Month: January 2008

The U.S. public holds Big Business in shockingly low regard.

A November 2007 Harris poll found that less than 15 percent of the population believes each of the following industries to be “generally honest and trustworthy:” tobacco companies (3 percent); oil companies (3 percent); managed care companies such as HMOs (5 percent); health insurance companies (7 percent); telephone companies (10 percent); life insurance companies (10 percent); online retailers (10 percent); pharmaceutical and drug companies (11 percent); car manufacturers (11 percent); airlines (11 percent); packaged food companies (12 percent); electric and gas utilities (15 percent). Only 32 percent of adults said they trusted the best-rated industry about which Harris surveyed, supermarkets.

These are remarkable numbers. It is very hard to get this degree of agreement about anything. By way of comparison, 79 percent of adults believe the earth revolves around the sun; 18 percent say it is the other way around.

The Harris results are not an aberration. The results have not varied considerably over the past five years — although overall trust levels have actually declined from the already very low threshold in 2003.

The Harris results are also in line with an array of polling data showing deep concern about concentrated corporate power.

An amazing 84 percent told Harris in a poll earlier in 2007 that big companies have too much power in Washington. By contrast, only 47 percent said that labor unions have too much power in Washington (as against 42 percent who said labor has too little power), and 18 percent who said nonprofit organizations have too much power in Washington.

These results have proven durable. At least 80 percent of the public has ranked big companies as having too much power in Washington since 1994. In 2000, Business Week and Harris asked a broader question: Has business gained too much power over too many aspects of American life? Seventy-four percent agreed.

The November 2007 poll also asked about support for measures to control corporations. These results are eye-opening as well, though perhaps not in the expected way.

Harris asked which industries “should be more regulated by government — for example for health, safety or environmental reasons — than they are now?” Only oil companies (53 percent), pharmaceutical companies (53 percent) and health insurance companies (52 percent) crossed the 50 percent threshold. Even the tobacco industry managed to escape in the survey with only 41 percent favoring greater regulation. These data trend significantly negative — against greater regulation — over the last five years.

Does this show that while people distrust Big Business, they equally distrust the government to constrain corporate power?

No.

The U.S. skepticism to regulation is only skin deep. When polls present specific regulatory proposals for consideration, U.S. public support is typically strong and often overwhelming — even when arguments against government action are presented.

For example:

+ After hearing arguments for and against, 76 percent favor granting the Food and Drug Administration regulatory authority over tobacco, with 22 percent opposed.

+ After hearing arguments for and against, 75 percent favor legislation that would significantly increase energy efficiency, including auto fuel efficiency standards, and the use of renewable energy.

+ Eighty-five percent favor country-of-origin labeling for meat, seafood, produce and grocery products, and three quarters favor a legislative mandate.

+ Seventy-one percent say it is important that drugs remain under close review by the FDA and drug companies after they have been placed on the market.

+ And, from a Harris finding a week after the poll showing skepticism about industry regulation in general, the polling agency found that those who think there is too little government regulation in the area of environmental protection outpaced those who think there is too much by a more than 2-to-1 margin (53 to 21 percent).

What the Harris findings on attitudes to regulation do show is that the business campaign against regulation as an abstract concept has been very successful.

It highlights the need for consumer, environmental, labor and other corporate accountability advocates to defend the concept of regulation, and to connect the rampant corporate abuses in society with the deregulation and non-regulatory failures of the last three decades. There’s little doubt that the general public attitude toward regulation significantly affects the willingness of politicians — none to eager to offend business patrons in the first place — to take on corporate power.

The founders of the United States took the First Amendment to the U.S. Constitution and the concepts of free speech and freedom of conscience very seriously.

“Whoever would overthrow the liberty of a nation must begin by subduing the freeness of speech,” said Benjamin Franklin.

“Information is the currency of democracy,” intoned Thomas Jefferson — one of countless Jefferson odes to the central importance of ideas and free transmission of information in fostering a working democracy.

But could they possibly have imagined the twisted purposes to which the First Amendment is put today?

Two crucial developments in U.S. constitutional jurisprudence — the grant of Bill of Rights protections to corporations, and the extension of First Amendment protections to commercial speech — have enabled corporations to invoke the First Amendment to defend their right to hawk goods, so long as they are legal, by almost any means short of outright lying or clear deception.

Now corporations are suggesting the First Amendment should effectively immunize them from government-imposed rules related to the simple commercial exchange of information.

This new expansion of the First Amendment to block broad public regulatory powers emerges from efforts in New England to control one of the most insidious pharmaceutical marketing practices.

Anyone who watches television in the United States, or reads magazines, is familiar with drug company advertisements to consumers. But these represent a relatively small fraction of industry marketing expenditures.

Drug companies devote much more money, and time, to influencing those with the power to prescribe medicines — as much as $34 billion in the United States, more than eight times what is spent on direct-to-consumer marketing.

The most important element of the marketing onslaught directed at doctors is “detailing” — the activities of the sales representatives who visit doctors constantly, and provide free lunches, free pens, free charts and other free goodies (including, very importantly, free samples). The average primary care physician sees drug detailers more than five times a day.

When a sales rep walks into a doctors office, he or she knows a lot about that doctor — including exactly what medicines the doctor prescribes, and in what quantities. How can this be?

Pharmaceutical companies purchase the information from data-mining companies, the largest of which is IMS Health. Pharmacies track what drug is sold to each customer. IMS buys the data from the pharmacies, deletes all patient names, combines it with data that enables the identification of prescribers for each prescription, and aggregates the information.

Then, when the drug company representatives cheerfully bound in to a doctor’s office, they know exactly what the doctor is prescribing. They know if the doctor prescribes a lot of medicine or a little (drug company reps rate the doctors on a scale of 1-10, or A-F), and whether they go for the rep’s company’s product or a competitor’s or a generic. They know where to focus their efforts, and how to frame their sales pitches.

And, as the New York Times explained, quoting an e-mail message from a pharmaceutical executive to company salespeople, they use the data to “hold [doctors] accountable for all the time, samples, lunches, dinners, programs and past preceptorships that you have paid for and get the business!” The sales reps obviously do not have punitive power over the doctors, but they use the prescribing information to exploit and manipulate the social ties built on the giving relationship.

Neither doctors nor patients consent to this use of prescribing data, and only a tiny few even know about it.

New Hampshire decided to ban this use of the data in 2006. Vermont and Maine followed with similar laws.

IMS sued to block implementation of the laws, and won at the U.S. district court level. Judges agreed with IMS that the New Hampshire and Maine laws violate the company’s claimed First Amendment rights.

The New Hampshire law permits IMS and other data miners to continue to collect prescription data, but they can’t use individualized data — information about specific doctors’ prescribing practices — for commercial purposes.

The law is a “speech restriction because it limits both the use and disclosure of prescriber-identifiable data for commercial purposes,” District Judge Paul Barbadoro found in the New Hampshire case.

This was a misguided determination, challenged by the State of New Hampshire in an appeal argued before the First Circuit Court of Appeals yesterday. Leave aside the merits of providing First Amendment protections to corporations, or to commercial speech. Nothing about the New Hampshire law impinges on the expressive values that the First Amendment is intended to protect.

Contends Sean Flynn, the lead attorney for a coalition of public interest organizations supporting the New Hampshire law, “This case is not about speech, it is about industry surveillance of the doctor-patient relationship. New Hampshire acted through its data-mining law to safeguard that relationship, and the public health, by protecting it from industry surveillance and manipulation.”

Flynn says that if the district court’s ruling is upheld, and the principle of commercial speech protections is extended to cover any commercial exchange of text or data, then a host of existing laws are vulnerable to constitutional challenge. These include laws to protect consumer privacy and to mandate disclosure of financial information related to securities transactions.

It is very hard to defend government regulations determined to restrict commercial speech. Under Supreme Court rulings, judges must assess whether a commercial speech restriction advances a substantial governmental interest, directly advances the interest and is no more limiting of speech than necessary. In a case like New Hampshire’s pharmaceutical data-mining restrictions, the test effectively requires the judge to closely scrutinize a government regulation and decide if it is both a good idea, and the best possible and least speech-restrictive way of achieving a desired ends. It gives the judge unwarranted authority — comparable, as former Justice Rehnquist noted, to the discredited turn-of-the-20th-century Lochner authority to strike down economic regulations — and makes it very hard to uphold a challenged regulation.

In applying the test, Judge Barbadoro knocked down the New Hampshire law on numerous grounds. There was no legitimate privacy interest involved, he found, especially since there is no evidence of drug sales reps harassing doctors. Pharmaceutical detailing may result in more brand-name and fewer generic drugs being prescribed, at greater expense, but there is no evidence that prescriber data “is being used to propagate false or misleading marketing messages.” And, he found, there are other ways the State could aim to curb drug company gifts, counter detailers’ messages and educate doctors, and aim to promote greater use of generic drugs.

Just to list the judge’s findings is to show how much inappropriate power the commercial speech test confers on judges in a case like this.

Will the appeals court agree with Judge Barbadoro? We’ll know in a few months.

Could Thomas Jefferson and his contemporaries have imagined the First Amendment being deployed for such purposes?

The world has obviously changed in the last 200-plus years, and Jefferson could not have envisioned even the existence of the modern pharmaceutical industry. But he did understand the threat that corporations posed to a working democracy.

“I hope that we shall crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our country,” he wrote.