Multinational Monitor

JUL/AUG 2004
VOL 25 No. 7


Monopoly Medicine: The Built-In Inefficiencies of a Patent-Based Pharmaceutical R&D System
by James Love

It’s in the Genes: Patent Barriers to Genetic Research
by Lee Drutman

Buy the Numbers: Publishers Seeks Special Database Monopoly Protections
by Robin Gross

The Great Global R&D Divide
by Gunnar Westholm, Bertrand Tchatchoua and Peter Tindemans


The Rise of the Free Software Movement: Freedom from Proprietary Control
an interview with Richard Stallman

A Conspiracy of Silence: The Suppressed Evidence About Anti-Depressants
an interview with Charles Medawar


Behind the Lines

A Healthcare R&D Treaty

The Front
Rigging the System - Lay Does Perp Walk - Remembering Paul Klebnikov - "The Shame of Humanity" - Grief for the Reefs

The Lawrence Summers Memorial Award


Names In the News


Behind the Lines

Pharma's Fix

The pharmaceutical industry spent more than $100 million -- a record -- on lobbying in 2003, according to a June analysis from the consumer group Public Citizen.

The Public Citizen analysis of federal lobbying disclosure records shows that drug companies hired 824 individual lobbyists in 2003 -- nearly half of whom had "revolving door" connections to Congress, the White House or the executive branch. There are only 535 members of Congress.

The allied managed care industry also poured money into lobbying, according to Public Citizen. Managed care companies that lobbied on the Medicare bill spent $32.3 million on federal lobbying in 2003. HMOs and health plans hired 222 lobbyists to work on the Medicare bill.

Frank Clemente, director of Public Citizen's Congress Watch, says the lobbying effort paid off. "The Medicare Modernization Act, a top priority of President Bush, promises to safeguard industry profits at the expense of America's taxpayers," he says.

The industry army of lobbyists helped ensure that the new drug benefit will be administered by private companies. The new law expressly prohibits the government from using its bargaining clout to negotiate lower prices and effectively bans the "reimportation" of cheaper drugs from Canada [see "Medicare Drugs: Prescription for Failure," Multinational Monitor, May/June 2004].

Since Bush signed the new Medicare bill into law, at least four key Bush administration officials have exited to help industry clients benefit from the Medicare bill that they wrote or promoted. Another six top congressional staffers at the center of negotiations over the Medicare bill now lobby for drug companies or HMOs.

Media Monopoly Upset

Saying that the Federal Communications Commission (FCC) relied on "irrational assumptions and inconsistencies" in a recent rulemaking deregulating the U.S. media system, a federal court in June overturned the FCC's deregulatory move.

The court's ruling requires the FCC to reverse its controversial June 2003 decision relaxing the regulation of ownership of the newspaper, television and radio industries. The court faulted the FCC's methodology in measuring concentration, and rejected the FCC's argument that ownership limits should be removed unless evidence could be shown to warrant their retention.

"The rush to media consolidation approved by the FCC last June was wrong as a matter of law and policy," said FCC Commissioner Michael Copps, who voted against and ardently opposed the FCC's decision. "The commission has a second chance to do the right thing."

"Thousands of Americans are telling the Commission and everyone who will listen that consolidation is bad for their communities and families," says Hannah Sassaman, program director for the Prometheus Project, which was the plaintiff in the case challenging the FCC decision. "It is of paramount importance that the FCC use that testimony to inform new ownership rules that will preserve and protect America's diverse, local voices."

FCC Chair Michael Powell, who had rammed the deregulatory move through the Commission, said that the judge's "decision perversely may make it dramatically more difficult for the Commission to protect against greater media consolidation. It sets near impossible standards for justifying bright-line ownership limits."

Offshoring the Government

A growing number of U.S. state government functions are being contracted out to private firms that are locating jobs offshore.

That's the finding of a July report by the Corporate Research Project of the Washington, D.C.-based Good Jobs First.

The report, "Your Tax Dollars at Work ... Offshore," found that nearly every state has engaged foreign vendors to perform state work offshore.

The report found that 18 offshore outsourcing firms are aggressively seeking state government contract work -- primarily in information technology -- in at least 30 states. The 18 firms have captured about $75 million in state contracts so far and are seeking more, in part by hiring former government officials and by making state electoral campaign contributions.

The study was commissioned by the Washington Alliance of Technology Workers (WashTech), a local union of the Communications Workers of America that supports workers in the information technology sector.

Frequently, state governments are not even aware that they are sending work offshore, the study found. In many cases, state governments awarded contracts to U.S. firms, believing that the work would be performed domestically, only to find that the work was subsequently subcontracted to an offshore vendor.

In other cases, states assume they are dealing with a domestic company because a U.S. mailing address is used. Offshore vendors typically use such addresses for sales and marketing purposes, while the contract work is performed offshore.

An Olympic Embarrassment

Strict regulations decreed by the organizers of the Athens Olympics games dictate that spectators may be refused admission to events if they are carrying food or drinks made by companies that did not see fit to sponsor the games, reports the Sunday Times of the UK.

Sports fans with a soft drink other than one made by Coca-Cola will be required to leave their drink outside the event venue if they want to obtain entry, the Sunday Times reports.

Even bottled water must pass the endorsement test. Fans will be allowed entry if they bring Avra, a Greek mineral water owned by Coca-Cola, which paid $60 million to become one of the main Olympics sponsors. Fans will not be able to enter with other brands of water unless the labels are removed from the bottle, according to the Sunday Times.

Food limits are designed to ensure only foods by McDonald's, two Greek dairy firms and other sponsors are consumed at the Olympics venues.

Under their "clean venue policy," Olympics officials will also be on the lookout for T-shirts, hats and bags displaying the logos of non-sponsors, according to the Sunday Times. The concern is with "ambush marketing" -- an attempt to covertly advertise on television without paying sponsorship fees. If Olympics staff believe a t-shirt wearing fan is on an ambush marketing mission, they will order the person to wear the t-shirt inside out.

Corporate sponsors have paid more than $1 billion to obtain exclusive advertising rights and privileges, including use of the Olympic rings in advertisements.

Kostas Giannis, a Greek sports fan, told the Sunday Times "I don't see why, after all the money that Greek taxpayers will end up paying to host the games, McDonald's should dictate what I can eat in my own city."

Acres Away

The World Bank in July debarred a company convicted of corruption on Africa's largest dam project, nearly two years after a Lesotho court issued a guilty verdict in a bribery case.

On July 23, the World Bank announced that it would debar from further Bank contracts the Canadian firm Acres International. The company had been convicted of bribing the head of the Lesotho Highlands Water Project in September 2002.

"This long overdue action on Acres is very much welcome and hopefully signals a more forceful World Bank approach to corruption on its projects," says Korinna Horta of the U.S.-based group Environmental Defense. "But the fact that a court case in Lesotho was decisive in the limited debarment of Acre appears to be a case of the tail wagging the dog. It remains to be seen if this will lead to more systemic changes in how the Bank approaches corruption."

Although World Bank President James Wolfensohn has said that fighting corruption is a top priority at the institution, the Bank has long avoided the tough step of debarring major multinationals that engaged in corruption on its projects. At least a dozen companies were found to have bribed the chief executive of the Lesotho Highlands Water Project (now serving a 12-year jail sentence for taking bribes), and the Lesotho courts have managed to get convictions of four companies.

Since its conviction in Lesotho, Acres has received three contracts from the World Bank, according to Susan Hawley, a research consultant working on issues of corruption for the UK group The Corner House.

Critics say the Lesotho Highlands Water Project left tens of thousands of poor farming families even poorer, and has sold the nation's water to the highest bidder, leaving the nation vulnerable to drought [see "Making the Earth Rumble: The Lesotho-South Africa Water Connection," Multinational Monitor, May 1996]. An ongoing drought has necessitated emergency food assistance to a large part of Lesotho's population this year, according to the UN Food and Agriculture Program.

Conflicted Science

Leading medical and scientific journals, including the New England Journal of Medicine and the Journal of the American Medical Association, are failing to enforce their policies for disclosing financial conflicts of interests among contributing authors, according to a July study by the Center for Science in the Public Interest.

In one case, William Owens, a Procter & Gamble scientist, was only identified by Environmental Health Perspectives as an official of the Organization for Economic Cooperation and Development.

The article by Owens validated a toxicity test that would likely be used on various P&G products. There was no disclosure of Owen's Procter & Gamble connection, even though it was known to the editors of the journal.

In another case, Dr. John Shaughnessy, a University of Arkansas College of Medicine professor, published an article in the New England Journal of Medicine outlining the potential efficacy of a treatment of multiple myeloma. But Shaughnessy failed to disclose that he intended to apply for a patent on the underlying technology. Shaughnessy also failed to disclose that he was a paid consultant for drug companies developing vaccines for the condition.

"Published research that fails to disclose authors' ties to drug companies threatens the credibility of scientific journals and rightly undermines public confidence in studies about the safety or efficacy of various drugs or chemicals," says Merrill Goozner, the author of the study.

Goozner examined 163 articles in the New England Journal of Medicine, the Journal of the American Medical Association, Environmental Health Perspectives, and Toxicology and Applied Pharmacology.

He identified 13 articles where authors did not disclose relevant conflicts of interest that should have been disclosed according to the journals' policies.



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