How GlaxoSmithKline Helped the Big Government Supporters Today

In a report from USA Today on July 2, 2012, we learned that prescription drug giant GlaxoSmithKline pled guilty and will pay $3 billion to resolve federal criminal and civil inquiries arising from the company's illegal promotion of some of the drugs it produces. About $1 billion will go towards the federal fine, the remaining $2 billion to resolve civil claims that were made under the US federal government's "Falls Claims Act".

Image courtesy of Wikipedia

This is a staggering announcement, not to mention one of the largest if not the largest penalty ever levied against a drug company by the US federal government. The article quoted the federal government as saying “GSK's salesforce bribed physicians to prescribe GSK products using every imaginable form of high-priced entertainment, from Hawaiian vacations to pay doctors millions of dollars to go on speaking tours to a European pheasant hunt to tickets to Madonna concerts, and this is just to name a few”, which was a statement reportedly made by Carmin M. Ortiz, a US attorney in Massachusetts.

The civil claims also presented evidence that GSK was inappropriately and illegally engaging in "off-label marketing” in which a drug that has been approved to treat one kind of illness might also have other beneficial uses. However, the US FDA still requires that those alternative uses be documented and proved prior to marketing. Two examples cited were: The promotion of the drug Paxil for treating children suffering from depression from April of 1998 to August 2, 2003; and the promotion of the use of Wellbutrin for weight loss, sexual dysfunction, substance addiction and ADHD from January of 1999 to December of 2003 even though it was only approved by the FDA for major depressive disorders.

Such a large penalty cannot have been an easy thing for GSK's executive management to swallow. I can imagine what the stockholders will say at the next annual meeting. But the only reason I can think of that would prompt GSK's senior management to accept such a staggering penalty is that the government had them dead to rights. And this is the issue that bothers me the most. I usually argue that most companies will do the right thing for their customers because loyal customers result in repeat business and repeat business results in long-term business growth and stability. Something is very wrong when the leadership of a company in the business of providing medicines would consider, much less execute any strategy that intentionally results in a doctor prescribing, or a patient taking a medication that has no proven benefit to fight their illness. Shame on GSK's sales force and incidentally, shame on any doctor that in so doing has contradicted the oath of "Do no harm." How can I, as a strong fiscal conservative who constantly argues for smaller government, in part by reducing the hundreds of thousands of pages of regulations and thereby reduce the size of the federal bureaucracy, when companies like GSK clearly show quality of products and services to their customers takes a back seat to profit? Where's the morality?

GlaxoSmithKline has created many products which have been of enormous benefit to our society. For that I applaud them. But when it is proven that they show no hesitation to incorrectly market their products in pursuit of greater and greater profits, then they have lost my trust and I would like to think that they have lost the trust of the general buying public. I would also like to think that what I was taught about basic economics is true, which is that the free market will reward companies that provide a good service or product and will force companies that provide inferior products and services or which have questionable business practices to fail. But with GSK being so big and being serviced by exceptionally bright and skillful lawyers, I am being forced to reevaluate my position.

Any person that calls themselves a true conservative should not be doing business with a company that knowingly puts you in jeopardy by misleading you to think that the medicine that you are taking, sometimes at great expense to either yourself or your insurance company, is effectively treating your illness when in fact it may be doing nothing or worse.

"I Like to Fire People" -- A non-controversy by the MSM

As is usually the case, if the media can take a comment, cut it out of it's context and then regurgitate it as pablum to the masses who lean the same direction as the media outlet, they can definitely make it run.

The BostonHerald.com today reported the following. I will provide the text verbatim so that you can see what they claim the former Masschussetts governer said at a Nashua, Hew Hampshire meet and greet.

“GOP frontrunner Mitt Romney – who has based his campaign on his sometimes controversial record as a corporate czar – sparked a furor today with the remark that he likes 'being able to fire people.'

The former Bay State governor was discussing health insurance when he said that insurers give fairer prices if they know they will be held accountable.

'It also means that if you don't like what they do, you can fire them. I like being able to fire people who provide services to me, ' Romney said.”

There was more in that article, about 600 words more... but nothing else from Mitt Romney's actual statement. With only that chunk of the statement, it would be pretty easy and quite reasonable to think that Mitt Romney is a ruthless man who enjoys firing people for no real reason other than he can.

Fortunately, we have YouTube.com and you can find the entire clip of what he actually said.

“It also means that if you don't like what they do you can fire them. I like being able to fire people who provide services to me. If, if, you know, if someone doesn't give me the good service I need, I want to say 'you know, that if... I'm gonna go get somebody else to provide that service to me.' And so that's one thing I'd change.”

See the difference? In the entire context, what Mitt Romney said is; if you can find somebody that provides a service and does a better job at it than your current provider, you should have the right to terminate the relationship with your current provider. Further, he says that you should be unapologetic about it.

In my opinion this is a contrived controversy. There is nothing radical or controversial about a successful businessman stating that in the course of his business dealings he would have no hesitation to fire a service provider if he can find somebody else to provide the same service for less cost, more service for the same cost, or more service for less cost.

What we really should be looking at in a free-market economy is at what point do we as consumers insist that providers continue to cut costs to the point that the labor to provide the service or good cannot live on the wages. But this isn't Mitt's problem, this is America's problem.

If 41 cents of every dollar you made was going on your credit card, would you keep doing it?

According to the Department of the Treasury, 41 cents of every dollar spent by the federal government of the United States was borrowed. 

Think about that. Think about that long and hard. Can you imagine that any sane person can possibly think that this kind of reckless spending can be sustained?  This is the equivalent of a private person making about $25,500 spending $50,000 dollars every year. That means that they had to put $20,500 on the credit card in a single year to hit the same ridiculous deficit spending percentage our government has.

The Bi-partisan Debt Commission report has come out. It's harsh. It's going to ask Americans to accept deep cuts in many of the entitlements that we hold dear. It holds nothing back. Deep cuts are found in health and human services, Social Security, the Department of Defense, all of which been "untouchable" and "third rail issues" until now.

So its surprise to me that the commission itself was only able to get 11 of 17 to support the conclusions of the commission. 

Two examples:
Max Baucus of Montana refused to support it because of the proposed gasoline tax hike that would damage the agriculture industry.  That's nothing. If it were me I would end farm subsidies and let farmers grow whatever the heck they want in quantities they want.

Andy Stern, the president of Service Employees International Union (SEIU) also refused to support it, because it would have deep consequences for federal government employee union pension plans.

As long as people continue to think "Think not what I can do for my country, think what my country can do for me" we are going to head down the road of national insolvency.  When will We, the People, wake up and realize that we've allowed our politicians to walk us down a path paved with the false glitter of lies and promises right to the very trapdoor of financial hell?  When will we stop demanding that our government take money from some and give it to others, when in fact there just isn't any more money to take?  Yeah, the rich are rich, but there aren't enough of them nor do they make enough that by themselves they could pull us out of this mess we are in.  We have to reduce spending. All across the board.

Because unlike you or I who have our mortgage company or credit card company to send us into bankrupty, the federal government instead gets to answer to China and Qatar and the United Kingdom.  And they aren't likely to be any more understanding than your local debt collector. What kind of a debt collector would China use, anyway? Do we really want to find out?

8 Stood in the Way

Eight GOP senators voted against the 2-year earmark moratorium.  They are:

1. James Inhofe (OK)
2. Bob Bennet (UT)
3. Susan Collins (ME)
4. Thad Cochran (MS)
5. Richard Shelby (AL)
6. Lisa Murkowski (AK)
7. George Voinovich (OH)
8. Dick Lugar (IN)

With their votes, the resolution failed 56-39.

I hate earmarks. I hate them because they are a backdoor currency to buy votes. And they are hard to find because they are not in the budget package. They can be attached to anything the house or senate passes.  I note that only one of these senators is actually up for re-election next year. That's Mr. Lugar of Indiana.

There are also 7 Democratic senators that voted for the moratorium. They are:

1. Evan Bayh (IN)
2. Michael Bennet (WI)
3. Russ Feingold (WI)
4. Clair McCaskill (MO)
5. Bill Nelson (CO)
6. Mark Udall (CO)
7. Mark Warner (VA)

Which just goes to show that doing the right thing isn't necessarily being done by just the right wing.

Earmarks are a symptom of the problem.

In 2005, the Congressional Research Service found that earmark projects accounted for 1.92% of all federal outlays (spending). Now... that doesn't sound like a lot of money.  Well, OK, in the jaundiced and stratosphere-high world of federal spending, that doesn't sound like a lot of money.  In fact, it would work out to about $47.7 billion dollars, which compared to the $1300 billion that we overspent in 2010, doesn't really seem like much.

However, earmarks are a symptom of a Washington problem that John McCain and a few others have been warning us against for years.  Earmarks are used to buy votes in both houses of Congress.  It's a form of political currency that is used to influence members of both the House and the Senate to vote in a manner that they might otherwise have done.  Here's an example:

House Leader: This reform legislation is very important and we really need your vote in order to guarantee it's passage.
Representative: I realize that this is important to you, but you have to understand that my constituency isn't effected that much by the problem your legislation addresses. And they will object to its cost.
House Leader: Well, what is your constituency interested in?
Representative: We've been trying for years to build that new county library, but the economy has made it difficult to get it done.
House Leader: Well, what if we were to attach, let's say, $600,000 in earmarked funding for that library to the proposed legislation?  
Representative. My constituency will be grateful.  You have my support.

See the problem?  So even though earmarks themselves only represent a small amount of the total federal funds spent, they contribute to a bloated federal budget by making it more palatable to some members of Congress by sending some funding back home where it will do some good.

In the above example, would a new public library be of benefit to the community? Almost assuredly so. But because it's earmarked legislation, it never gets debated as part of the budget.  Therefore, this funding is hard to find and hard to track.

If you get rid of these "pork-barrel" projects and hidden earmarked funding riders, then bills tend to be voted on based only on their relative merit and not because votes have been bought and paid for.  For example, without the sweetheart deals that were made to certain members of Congress in states like Kansas and Louisiana, the United States National Health Care legislation (aka "Obamacare") would probably never have gotten enough votes to pass.

And that's why the Tea Party wants earmarks eliminated.

Quantitative Easing and the 2010 G20 Summit.

From the FT.com (Financial Times): In an article by Ralph Atkins while in Frankfurt, Germany, he wrote about the "collision" course that Germany has plotted with regards to the United States.

Our policy makers are whining about our trade imbalance.  Wolfgang Schäuble accused the United States government of undermining its own policymaking credibility.  "It is not consistent when the Americans accuse the Chinese of exchange rate manipulation and then steer the dollar exchange rate artificially lower with the help of their printing press." He went on to say that American's have lived for "too long" on credit, overblown their financial sector and neglected their industrial base.  There are lots of reasons for the US problems -- German export surpluses are not part of them.

He further pointed out that we don't have a liquidity problem. There's a LOT of money in the system right now.  What he didn't say, but was definitely implied, is that borrowing is low because banks have increased standards for borrowing and therefore far fewer borrowers are found to be credit worthy. 

I've harped on this for years.  Part of our problem is that in the noble but misguided effort to make home ownership attainable to more people, the federal government put great pressure on banks to ease lending requirements, with the result that potential borrowers were not required to provide much proof that they could pay back the money they were borrowing. This risky behavior resulted in the mortgage bust of 2008, although signs could be seen as early as 2005-6.  Federal policy makers tried to exert pressure to roll back these practices but were soundly rebuffed by a Democrat-controlled Congress. 

If our government continues to "monetize our debt", soon the Federal Bank will be the only organization that will be willing to buy our debt, and at that point the "Weimar moment" as Glenn Beck puts it, will happen.  

Call your congressman, call your Senators and inform them that printing money is no solution to our problem.  Demand that they reign in federal spending, but be aware that in so doing you will be asking the government to reduce services, some of which you or someone you love and know are depending on. How tight are you willing to pull your belt in order to gain federal fiscal responsibility? Because until you are willing to live with less entitlements from our government, our government will continue to spend its way into debtor's prison.

Maybe the GOP gets it. Day 2.

Representative Eric Cantor (R-VA), who will likely become the House Majority Leader in January, distributed a document called "Delivering on Our Commitment" that will be given to new the new class of Representatives.  In it, Mr. Cantor reveals some detail on his proposed congressional agenda.

1)  He opposes a VAT.
2) Create a forum with the nation to seriously discuss entitlement changes necessary to maintain our obligation to retirees while still reducing overall entitlement expenditures. Outreach to the "minority" party is stressed.
3) Continue the GOP moratorium on earmarked appropriations and based on an outcome of the Organizational Conference, extend it to both parties. In short, no House legislation including earmarks will be allowed to the floor for discussion or balloting.
4) A systematic, piece by piece approach to repealing or defund the United States National Health Care act and replace it with "common sense" legislation. I have no ideal what "common sense" legislation means.
5) Implementation of rules for articulating clear standards for bringing legislation to the floor of the House. In summary, an argument must show that the legislation is not more appropriately a state or local government issue and that Congress is within Constitutional limits to pass such legislation. Further, the legislation must include a plan for paying for its implementation.  Shrinking the size of the Federal Government is a primary goal of these rules.
6) Changes to the Legislative Schedule and House Calendar, with focus on committee hearings and oversight uninterrupted by floor activities such as House votes.  Oversight committee reports can be brought to the floor for debate or even adoption.
7) Eliminate expressions of appreciation and recognition for individuals, groups, events and institutions in order to focus on the critical work ahead of us.  Also, consider designations and namings of post offices or other federal buildngs only once day a month.
8) A renewed focus on standardized goals, objectives and formats of oversight reporting in connection with a greater emphasis on individual member oversight initiative.

I have only one relevant piece of advice for Mr. Cantor. Every single category of federal spending needs to be critically scrutinized and that there are no sacred cows.  Defense, Health and Human Services, the Federal bureaus and agencies, and yes, even Social Security all need to be looked at with an eye towards the reduction of spending.