The Multinational Monitor

JUNE 1990 - VOLUME 11 - NUMBER 6


N A M E S   I N   T H E   N E W S

Dumping in Mexico

Federal investigators have revealed that several companies may be circumventing U.S. environmental laws by exporting hazardous wastes to Mexico.

In what may be the first of many cases, a federal grand jury indicted a California resident and a Mexican citizen on felony charges of violating the U.S. Resource Conservation and Recovery Act (RCRA).

Raymond Franco and David Torres are accused of transporting and exporting hazardous wastes to Mexico by truck.

In another case, the Laminating Company of Garden Grove, California was indicted on 46 counts of violating RCRA. The company allegedly sent thousands of gallons of hazardous methylene chloride waste to Mexico.

"Although this type of hazardous disposal practice has been suspected for many years, this case is the first in California in which a law enforcement surveillance operation actually has witnessed the attempted smuggling of hazardous waste into Mexico," said Los Angeles District Attorney Ira Reiner.

Reiner's office receives reports of illegal waste shipments to Mexico about twice a week. "To some people who are involved, Mexico is one big trash can and it doesn't really matter what goes on down there," an assistant to Reiner told the Los Angeles Times. "It's not realistic to think what we send down there won't come back in foods, water pollution, air pollution or pottery we buy from Mexico."

Gouging Babies

The three companies that control 93 percent of the U.S. infant formula market were accused of engaging in price fixing for the last decade, in testimony at a recent congressional hearing. The companies, Ross Laboratories, Mead Johnson, and Wyeth-Ayert Laboratories, allegedly forced consumers to pay excessively high prices for the formula. From 1979 to 1989, the price of infant formula rose more than 100 percent, while the price of milk, infant formula's main ingredient, rose less than 40 percent.

Senators raised questions at the hearing about whether the companies are preventing others from entering the market and whether they are dividing up the infant formula market among themselves.

From 1981 to 1990, Mead and Ross, the two larger companies, raised the price of their formulas 12 times, while Wyeth raised its price 11 times. Many of Ross's and Mead's price increases occurred within weeks of each other and some of the changes brought their respective products to the same price. When the prices were not the same, they were extremely close; five cents was the maximum price difference during the nine-year period.

"I have a real concern about this type of cozy pricing interaction among competitors in a highly concentrated industry like infant formula," said Sen. Howard Metzenbaum, D-Ohio. "These companies don't need to meet behind closed doors to set prices. They can conduct their pricing coordination in public based on a pattern that becomes routine. They are fooling no one with claims that this industry is competitive."

All three companies deny any collusion, however. "We compete independently and vigorously for infant formula business and make unilateral decisions on all pricing policy," a Wyeth spokesperson told Multinational Monitor. Gerald Elliot, director of public affairs at Mead Johnson, says "we don't think that [price-fixing] goes on at all. We've never discussed pricing with our competitors and we never will." A Ross spokesperson joined the chorus, dismissing the allegations.

Denials notwithstanding, the Federal Trade Commission (FTC) promised to investigate the allegations raised at the hearing. "The infant formula industry may have some characteristics that make it conducive for collusive or oligopolistic firm behavior," said Kevin Arquit, the director of the FTC's Bureau of Competition. "[T]he infant formula industry appears to be highly concentrated. ... In addition, because of federal standards for product content and quality, the product appears to be relatively homogeneous, a factor likely to make anti-competitive pricing practices easier to coordinate and maintain."

Escaping the FDA`s Net

Over half of the new drugs approved by the Food and Drug Administration (FDA) between 1976 and 1985 were later found to pose serious health risks, the General Accounting Office (GAO) reported in May. The GAO questioned the FDA's ability to identify the severe and sometimes fatal risks discovered after a drug's approval.

The findings were based on a study of 198 drugs approved by the FDA. Of these drugs, 51 percent were found to have serious post-approval risks. These have included heart failure, respiratory problems, convulsions, seizures, kidney and liver failure, severe blood disorders, birth defects, fetal toxicity and blindness.

"It is disturbing that shortcomings in FDA's approval process may be responsible for serious adverse reactions," said Rep. Ted Weiss, D-NY, who commissioned the study. However, Dr. Robert Temple of the FDA told Multinational Monitor that the GAO report did not say "that anything that should have been discovered was missed." He added that it "never said that there is a problem with the drug-approval process, but it's easy to misinterpret [the report]."

Drugs approved for children were found to be twice as likely as others to pose significant risks. Cardiological, anti-inflammatory, psychopharmacologic, dermatologic and antibiotic drugs were found to be twice as risky. The GAO also found that "drugs with serious post-approval risks were approved in a shorter time than drugs without [serious post-approval risks]."

"Serious and unanticipated adverse reactions are certainly a risk we must accept when FDA shortens the review time for experimental drugs to treat immediately life-threatening diseases such as AIDS and cancer," Weiss said. "However, for diseases that are not immediately life-threatening, this may be too high a price to pay for shorter approval times."

David Lapp


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