But thought you might be interested in one congressman’s last-minute appeal to sanity.
You, dear reader, are a person things are done to.
January 2012
North Korea’s official propaganda organ, the Korea Central News Agency, reveals the real cause of global warming:
The snow in the area of Jong Il Peak began to thaw with the auspicious February 16, the birthday of General Secretary Kim Jong Il just ahead, heralding the approach of spring.
According to the data tabulated in the Paektusan Secret Camp Meteorological Observatory, the temperature in the area from the beginning of February this year is 15 degrees higher than last year to make willow trees in Sobaeksu Valley open catkins on Feb. 11 three days earlier than the previous years.
Five centimeters of snow is thawing every day on an average in the area.
As there is no strong wind and mild climate continues there, it is foreseen that the depth of snow will go down by nearly 60 centimeters in the middle of this month.
An unprecedented phenomenon of moon halo was observed.
At around 18:25 on February 8 the surroundings of the peak became as bright as daytime to make the night view above Kim Jong Il’s birthplace in the Paektusan Secret Camp brilliant.
This was the first of its kind there this year.
Those who witnessed the opening of willow catkins earlier than the previous years and the unprecedented nocturnal view said excitedly that even the nature and the sky unfolded such mysterious ecstasy in celebration of the birthday of Kim Jong Il.
So is this why Kim Jong Il wants the ability to bring about nuclear winter?
Electricity consumers beware! The so-called-stimulus bill includes provision for something called “decoupling.” E&E Daily reports:
Also included in the final version is a requirement that governors who want additional state energy efficiency grants ensure that their state regulators guarantee revenue to utilities to support efficiency programs.
State regulators and consumer advocates strongly opposed the provision, saying it ties regulators’ hands and is not the best tool to promote efficiency.
The National Association of Regulatory Utility Commissioners said many regulators cannot assure that “decoupling” requirements will be met. “These ambiguous conditions will create confusion and legal uncertainty and will likely delay or preclude the release of these critical funds,” NARUC said in a statement. “This benefits neither the States the utilities, nor, most importantly, the citizens they serve.”
“Decoupling” is a mystifying-sounding name for an economically terrifying concept. This is how it is described in government/regulatory jargon:
In order to motivate utilities to consider all the options when planning and making resource decisions on how to meet their customers’ needs, the sales-revenue link in current rate design must be broken. Breaking that link between the utility’s commodity sales and revenues, removes both the incentive to increase electricity sales and the disincentive to run effective energy efficiency programs or invest in other activities that may reduce load. Decision-making then refocuses on making least-cost investments to deliver reliable energy services to customers even when such investments reduce throughput. The result is a better alignment of shareholder and customer interests to provide for more economically and environmentally efficient resource decisions.
Now, in English: the laws of supply and demand mean that if the quantity demanded goes down, you sell less of the product you supply. In energy supply terms, this means that if conservation works, energy utilities see their profits decline, because in general they are regulated so tightly that they cannot raise their prices, which is the usual response to declining demand. Therefore, if there is a policy goal of increasing energy conservation, then utilities are likely to stand in the way, because their profits depend on selling more energy; they are unlikely to install technologies that reduce the need for energy, for example. Accordingly, the link between quantity sold and profits must be broken, or “decoupled.” This is normally done by regulating rates such that if more energy is sold, the marginal rate goes down and, if less is sold, the marginal rate goes up.
Now, to some this may sound like supply and demand at work, but it is actually a market manipulation aimed at achieving a policy goal. In fact, it most resembles a supply-side reform designed by someone who doesn’t understand supply-side economics. The utility remains regulated and the incentive structure is designed such that the utility is more inclined to respond to the regulator rather than the consumer. When profits are essentially guaranteed at a certain level, the utility will be more likely to spend money pleasing the regulator and delivering service improvements to that body than to the consumer. The consumer may end up paying more money for less electricity and the utility and regulator will both be happy. The dangers here are obvious; insulating the supplier from the consumer is a terrible idea.
Here is a useful paper from the Electricity Consumers Resource Council that raises several further objections to decoupling, which it says is a blunt instrument. They are:
Only Dubious Opportunities For Net Increases In Consumer Benefits.
Development Within Its Franchise Area. This Includes The Incentive To Support The
Well Being of Manufacturers And Their Workforce.
Issue, Which Is Lost Profits.
Efficiency Is To Send The Proper Price Signals To Each Customer Class.
Agencies—For Unselling Energy. This Creates An Entity Whose Sole Mission Is To
Promote Energy Efficiency, And Retains A Separate Entity Whose Responsibility Is To
Efficiently Sell And Deliver Energy.
(Not sure about that last one, but if there’s a policy goal to reduce energy consumption, that’s certainly a better way to go about it than decoupling).
A true supply-side reform would actually reduce regulation to the basics (reasonable safety requirements etc) and thereby not only allow but encourage the best conservation measure of all – demand-based pricing. This would allow rates to increase and decrease not according to some bureaucrat’s assessment of whether a policy goal is being met, but hourly, according to whether the system is being over- or under-used. Less energy will be consumed at peak times, thereby reducing the need for back-up energy generation, and more will be used at off-peak times, reducing the amount of wasted energy then. Overall, as long as the consumer responds to the price signal, consumers will probably use less electricity but also see their bills drop, while the utilities will save in lower production costs. Decoupling-style rate regulation actually stands in the way of this win-win goal.
Image by Skagit Information Management Systems, used under Creative Commons License.
The Wyeth v. Levine case presents a narrow set of facts in which the Food and Drug Administration had, for many years, known about the risks presented by intravenous push injection of Phenergan and worked with the manufacturer to carefully word the label description of this risk. There is no allegation of fraud in this case, nor has relevant information about this risk arisen since the label language was last amended. Nevertheless, disregarding the limiting facts in the Levine case, a flood of “friend of the Court” pleadings supporting Ms. Levine sought to broaden the preemption debate and persuade the Court of the critical need for additional tort-based supervision of the pharmaceutical industry. The FDA was portrayed as the vassal of the pharmaceutical industry, either unable or unwilling to protect the public against unsafe drugs. The industry was portrayed as a callous marketing machine committed to maximizing revenues – safety be-damned – and using promotion to skew medical decisions away from science-based, cost-effective medicine. Paying judgments was presented as a mere inconvenience given the enormous profit margins on pioneer branded drugs.
Ms. Levine’s supporters, who include the American Association for Justice (“AAJ”, formerly ATLA) are sophisticated enough to know that arguments relating to fact patterns not before the Supreme Court are unlikely, at best, to affect the Court’s judgment. Their briefs are more realistically targeted at a political audience which they wish to persuade to “right the wrong” should Wyeth prevail. Not surprisingly, AAJ has produced and is widely distributing a 22 minute video featuring Ms. Levine and promoting her cause. Thus, AAJ apparently believes that demonizing the pharmaceutical industry and denigrating the FDA is just one more means of obscuring the merits of federal preemption and positioning the issue as individual victim against industry Goliath – good versus evil.
On the actual policy merits, it is hard to conceive of any sound argument against the superiority of a uniform, scientifically based, expertly administered system for determining if and how prescription drugs should be approved for use, labeled and administered. Of course prescription drugs are powerful chemical and biological entities and their use will always entail a risk of injury. Some risks, as in the case of Phenergan, will be known, labeled and avoidable by proper medical procedures. Others, however, will be rare enough that only widespread use will suffice to detect and label them. In either case, given AAJ’s fundamental tenet that every injury warrants a legal proceeding and judicial remedy, injured patients like Ms. Levine will seek to have lay juries provide compensation by faulting the conduct of pharmaceutical companies. Sympathetic jurors, acting without scientific training, will set ex post facto standards of labeling conduct that override FDA’s determination that the drug allegedly causing injury was safe and effective for its labeled uses.
Absent preemption of these state-law conduct standards, pharmaceutical companies either will have to accommodate to jury determinations by restricting beneficial use of their products or face damages that have drained, and will continue to drain billions of dollars from the research-based industry, largely to the benefit of the pharmaceutical litigation industry. Moreover, practicing physicians will lack authoritative guidance for administering drug treatment and will be forced to consider whether they will be held accountable for failing to prevent injuries by considering any and all risks that might have been suggested in any publication an enterprising lawyer might later discover.
If faced with the question whether FDA experts or panels of lay people drawn randomly from the general population should make the hard call whether a drug’s effectiveness in treatment outweighs the risks it necessarily creates, few would opt for a lay decision. Yet a non-preemptive tort system makes exactly that choice and further distorts the decision process by focusing the inquiry on a single sympathetic drug-related injury and essentially ignoring the interests of all those who benefit from having the drug available.
AAJ and its allies no doubt hope to capitalize on the natural sympathy generated by innocent victims and the animosity whipped up by isolated instances of overzealous promotion or delayed recognition of emerging risk by pharmaceutical companies to overcome the sound policy support for uniform conduct standards enforced through federal preemption. Sadly, if they succeed in imposing dual level regulation by throwing brickbats at the pharmaceutical industry and the FDA, the harm to the public may spread even beyond a liability system run riot.
FDA professional staff, and FDA’s leadership are not insensitive to the criticisms levied at them in political debate and highlighted by jury verdicts proclaiming that drugs FDA has adjudged safe are, in fact, unreasonably unsafe. FDA’s likely reaction is to exercise greater caution in reviewing new drug applications, to demand more clinical testing in more sub-populations for longer periods before approval and to encourage defensive, use-restricting labeling and management systems. The inevitable consequence is to further limit the number of new drugs approved, to substantially increase the cost and risk of FDA’s new drug approval process and to deteriorate return on investment by deferring access to market.
The American pharmaceutical industry is one of the few successes left in an otherwise bleak industrial landscape. To survive, and hopefully thrive, American pharmaceutical manufactures need to have a regulatory apparatus reasonably tolerant of the risks arising from powerful new cures, the ability to disseminate meaningful information about new products, the pricing freedom to recoup the costs of research and development in a limited period of patent exclusivity and reliable upfront standards for the labeling and administration of their drugs. The looming fight over federal preemption will directly or indirectly affect each of these elements of pharmaceutical industry success. Indeed, winning the preemption battle may be essential to the survival of a privately financed, research-based, free enterprise pharmaceutical industry. Ironically, if the AAJ and its allies succeed in imposing dual regulation through attacking the industry on all fronts, they may wind up sorely missing their pharmaceutical industry whipping boy but they will not miss it nearly as much as the patient population of which we are all a part or the troubled American economy.
[Editor's Note: Bert Rein, a founding partner in the Washington, DC law firm Wiley-Rein and a long-time friend of CEI, represents Wyeth in this case. This post appears by invitation.]
There ain’t no way any of the lawmakers voting for the $790 billion stimulus package today could have read, comprehended, and analyzed the implications of the pork-filled 1000-plus pages of giveaways to just about every special interest, especially since it was reportedly only posted on a website at 12:00 a.m. this morning. Even the army of Hill staffers would have been hard-pressed even to print out and divvy up the paper.
As my colleague Iain Murray noted this morning:
Just a thought off the top of my head; how about an amendment to Article I, Section 7 that reads:
Before voting on any Bill, a Senator or Representative shall certify to the President of the Senate or Speaker of the House respectively that they have read the Bill in full.
Or something like that?
This is inspired by Tom Coburn pointing out that to read the porkulus bill in its entirety out aloud would take the Senate Clerk 31.5 hours. Yet this monstrosity is going to be foisted on the American public today. The contempt for the legislative process is shocking.
Okay – so it’s likely that nobody has read the stimulus package in its entirety. Then how do they know what to vote on? Betcha’ the special interests made sure they took their separate wish lists and legislative language to their favorite politicians. The enviros probably could care less about funding for the new agency that will be rationing health care. They’re just concerned with the billions upon billions for alternative energy projects and conservation credits. The iron and steel producers just love the massive funding for infrastructure – the roads and bridges to nowhere – as long as a “Buy American” clause is in the bill. The urbanites will get increases in food and nutrition programs, while rural residents will get broadband.
Since the pork is being dished out widely and indiscriminately, who needs to read the bill? Everybody should be happy – after all, we’re promised that millions of jobs will be created as the money flows through the government agencies. But who’s going to be paying for all this largess? It’s us, the taxpayers today, and tomorrow, and the next.
The Supreme Court’s pending, and perhaps imminent, decision on the preemptive effective of FDA drug labeling approvals in Wyeth v. Levine has stimulated a flood of legal and public policy debate on the roles that federal regulation and state-law based tort litigation should play in regulating pharmaceutical manufacturers. That debate, which is almost certain to continue in a legislative forum should Wyeth prevail before the Court, may determine the future of the now-lucrative litigation industry. More importantly, arguments made in the debate by those seeking to protect or expand litigation opportunities may exacerbate an onslaught of public policy initiatives that threaten the future viability of a private enterprise, research-based pharmaceutical industry.
The Wyeth v. Levine case itself presents a relatively narrow preemption issue. Ms. Levine lost her right forearm to gangrene when Wyeth’s drug Phenergan was improperly administered by intravenous push injection to deal with her severe migraine-related nausea. The drug entered an artery and caused gangrene. The administering clinic failed to observe a number of cautions prominently displayed on Phenergan’s label relating to the maximum total dosage, rate of administration, cessation of treatment on complaint of pain and extreme caution in avoiding exposure of Phenergan to arterial blood. Nevertheless, after settling her claim against the administering clinic, Ms. Levine successfully sued Wyeth under Vermont law for failing to totally foreclose push injection of Phenergan in its labeling and thus allegedly making the product unreasonably unsafe.
Wyeth’s constitutional preemption defense was two pronged. Wyeth first argued that, under federal law, it could not have complied with Vermont’s labeling standard. The FDA, in first approving Phenergan in 1955 and then repeatedly approving Wyeth’s evolving label, had determined that push injection – the fastest and most efficacious method of administration – was safe given the cautions included in the label. Wyeth’s post-approval experience had provided no additional information that would authorize a deviation from FDA’s position and any unauthorized deviation would put Wyeth in violation of federal law. Wyeth also argued that Congress had given FDA national authority to optimize prescription drug use by balancing benefit and risk and that state law – particularly case-by-case setting of labeling standards in jury trials – should not override FDA’s scientific risk assessments. Wyeth presented both arguments to the Supreme Court in seeking certiorari and in arguing the merits of its case.
Ms. Levine’s response to Wyeth was that FDA’s balancing determinations should be viewed as minimum standards subject to imposition of added safety requirements under state law. Congress had not included an express preemption clause in FDA’s prescription drug authority as it had, for example, in FDA’s medical device authority and thus a presumption against preemption should prevail. In any case, Ms. Levine argued, Vermont’s labeling standard only required Wyeth to compensate Ms. Levine and did not force Wyeth to change its federally-approved label.
The legal arguments of the parties, and the incremental approach typical of the Supreme Court, strongly suggest that the Court will issue a narrow legal ruling addressing FDA preemption only in the context of fully-informed FDA labeling decisions directly challenged in state tort actions. The Court is unlikely to rule on the consequences of allegedly fraudulent representations to the FDA or of pharmaceutical company failures to disclose or act upon new safety information available to the manufacturer after FDA approval. If other cases present those issues the Court will be able to deal with them on a full factual record.
Still, a number of organizations have filed amicus curiae (“friend of the Court”) briefs making “policy” rather than legal arguments regarding the importance of this case. Many, including the American Association for Justice (“AAJ”, formerly known as the Association of Trial Lawyers of America) have disregarded the narrow facts presented in Wyeth v. Levine to argue that preemption ought to be denied because of a need for additional tort-based supervision of the pharmaceutical industry. I will discuss the merits of these policy arguments in my next post.
[Editor's Note: Bert Rein, a founding partner in the Washington, DC law firm Wiley-Rein and a long-time friend of CEI, represents Wyeth in this case. This post appears by invitation.]
Back in November, I wrote about the pending Supreme Court case Wyeth v. Levine, the decision in which will have a huge impact on the pharmaceutical industry and the law of federal preemption. The plaintiff in that case, Diana Levine, was injured when a physician’s assistant improperly injected a Wyeth-made drug into Levine’s artery despite a clear, FDA-approved label statement warning against possible risks from arterial injection.
Levine and her lawyers were nevertheless able to convince a Vermont jury that FDA’s approval of the label warning should not preclude her claim under Vermont tort law that Wyeth acted negligently. Wyeth, on the other hand, argued that the explicit FDA approval of the label statement should preempt Vermont law, since Congress delegated to FDA the authority to carefully examine the risks and benefits of medical drugs and determine whether they are, on balance, safe enough for doctors and their patients to use. In November, the United States Supreme Court heard oral argument on the preemption question, and a decision in the case is expected some time this spring.
One of Wyeth’s attorneys in the case is Bert Rein, éminence grise in the Washington legal scene and a founding partner of the highly regarded firm Wiley-Rein. Bert is a long-time friend of the Competitive Enterprise Institute, and he and other Wiley-Rein attorneys have done pro bono work for CEI in past years. So, I am happy to announce that Bert has agreed to contribute a few guest blog posts to Open Market discussing the importance of this case. His first post will appear later this morning.
February is an important month in the history of American commerce. In a few days will be the birthday of one of the country’s earliest business innovators and large-scale entrepreneurs.
During a time period of America’s existence as an English colony and then a young nation – when, to put it mildly, communication and transportation faced challenges – this businessman’s enterprise processed 1.5 million fish per year sent throughout the 13 American colonies and the British West Indies. The mill he built grinded 278,000 pounds of branded flour annually that was shipped through America and, unusual during colonization, even exported to England as well as Portugal. And in the 1790s, during the last years of his life, this mogul built one of the largest whiskey distilleries in the new nation.
Don’t think you’ve head of this entrepreneur? Well, it’s possible you might know him from some of his achievements in the political sphere. He did, in fact, have a few notable accomplishments there.
Like serving as a representative in colonial Virginia’s House of Burgesses and as a Virginia delegate to the pre-Revolutionary War Continental Congress. Then being chosen to lead the Continental Army during the Revolutionary War and leading the American nation to a hard-fought victory for independence. And then, a few years after that, becoming the new nation’s first president.
For many Americans, and indeed quite a few scholars, George Washington has been little more than just the face on Mount Rushmore and the one-dollar bill. People revered him but just didn’t know how to relate to him. Whereas Thomas Jefferson and Benjamin Franklin generated interest with their passions and achievements in practical science and architecture, Washington didn’t seem to have a career – or much of a life – outside of his leadership as general and president.
But now, some pioneering scholars are documenting that Washington’s life’s work was just as enthralling as that of any of the Founding Fathers. His pursuits can be said to be just as creative as those of Franklin and Jefferson, but in a different way. Washington’s creativity of the type one associates with modern entrepreneurs such as Bill Gates and even Donald Trump. Whereas Franklin built gadgets at his homestead, and Jefferson built fancy buildings, the notable thing Washington built were a series of interconnected businesses.
Read more about Washington’s entrepreneurship in my article just posted at Reason. As I say in the piece, “Especially in times of economic crisis and rampant government intervention into the free enterprise system, Washington’s business background should be seen as emblematic of the American Dream.”
BTW, The image of Washington accompanying this blog post as a dashing young man with red hair was created by scholars as part of the recently opened Donald W. Reynolds Museum and Education Center at Mount Vernon Estate and Gardens in Northern Virginia. If you’re in the Washington area this weekend, you may want to go visit. Mount Vernon is also open seven days a week all during the year.
Ran across this excerpt from a Wall Street Journal piece that I thought I’d pass along. And this was before the Anti-Stimulus added heft to Washington:
A long line of judge-made law since the Supreme Court’s New Deal era decision in Wickard v. Filburn (1942) says there is almost no limit, under the commerce clause of the Constitution, to the regulatory reach of the federal government.
Thus, a united president and Congress can, as a practical matter, do all or any of the following (plus much more): take your money and give it to someone else; tell businesses what to produce and sell, who to hire and what wages to pay; set all commodity, wholesale and retail prices; control all energy supplies, communication networks and financial markets; replace all private health-care with a government system; prescribe the curriculum for all schools; determine which students get a slot in elite universities; diminish political and other speech; and enroll all citizens above the age of 17 either in the military or in civilian corps for periodic instruction and service.
It’s been a while since I posted here, but I thought OpenMarket readers may want to check out a piece I have up on TechLiberation that has generated a lot of heated discussion. I there argue that “2008 was the year of Schumpeter” and 2009 is looking like it will be the year of Bastiat/Hazlitt, because it is the year that we all give in to the broken window fallacy and come to believe that we can improve the economy by going around and smashing windows… or taking money from taxpayers and wasting it. For a more detailed review of broken windows and the modern Keynesian state, look here.
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