneys at Kilpatrick.

Read full article »

CFPB's First 100 Days Lay Foundation To Maximize Authority

Former Consumer Financial Protection Bureau general counsel Quyen Truong, now at Stroock, analyzes how developments in the first 100 days under new CFPB leadership reclaim the agency's activist mission and authority, redirect resources toward forceful action, and open the door to change the regulatory framework.

Read full article »

Bid Protest Spotlight: Scope, Evaluation Criterion, Privity

In this month's bid protest roundup, Sandeep Nandivada and Markus Speidel at MoFo look at April U.S. Government Accountability Office and U.S. Court of Federal Claims decisions concerning proposed labor categories outside the scope of vendor schedule contracts, use of unstated evaluation criterion, and whether co-prime contractor privity supports standing to protest.

3 documents attached | Read full article »

4 Trends In Discoverability Of Litigation Funding Documents

Recent rulings shed light on how courts and international arbitration tribunals decide if litigation funding materials are discoverable and reaffirm best practices that attorneys should follow when communicating with funders, say Justin Maleson at Longford Capital and Michele Slachetka and Christian Plummer at Jenner & Block.

Read full article »

LEGAL INDUSTRY


Alex Oh Lawyers Up In Exxon Case After Brief SEC Stint

Alex Oh, the corporate defense attorney who resigned as head of the U.S. Securities and Exchange Commission's enforcement division less than one week after achieving the coveted post, has hired the president of the D.C. Bar to back her in the ongoing Exxon Mobil Corp. human rights case that is seen as the likely impetus for her abrupt SEC departure.

Read full article »

Reed Smith Eyes Fully Reopening Offices In September

Reed Smith LLP said Thursday that it would gradually begin encouraging more of its lawyers to go into the office in the coming months, as it eyes fully reopening all of its 17 U.S. locations by September.

Read full article »

Rimon Grows Further In Texas With Austin Launch

Rimon PC is the latest law firm to plant a flag in Austin, Texas, announcing Thursday that it has hired a former Reed Smith LLP partner to spearhead its growth in the fast-growing Texas technology hub.

Read full article »

Holland & Knight Adds Former NBCUniversal Privacy Chief

BigLaw firm Holland & Knight announced on Tuesday the hiring of NBCUniversal's former chief privacy officer to boost its data strategy, security and privacy practice.

Read full article »

Adtalem GC Who Led Diverse Staff On $1.5B Deal Resigns

Adtalem Global Education Inc.'s general counsel, who had received widespread acclaim among his peers last year for staffing a team entirely with African American and female corporate lawyers for the educator's $1.5 billion acquisition of Walden University, has left the company, according to a recent filing with the U.S. Securities and Exchange Commission.

Read full article »

GoDaddy Taps McKesson Corp. Atty For CLO Slot

GoDaddy Inc. has announced that McKesson Corp. attorney Michele Lau will join the company to serve as its new chief legal officer starting in July.

Read full article »

Ex-NFL Team GC Wants His Docs Sealed In Wilkinson Suit

The Washington Football Team's former general counsel has urged a Virginia federal court to seal arguments he has made in litigation over a sexual harassment probe so that details over confidential deals don't come into public view.

Read full article »

Carter's Wants Out Of Legal Affairs Manager's Bias Case

The legal and corporate affairs manager for the parent company of Carter's and OshKosh B'gosh children's clothing waited too long to claim she was not promoted because of her age and gender, the retailer has told a Georgia federal court.

Read full article »

Lin Wood Says Judge 'Abused' Power By Taking Him Off Case

Controversial attorney L. Lin Wood told the Delaware Supreme Court on Wednesday that a state trial court "abused its discretion" by revoking his temporary admission in a First State defamation case involving onetime Trump administration adviser Carter Page.

Read full article »

17 New Immigration Judges Largely Held Prior Gov't Roles

The first group of 17 immigration judges to begin working under the Biden administration includes eight former prosecutors, seven attorneys who counseled U.S. Immigration and Customs Enforcement and two who were most recently private practitioners, according to a Thursday announcement.

Read full article »

Coronavirus Litigation: The Week In Review

A D.C. federal judge has vacated the U.S. Centers for Disease Control and Prevention's nationwide eviction ban, Pfizer and BioNTech must face claims they poached research technology while testing their COVID-19 vaccine, and Kentucky's attorney general has a green light from the Sixth Circuit to continue price-gouging probes into Amazon sellers.

Read full article »

Podcast

The Term: Goodbye Arguments, Opinion Season Is Upon Us

The Supreme Court heard its final oral argument of the term this week in a criminal case involving sentencing relief for low-level crack offenders that saw some tough questions for the Biden administration. Law360's The Term dives into the case, then looks ahead to some of the biggest decisions that are expected to come by the end of June.

Read full article »

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Food Insecurity: Chicken Shortage. May 2021

According to the U.S. Department of Agriculture, broilers – chickens raised for meat – slaughter was down 4% in the first quarter of 2021, with ...

Wednesday, May 5, 2021

Get your shot! New vaccine incentives as U.S. demand for COVID-19 vaccine drops May 2021

 

New vaccine incentives as U.S. demand for COVID-19 vaccine drops

Robert Day walked up to a house in northwest Detroit, eager to talk about nearby COVID-19 vaccination sites and pitch a local program that pays $50 to anyone who brings someone to a clinic to get inoculated.

A man sitting on the porch, who refused to give his name, tore up the flyer Day had handed him and stormed inside.

"That's just one person's opinion," said Day, a volunteer helping the Michigan city convince more people to get vaccinated, before he moved on to the next home on Tuesday.

The U.S. coronavirus vaccination campaign has reached a tipping point, with supply outstripping demand due to factors including ambivalence or skepticism about the vaccines as well as access issues. In recent weeks, the number of Americans seeking to be vaccinated against COVID-19 dropped by a third, according to the U.S. Centers for Disease Control and Prevention (CDC).

That is forcing public health officials to try new strategies to persuade people to get the shot, efforts that range from creative gimmicks to grassroots outreach resembling get-out-the-vote drives.

On Wednesday, New York Governor Andrew Cuomo said the Mets and Yankees Major League Baseball teams would give free tickets to fans who got vaccinated at the ball parks before games.

New Jersey and Connecticut are partnering with bars and brew pubs to offer a free drink to people who are newly vaccinated, while Maryland announced it would give $100 to state employees who get inoculated.

In Colorado, a non-profit organization is planning to reach out to rural conservatives - a group that includes many vaccine skeptics - at county fairs and rodeos.

Immunize Colorado also will use pop-up and Zoom events to appeal directly to immigrant groups and communities of color, where issues of access and distrust of the medical establishment have prevented many people from rolling up their sleeves.

"Those kinds of strategies - tried and true - are really going to get us to the last mile," said Stephanie Wasserman, executive director of Immunize Colorado.

This week, President Joe Biden set an ambitious target of having more than 70% of U.S. adults get at least their first shot by the Independence Day holiday on July 4, shifting the country's inoculation strategy from mass vaccination sites to pharmacies and mobile and pop-up clinics with walk-in availability.

About 105 million U.S. adults are fully vaccinated and more than 56%, or 145.7 million people, have received at least one shot as of Tuesday, according to CDC data. (Graphic on global vaccines) https://tmsnrt.rs/3tUM8ta

Biden's goal of inoculating 160 million by July 4 will be challenging, but will help reduce circulation of the virus to very low levels and allow a return to normal life, experts say.

INCENTIVES AND MANDATES

The problem is that most adults eager to get the vaccines - which have not yet been authorized for children - have already done so.

Demand has dropped broadly around the United States, both in states that have been vaccinating at quicker paces, like Connecticut, New Hampshire and California, and states that have lagged, like Louisiana, Alabama and Idaho, CDC data shows.

In the most recent week, the drop in demand accelerated. Vaccine doses administered were down at least 11% in more than half the states and up more than 11% in just three.

Public health experts said that while federal money and publicity campaigns can help, the toughest work will need to be done by local health officials, doctors and pharmacists to  reach harder-to-vaccinate populations.

Vaccine mandates by employers and universities also could make a difference, said Glen Nowak, a professor at the University of Georgia and former communications director for the CDC's National Immunization Program.

He noted that historically U.S. child immunization rates were often below 75% until states started putting in place vaccination requirements to enter school.

It is unlikely that outreach campaigns will persuade those who are firmly opposed to vaccination in general, experts said.

Instead, they are targeting people who may fear the COVID-19 shot for a variety of reasons, including misinformation about  safety and how quickly they were developed, as well as political opposition among many conservatives.

Alabama has been one of the slowest states to vaccinate, with just 42% of its adult population having received a shot by early May. Weekly vaccination rates there are off more than 40% since the beginning of last month.

Dr. Karen Landers, an Alabama public health official, said the state is looking at setting up clinics in schools, particularly after vaccines are authorized for 12 to 15 year olds, which is expected shortly.

"We have to continue to have access in every corner, but I think we also need to continue to combat hesitancy on an individual basis," she said.

 

 (Reporting by Sharon Bernstein in Sacramento, California and Michael Erman in New York; Additional reporting by Emily Elconin in Detroit; Editing by Colleen Jenkins and Bill Berkrot)

Monday, May 3, 2021

Ethics in the Pharmaceutical Industry. A few references. May 2021.

https://sevenpillarsinstitute.org/pharmaceutical-industry-ethics/#:~:text=From%20a%20deontological%20perspective%2C%20pharmaceutical,prioritizing%20fair%20access%20to%20medication.


"From a deontological perspective, pharmaceutical firms have a moral obligation to provide fairly priced drugs lest they use their consumers as a means to a profit rather than prioritizing fair access to medication."Jan 19, 2017


Pharmaceutical Industry Ethics

By: Rachel Thomas

Part 2 of the Valeant Pharmaceuticals Series

In a capitalist free market, the goal of business is to sell a product to satisfy demand. The company’s objective is to maximize profit, without breaking the laws of the land. This profit motive is generally accepted as a characteristic of the free market and rarely raises ethical questions. However, there are industries where social good may take precedent over profit. The pharmaceutical industry presents one instance.

The pharmaceutical industry is a unique and significant component of the international economy. It faces ethical issues distinct from other industries. There are a few powerful players controlling the supply of arguably the most critical products in an economy.

A pressing ethical issue for pharmaceutical companies is whether they ought to be held to a higher standard than those in other industries due to their role in serving the public good. How can earning a profit be a company’s single most important concern if this goal prevents a consumer from purchasing a lifesaving drug? Do pharmaceutical companies have a moral duty to invest in treatment research, a societal good, even if they lose money in the process?

Pharmaceutical companies can profit from patent laws intended to promote social good but which instead create perverse incentives, or fail to adequately incentivize. Even if patent protection secures exclusive rights to sell a product, it still may not be profitable for a company to invest in certain drug development.

Inevitable patent laws, the consequent lack of competition, and crucial public interest in accessing these drugs are distinctive characteristics of the pharmaceutical industry. As such, policies ought to encourage companies in this industry to keep drug prices low and to develop new treatments for humanitarian rather than pure profit motives.

Controversies surrounding one of the industry’s most powerful companies, Valeant Pharmaceuticals International Inc., demonstrate the financial and social consequences of the current system. With actual human lives on the line, pharmaceutical companies should be held to a higher standard. Thus, pharmaceutical companies have a duty to serve the public. This idea of moral duty is the foundational principle of deontological ethics.

Characteristics of the Pharmaceutical Industry

In many industries, a consumer will simply not participate in the market if his demand is lower than the market price. However in the case of vital medication, demand is so inelastic the supplier could charge an exorbitant price and demand would remain steady. Essentially, pharmaceutical suppliers can put a price on human life – and that price can be high.

A controversial example of extreme price setting by Turing Pharmaceuticals occurred in 2015. Turing acquired Daraprim, a drug used to treat life-threatening parasitic infections called toxoplasmosis (NY Times). The infection is most deadly for AIDS patients and some cancer patients. Almost immediately after acquiring the drug, CEO Martin Shkreli raised the price per tablet from $13.50 to $750. While the drastic increase caused public outcry, the operation was legal and could potentially earn Turing millions in profits (NY Times). Although insurers have the option to continue to pay for the drug, they will likely turn to a cheaper, less effective treatment after this price hike.

Patent laws and monopolistic pricing

Many industry features intended to promote development and distribution of drugs lead to perverse incentives for suppliers. Operating costs for pharmaceutical companies are extremely high especially: funding research and development, fighting legal battles, and distributing through insurers. However, the creation of new treatments for diseases is a public good, so governments tend to incentivize research through patent laws and subsidies. After investing in developing a new drug, a company has the exclusive right to sell and profit from the product. While these laws aim to promote medical progress, they create a monopoly over potentially lifesaving drugs, allowing suppliers to charge monopolistic (high) prices.

Although patent laws are necessary to incentivize the development of new drugs, they support monopolies and prevent competition in the industry. A monopoly over products allows a company to fix prices, helped by inelastic demand, earning the company substantial profits. By definition, monopolistic markets do not offer free access to competitors. Competition causes the price of goods to reach equilibrium, limiting the opportunity to profit. In a monopolistic industry, new firms cannot freely enter and exit the market, so there is always a potential for existing firms to profit enormously.

The lure of high profits motivates companies to continuously develop new drugs, but also creates an incentive to unscrupulously mark up prices. It is more expensive and challenging than ever to create new drugs approved for the market, making it unprofitable to invest time, money, and personnel on research and development. One of the top four pharmaceutical companies, Pfizer, earned $22 billion in profits while spending only $6.6 billion on research and development (thinkprogress.org).

The pharmaceutical company Valeant recognized this dilemma, and began slashing research in favor of acquiring smaller companies to make a profit. This practice allows companies to take advantage of patent laws and the monopolistic profit characteristics of the industry while avoiding the burden of investing in treatment research, a public good.

Ethical Issues in the Pharmaceutical Industry

After acknowledging the pharmaceutical industry possesses unique elements that give a few powerful companies control over drug creation and distribution, we soon recognize there are inherent ethical problems with the structure of the industry.

The most pressing concern is whether, for humanitarian purposes, pharmaceutical companies have a moral responsibility to supply affordable drugs and to invest in developing new treatments. The current system provides incentives for research by exchanging patent protection for introducing new drugs to market, but there are few enticements to keep prices low. Public and investor relations can motivate companies to reduce prices and they are required by law to provide drugs to Medicaid at discounted rates (Vanity Fair).

From both consequentialist and deontological perspectives, the current system is unethical. Although a consequentialist would consider making a large profit a positive outcome, depending on the value he places on a human life, the burdens will outweigh the benefits. Patients unable to afford medication will suffer a lower quality of life or even death if faced with a life threatening condition. Despite the positive outcome of large profits for companies, the overall consequence is negative due to suffering inflicted on people.

Deontologists would view extraordinary price increases of necessary drugs as unethical. Kant’s categorical imperative states that we should “act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means” (Seven Pillars Institute). By raising drug prices to expensive levels, the companies are treating patients as the means to an end. These firms know that patients, or their insurance providers, will continue to pay for treatment regardless of the price, as the demand is inelastic. However, taking advantage of another human in order to promote one’s self-interest violates the moral duty to “seek an end that is equal for all people” (Seven Pillars Institute). Using a deontological framework, pharmaceutical companies have a moral duty to keep drug prices fairly priced. Price gouging is immoral as it exploits disadvantaged individuals to the benefit of the firm.

Valeant Pharmaceuticals International Inc.

, a multinational pharmaceutical company, has been the subject of multiple public controversies since 2015. Once celebrated for its innovative business approach, Valeant’s stocks and reputation have plummeted in the past year. The company has been accused of “price gouging, a secret network of specialty pharmacies, and fraud” (Fortune). The company is under investigation by the U.S. Securities and Exchange Commission (SEC) and the U.S. Congress (Fortune).

When former CEO Michael Pearson joined Valeant in 2008, he forged a new way to operate in the pharmaceutical industry (Vanity Fair). Pearson decided that rather than invest billions of dollars into developing new drugs that may never be approved by the Federal Drug Administration (FDA), he should acquire the companies currently holding drug patents. He theorized that by buying these companies and drastically raising the prices of their products, he could greatly increase profits. Since the company held a patent, there would be no market competition to keep the price low. Pearson severely cut Valeant’s research and development spending, instead focusing on acquisitions to make a profit.

Valeant worked closely with a “specialty pharmacy” called Philidor in order to distribute the company’s drugs more effectively. Philidor’s role was to distribute Valeant’s drugs to patients through insurers, who would have to foot the bill for the overpriced products. The fraud allegations arose from Valeant’s relationship with Philidor, as some employees reported altering doctor’s prescriptions from generic products to Valeant’s brand (Vanity Fair).

Pearson’s plan worked at first, raising Valeant’s stock to a high of $262 (Vanity Fair). However, in order to purchase these companies, Valeant accumulated substantial debt. This debt, along with scrutiny into the company’s unorthodox practices by Congress and the SEC, pushed Valeant’s shares down to $94 by November 2015 (fortune.com).

Valeant’s initial success and eventual failure highlight the unique characteristics of the pharmaceutical industry, as well as the likely consequences from failure to recognize these unique and potentially destructive features.

Pearson’s only objective as CEO was to increase profits, reduce costs, and placate shareholders. Without a humanitarian incentive to keep drug costs low, Pearson raised prices to the extreme limit of demand for the products. In another industry, the fall of a powerful company would only hurt investors and possibly the general stock market. However, Valeant’s shady business practices may have prevented individuals from receiving lifesaving treatments.

A crisis of this magnitude would not have even been possible in most other industries, as the limited competition in pharmaceuticals (caused by strict patent laws) allowed Valeant to grow powerful and to manipulate prices to excessive degree.

The Future of Pharmaceutical Policy

Policymakers must weigh the potential benefits and costs of a policy to determine whether it will make the public better off. In the pharmaceutical industry, policies should promote research and development while ensuring citizens can easily access the drugs they need. In theory, the current environment encourages companies to invest in developing new drugs by promising a temporary monopoly over the product. Although this increases the market price, the benefit of new research outweighs that cost.

The Valeant and Turing cases demonstrate the failures of current policies. Companies are manipulating patent laws to make a profit without investing in new research and development. There are also few regulations in place to limit extreme price increases, which allowed Turing to increase the price of Daraprim by 500 percent (NY Times). Policymakers need to determine a way to protect people’s ability to buy medications while promoting innovation.

The Clinton Plan for Lowering Prescription Drug Costs

Hillary Clinton, the 2016 Democratic presidential nominee, is an outspoken advocate for reducing prescription drug costs by increasing regulations on the pharmaceutical industry ().

During the campaign, Clinton wanted to  “to promote competition and leverage our nation’s bargaining power to lower drug costs on behalf of Americans.” Her plan was to “[encourage] competition to get more generics on the market and create a Federal backstop for when there are excessively high-priced drugs that face no competition.” She also demanded a “stop to excessive profiteering and marketing by denying tax breaks for direct-to-consumer advertising and demanding that drug companies invest in R&D in exchange for taxpayer support” (HillaryClinton.com).

Clinton’s plan addressed the lack of investment in research, misdirection of government research subsidies towards advertising, and absence of competition in the market. By ensuring subsidies are used only for research and “[funding] the FDA’s Office of Generic Drugs to clear out their multi-year generic drug approval backlog,” drug prices will decrease and competition in the industry will increase. Additionally, allowing Americans to import prescriptions from other developed countries increases competition in the United States (HillaryClinton.com).

Healthcare Reform to Make America Great Again

The President-elect Donald Trump, also plans to reduce healthcare costs by limiting the power of drug companies. Trump claims that “though the pharmaceutical industry is in the private sector, drug companies provide a public service,” reflecting the deontological view that pharmaceutical companies have a moral obligation to serve the public (Donald J. Trump).

Both Trump and Clinton believe the industry needs to become more competitive to lower drug prices. Trump agrees with Clinton that “allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.” He also believes the lobbying power of big drug companies has prevented reform, stating: “Congress will need the courage to step away from the special interests and do what is right for America.” As drug companies spend more money on lobbying than any other industry, about $229 million in 2014, Trump claims the pharmaceutical industry holds significant influence over lawmakers ().

According to Trump, “it is the moral responsibility of a nation’s government to do what is best for the people and what is in the interest of securing the future of the nation” (Donald J. Trump). Therefore, the government would be obligated to prevent companies from using patients as a means to profit without recognizing that their survival depends on their ability to purchase a drug. 

Conclusion and Policy Recommendation

The Valeant controversy demonstrates the necessity of restructuring the pharmaceutical industry. Encouraging and protecting monopolistic pricing fails to promote innovation. Instead, policies such as patent laws discourage research and allow companies to earn massive profits while patients are forced to bear excessive costs for essential drugs.

From a deontological perspective, pharmaceutical firms have a moral obligation to provide fairly priced drugs lest they use their consumers as a means to a profit rather than prioritizing fair access to medication.

The central problem with the pharmaceutical industry is its lack of competition, a characteristic protected by current drug patent laws. The potential to profit that arises from the monopolistic protection of new drugs incentivizes companies to raise prices to obscene levels, preventing patients from accessing the medication they need to survive. This perverse incentive fails to promote research and innovation, and instead increases healthcare costs and government spending, while drug companies profit.

In order to increase competition in the industry, policymakers should follow the plans set forth by both Clinton and Trump who believe that allowing Americans to import drugs (that meet FDA standards) from other countries promotes competition. Clinton also supports reducing the time it takes to approve generic drugs and limiting companies’ use of government subsidies towards marketing. Trump claims that due to the industry’s lobbying efforts, Congress has prioritized protecting drug companies over patients.

Implementing these policies should be the first steps towards fair pricing of drugs. The consequences of the current system extend beyond limited access to healthcare. The current scheme also places financial burdens on people requiring medicines, government, and ultimately, taxpayers (Think Progress). Until pharmaceutical companies embrace their moral duty to provide drugs as an end (public good) rather than as a means (to profit), there will be a need for government intervention.

 

Editor: Eric Witmer

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Works Cited

Crow, David. “Pharmaceuticals: A Harsh Dose of Reality.” FT.com. Financial Times, 01 Dec. 2015. Web. 10 Aug. 2016. https://next.ft.com/content/e8092a62-9744-11e5-9228-87e603d47bdc .

Gandel, Stephen. “Valeant: A Timeline of the Big Pharma Scandal.” Fortune.com. Fortune, 30 Oct. 2015. Web. 10 Aug. 2016. http://fortune.com/2015/10/31/valeant-scandal/

Gurciullo, Brianna. “Pharmaceutical Industry, under Scrutiny for Prices, Has History of Big Political Wins.” Opensecrets.org. Center for Responsive Politics, 02 Oct. 2015. Web. 16 Aug. 2016. .

“Healthcare Reform to Make America Great Again.” DonaldJTrump.com. Donald J. Trump for President, Inc., n.d. Web. 16 Aug. 2016. https://www.donaldjtrump.com/positions/healthcare-reform.

“Hillary Clinton’s Plan for Lowering Prescription Drug Costs.” HillaryClinton.com. Hillary for America, n.d. Web. 16 Aug. 2016. .

McClean, Bethany. “The Valeant Meltdown and Wall Street’s Major Drug Problem.” VanityFair.com. Vanity Fair, 2016. Web. 10 Aug. 2016. http://www.vanityfair.com/news/2016/06/the-valeant-meltdown-and-wall-streets-major-drug-problem.

Pollack, Andrew. “Drug Goes From $13.50 a Tablet to $750, Overnight.” The New York Times. The New York Times, 20 Sept. 2015. Web. 10 Aug. 2016. http://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html?_r=2.

“The Progressive Policy Donald Trump Just Embraced.” ThinkProgress.org. Think Progress, n.d. Web. 16 Aug. 2016. https://thinkprogress.org/the-progressive-policy-donald-trump-just-embraced-10ffb99015fa#.4mp839cab.

Shakil, Ali. “Kantian Duty Based (Deontological) Ethics.” Seven Pillars Insititute for Global Finance and Ethics, n.d. Web. 10 Aug. 2016. https://sevenpillarsinstitute.org/morality-101/kantian-duty-based-deontological-ethics.

 






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