Saturday, January 25, 2014

The Cheats

In 2013, for instance, pharmaceuticals led all other industries with $171 million spent on government lobbying. George W. Bush's 2003 Medicare Modernization Act (MMA) was the result of corporate lobbying.  It explicitly outlawed Medicare from involving itself in "negotiations between drug manufacturers and pharmacies and PDP sponsors," the bill ensured that Medicare would pay richly for the drugs it purchased. Notably, when it comes to all other healthcare - including physician services, hospitalizations, lab tests, and so forth – Medicare essentially has a "take-it-or-leave-it" approach to pricing. When it comes to prescription drugs, however, Medicare isn't even allowed to use its purchasing power to try to get a better deal for US taxpayers, which is particularly problematic because many prescription drugs are patent-protected, giving the seller monopoly-power in determining prices.The main proponent of the bill in the House - Congressman Billy Tauzin, Within weeks of its passage, he was in negotiations with the Pharmaceutical Research and Manufacturers of America (PhRMA), the chief lobbying group for the industry, for a position. Billy Tauzin accepted a $2 million a year offer to head PhRMA.  Tauzin, still President of PhRMA, visited the White House some half dozen times after the 2008 election, and the industry ultimately got what it wanted: no price negotiations or drug imports. In that same year, Tauzin took home a bonus of $2.3 million in addition to his $2.1 million salary, and the following year he cashed out of the organization for a cool $11.6 million. At least 15 congressional staffers, officials, and congressman who worked on the bill subsequently took positions with the industry.

When comparing the prices of the top 20 drugs prescribed to seniors, the organization Families USA found nearly a 60 percent markup in median drug prices. If Medicare spent as much as other industrialized nations on prescription drugs, it would save the federal government between $229.7 and $541.3 billion over the coming decade. The report also estimated that such a move would save state governments between $30.8 and $72.7 billion and beneficiaries directly between $47.7 and $112.4 billion over this same period. A cool half trillion.

Annual salaries of the CEOs of the pharmaceuticals companies - $25 million in 2012 for the head of Pfizer alone, for instance, and about $200 million for the big 11 that year collectively - cannot, in other words, be construed as simply the natural result of anarchical market forces. On the contrary, much of the wealth accumulation at the apex of the economic pyramid over the last few decades has had little to do with some miraculous, collective upsurge in the work ethic, intelligence, prudence, inspiration, perspiration, thrift, or math-and-science skills of a tiny class of mega-rich.

Apple founder Steve Jobs and Google CEO Eric Schmidt had a secret pact to institute a “no-hire” policy in which each executive promised not to recruit each other’s workers. Yet the tech superstars are just two of the business leaders to be implicated in the wink-wink agreement, which reportedly included Google, Apple, Intel, Adobe, Intuit, and Pixar. They agreed not to poach each other’s employees, thereby keeping salaries low.

The scheme began in early 2005, when the need for Silicon Valley engineers was at an all-time high. The deal’s consequences became so pervasive that the US Department of Justice launched an antitrust investigation in 2010, which laid the groundwork for a class action lawsuit filed on behalf of more than 100,000 Silicon Valley employees who allege they were deprived of over $9 billion since 2000.

Jobs, who died in 2011, seems to be the principal architect behind the illegal conspiracy. Yet Schmidt, according to an email from Google senior advisor Bill Campbell dated February 27, 2005, “got directly involved and firmly stopped all efforts to recruit anyone from Apple.” Schmidt is also said to have told his Senior Vice President for Business Operation Shona Brown to only mention the pact “verbally, since I don’t want to create a paper trail over which we can be sued later.”

Google founder Sergey Brin was also strong-armed when he approached members of Apple’s Safari team about working for Google. Jobs, in an emailed quoted by Pando Daily, cited the “gentlemen’s agreement” when threatening Brin, stating: “If you hire a single one of these people that means war.”

Testifying in court, former Palm CEO Edward Colligan said Jobs enforced the no-poaching policy by threatening to hire away Palm employees, or worse. “Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple’s many patents,” Colligan said.Colligan swore he told Jobs the scheme was “likely illegal”.

Despite the fact that JPMorgan was hit with $20 billion worth of fines during 2013, Dimon will receive $1.5 million for the year. That base salary is virtually unchanged from the year before, but the company will also pay him an additional $18.5 million in restricted stock.

SOYMB shouldn't really be surprised by these revelations. Capitalists have always bent the rules to make profits. What we are surprised by is how members of the working class can get so irate and upset by those who fiddle the system for pennies and ignore those who make off with millions. 

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