Patents were originally granted as an incentive to inventors. Now it’s all gone terribly wrong:
The cost of dozens of brand-name drugs have nearly doubled in just the past five years. Public outrage over drug prices extends from Capitol Hill to the presidential candidates to patients. In response, pharmaceutical executives are spending more on lobbying and marketing. Yet for all this attention, most of the proposed solutions for reducing prescription drug costs—tougher negotiations, appeals for transparent R&D costs or investigations into insurers—miss one of the primary sources of the problem: the way we award patents.
Today, too many drug makers receive patents for unmerited and unjust reasons. Take, for example, the hepatitis C drug Harvoni®, which has one the largest sticker prices despite its origins in previously published information and compounds. In the last year, China and Ukraine have rejected patents for sofosbuvir, the base compound for Harvoni, on the grounds that it doesn’t deserve a patent. Or, take Baraclude, a hepatitis B drug made by Bristol-Myers Squibb whose lowest known price in the U.S. a few years ago was $15,100. In a successful patent challenge that went all the way to the U.S. Supreme Court in 2015, the generic drug maker Teva showed that the patent claim on the base compound in the brand name drug was invalid—which then allowed Teva to go on to offer a generic version for half the cost in the U.S. and for as low as $427 in the developing world by other companies.
While TV ads and sticker-shock pricing by major corporations would have us believe that every new drug they roll out is a breakthrough invention, the reality is that they are often playing games with the lax standards in the U.S. patent system.
In its current form, the TPP attempts to “fix” this problem by … imposing the same patent practices onto other countries.
Tragedy struck last week for a Kansas family whose 10-year-old died during a ride on the world’s tallest waterslide. The accident occurred on the Verruckt, a raft-ride at the Schlitterbahn WaterPark in Kansas City, Kansas. While the park has reopened for business, the 168-foot slide remains closed during an ongoing investigation. The accident comes during a week when at least four amusement park accidents have left children aged 3 to 16 hospitalized.
According to media reports, the boy, who is the son of Kansas state representative Scott Schwab, died of neck trauma and possible decapitation. Two women in the same raft with Caleb Schwab were treated for facial injuries. The women were not related to the boy who was seated with them for the ride.
Verruckt has been open for two years at the Kansas City park, and has drawn some criticism for the straps that hold riders in the rafts being Velcro instead of buckles. During preliminary tests, sandbags used as dummies flew off the ride, prompting designers to change the descent angles and delay the opening.
The ride, which reaches speeds of up to 65 mph. during the 17-story drop, has a minimum height requirement of 54 inches. Two to three riders in a single raft must also meet a combined weight of 400-500 pounds. Riders must make reservations as a group and are given a specific ride time. However, there is also a stand by walk-up line for single riders and those unable to make a reservation.
With about 30,000 children suffering injuries each year at the nation’s amusement and water parks, the Schlitterbahn death and other recent accidents raise serious questions about safety and liability. Kansas statutes don’t specifically mention water slides, but permanent rides must be inspected at least once a year by a qualified individual. Schlitterbahn had passed previous state audits despite discrepancies in record-keeping.
The park has been sued for negligence at least three times in the past few years. Two of the suits involved another inner-tube water ride, but none of the suits have involved the Verruckt water slide. All were settled out of court for undisclosed terms.
Amusement park riders accept some responsibility in that they are expected to follow the posted rules and regulations. Where a ride states a specific height requirement or weight restriction; or advises riders with pre-existing medical conditions not to participate, it is axiomatic that the rider must faithfully abide by those conditions.
Personal injury attorney John Yannone commented, “Riders do not waive all liability claims simply because of posted ride regulations. While tort and liability laws vary across the nation, there are general legal assumptions that hold some universal applicability. In product liability law, one of the foremost principles is that the product is free of defects that may pose a hazard to health and life. A rider boarding a rollercoaster naturally assumes that the track, rollers, cars, and safety restraints have been designed and tested to protect her from injury or death.”
Therefore, when a serious accident like the one in Kansas City happens, both riders and owners must be looking to the law for guidance on liability. Already, media reports are surfacing of riders who complained about the Verruckt restraint system being too loose or failing. This could have a significant impact on Schlitterbahn’s liability in the death of 10-year-old Caleb Schwab. Continue Reading →
Little-known fact: Butthurt is also covered by Obamacare We’ve known for some time now that corporations are people, my friends, so it should be no big surprise they’re occasionally capable of acting like petulant toddlers when they don’t get their way. Or maybe the Magic of the Free Market just looks that way sometimes. What we’re… Continue Reading →
Trade deals are so complicated. On political listservs these days, experts argues on all sides and no one trusts politicians to make such complicated decisions. Oh well!
Doing business in today’s global marketplace can be fraught with liability – especially when the location is the Middle East and a hotbed of controversial governments, regimes, and histories of violence. The real dangers, however, can lie in the complex rules and regulations governing how business may be done in a country that poses a risk to U.S. national security.
The Office of Foreign Assets Control – familiarly known as OFAC – is an agency of the U.S. Department of Treasury that enforces economic sanctions and trade embargoes. The agency is tasked with ensuring that legislation and Executive Orders declaring national emergencies are enforced in accordance with United States’ economic policy interests, foreign policy goals, and national security objectives.
In addition to regimes targeted with country-wide embargoes, OFAC maintains a blacklist of Specially Designated Nationals and Blocked Persons (the SDN List) of persons with whom U.S. persons are prohibited from engaging. Sanctions may prohibit direct involvement or even indirect action – like financing or facilitating the actions of another person. One of the primary targets of economic sanctions—and the biggest target behind OFAC enforcement actions—is Iran. Continue Reading →
Fashion trends that originate in Europe often spread with lightning speed to the U.S., but companies are probably hoping that pattern doesn’t hold true with the regulation of online services, at least not the sort that has had Google tied up in knots.
The American internet services giant has been fighting antitrust battles in Europe for years and as if it were wrestling a Hydra, as soon as one issue is settled or one opponent vanquished, two more rise up to take its place. Moreover, Google is now also in danger of running afoul of European privacy regulations in the way that it mines for information.
While the earlier antitrust cases against Google in Europe were brought by competitors, the latest batch of antitrust complaints originated with the European Union itself, spearheaded by a new competition chief. These complaints allege that Google essentially requires the makers of smartphones to use its services in Android phones and that Google compels those using its search engine on their websites to display a requisite quantity of Google advertising.
In addition, new privacy regulations in Europe may require Google to completely change the way the company collects and uses data, at least in the European market. Google’s neural networks typically process huge quantities of data to efficiently complete tasks such as finding the most relevant answers to online search queries.
But the new EU regulations might prevent Google from using systems that focus on certain personal data. In addition, according to Cade Metz, Senior Staff Writer at WIRED, “the regulations give individuals the right to ask Google how it made specific decisions related to their personal info.”
Even though Google engineers created the neural networks that mine data, they will not be able to easily provide information about the results their networks generate. As Metz explains, “A neural net is a bit like a black box, even to its creators.” (Metz, Cade. “Europe Is Going After Google Hard, and Google May Not Win.” WIRED, July 15, 2016. www.wired.com)
The bottom line is that the privacy regulations may require Google to alter the fundamental algorithms that operate its services in Europe. On the other hand, those regulations may actually help Google resolve some of the antitrust complaints.
For example, if the regulations allow users to move their personal data easily from one site to another, Google can argue that it does not have a monopoly on personal data and that it is therefore not acting in an anticompetitive manner.
Tokyo, 21 July 2016 – Radioactive contamination in the seabed off the Fukushima coast is hundreds of times above pre-2011 levels, while contamination in local rivers is up to 200 times higher than ocean sediment, according to results from Greenpeace Japan survey work released today.
CLEVELAND – Millions of dollars short and running out of time, organizers of the Republican National Convention have written an urgent request for $6 million to Las Vegas billionaire couple Sheldon and Miriam Adelson to cover the bills for next week’s festivities.
In a letter addressed to the Adelsons, obtained by POLITICO, the Cleveland 2016 Host Committee revealed the names of more than two dozen prominent corporations and individuals who have reneged on a collective $8.1 million in pledged donations.
The letter represents the most public acknowledgement to date that Donald Trump has directly cost convention organizers millions of fundraising dollars.
“Over the past couple months, negative publicity around our potential nominee resulted in a considerable number of pledges backing out from their commitments,” the letter says.
It goes on to list the companies and wealthy individuals who have withdrawn their financial commitments. Among those who have canceled their donations, according to the letter, are David Koch ($1 million), FedEx ($500,000), Visa ($100,000) and both Pepsi ($500,000) and Coca-Cola ($1 million).
Amid a haze of grief after her son’s murder last year, Marcia DeOliveira-Longinetti faced an endless list of tasks 2014 helping the police access Kevin’s phone and email, canceling his subscriptions, credit cards and bank accounts, and arranging his burial in New Jersey.
And then there were his college loans.
When DeOliveira-Longinetti called about his federal loans, an administrator offered condolences and assured her the remaining balance would be written off.
But she got a far different response from a New Jersey state agency that had also lent her son money.
“Please accept our condolences on your loss,” said a letter from the Higher Education Student Assistance Authority to DeOliveira-Longinetti, who had co-signed the loans. “After careful consideration of the information you provided, the Authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you.”
DeOliveira-Longinetti was shocked and confused. After all, the agency features a photo of Governor Chris Christie on its website, and boasts in its brochures that its “singular focus has always been to benefit the students we serve.”
But her experience with the authority, which runs by far the largest state-based student loan program in the country, is hardly an isolated one, an investigation by ProPublica, in collaboration with the New York Times, found.
New Jersey’s loans, which currently total $1.9 billion, are unlike those of any other government lending program for students in the country. They come with extraordinarily stringent rules that can easily lead to financial ruin. Repayments cannot be adjusted based on income, and borrowers who are unemployed or facing other financial hardships are given few breaks.
New Jersey’s loans also carry higher interest rates than similar federal programs. Most significantly, the loans come with a cudgel that even the most predatory for-profit players cannot wield: the power of the state.
New Jersey can garnish wages, rescind state income tax refunds, revoke professional licenses, even take away lottery winnings 2014 all without having to get court approval.
“It’s state-sanctioned loan sharking,” said Daniel Frischberg, a bankruptcy lawyer. “The New Jersey program is set up so that you fail.”
The authority has become even more aggressive in recent years. Interviews with dozens of borrowers, who were among the tens of thousands who have turned to the program, show how the loans have unraveled lives.
The program’s regulations have destroyed families’ credit and forced them to forfeit their salaries. One college graduate declared bankruptcy at age 26 after struggling to repay his debt. The agency filed four simultaneous lawsuits against a 31-year-old paralegal after she fell behind on her payments.
Another borrower, Chris Gonzalez, couldn’t keep up with his loans after he got non-Hodgkin’s lymphoma and was laid off by Goldman Sachs. While the federal government allowed him to suspend his payments because of hardship, New Jersey sued him, seeking nearly $266,000 in payments, and seized a state tax refund he was owed.
One reason for the aggressive tactics is that the state depends on Wall Street investors to finance student loans through tax-exempt bonds and needs to satisfy those investors by keeping losses to a minimum.
Loan revenues also cover about half of the agency’s administrative budget.
In 2010, the agency filed fewer than 100 suits against borrowers and their families. Last year, it filed over 1,600 suits. (Some could result from federal loans handled by New Jersey, though such loans make up just 4 percent of the agency’s portfolio.)
The cases are handled by debt collectors, who can tack on another 30 percent in fees on top of the outstanding debt.
Marcia Karrow, the authority’s chief of staff, said, “the vast majority of these borrowers are happy with the program.” She added that New Jersey’s loans had “some of the lowest default rates” in the country. But when asked to produce the annual default rates, the agency sent ProPublica and the Times data only for students with strong credit scores, making it impossible to calculate the overall rate. (Read their responses to our questions.)
A spokesman for Gov. Chris Christie said the governor does not control the authority and declined to respond to questions about the loan program. But Christie appointed its executive director, Gabrielle Charette; he also has the power to appoint at least 12 of the agency’s 18 board members and can veto any action taken by the board.
Besides administering the loan program, the authority provides financial aid counseling, conducting hundreds of financial aid nights at New Jersey high schools, where it offers advice about paying for college, including pitching its own loans.
DeOliveira-Longinetti, who emigrated from Brazil and had long worked as a nanny while raising her son as a single mother, always knew that paying for college would be a challenge. Even after marrying her husband when Kevin was in middle school, she knew that their combined income would not be enough to cover the costs. But a friend told her about New Jersey’s program. That, along with a combination of scholarships, grants, and other loans, allowed Kevin to enroll at the University of Vermont.
Since her son’s murder, DeOliveira-Longinetti has made 18 payments to New Jersey. At $180 per month, she has about 92 to go.
“We’re not going to be poor because of this,” she said. “But every time I have to pay this thing, I think in my head, this is so unfair.”
For decades, states served as middlemen for federal student loans. Most of the loans were made by banks and were handled and backed by regional and state-based agencies as well as by the federal government. The arrangement was unwieldy, expensive and marked by scandal.
That same year, New Jersey’s agency was caught in what amounted to a kickback scheme. The state attorney general found that the agency had improperly pushed one company’s loans in exchange for annual payments of $2.2 million. A subsequent investigation by the state’s inspector general found that the agency was in “disarray.”
In 2010, Congress and the Obama administration decided to effectively eliminate the role of state agencies by having only the federal government lend directly to students.
Some states, like California, decided to downsize and transferred their federal loan portfolios. Others, such as Pennsylvania, won contracts from the federal government to service debt from the federal loan program.
But New Jersey chose a different path. In the years leading up to the end of the federal program, New Jersey sharply expanded its loan program, slowly replacing the federal loans it once handled with state loans. From 2005 to 2010, loans from the agency nearly tripled, to $343 million per year. Since then, the agency has reduced its loans by half, but its outstanding portfolio has remained roughly the same, about $2 billion.
Karrow said the growth of New Jersey’s program was simply a result of both the growing number of students and the rising cost of tuition. But in fact, college enrollment and tuition have not grown as rapidly as the program’s size.
Lawsuits on the Rise for the New Jersey Higher Education Student Assistance Authority
Source: New Jersey Courts Automated Case Management System (ACMS) and Archive Case Management Information System (AMIS)
While other states have similar programs, New Jersey’s stands apart, both for its size and onerous terms.
Massachusetts, running the next-largest program with $1.3 billion in outstanding loans, automatically cancels debt if a borrower dies or becomes disabled, something many other states also do. The program of the third-largest state lender, Texas, is half the size of New Jersey’s. And Texas offers a flat interest rate, a modest 4.5 percent, while New Jersey’s rates can reach nearly 8 percent. Some other state loan programs also have more flexible repayment options 2014 Rhode Island, for example, offers income-based repayment.
New Jersey, meanwhile, encourages students to buy life insurance in case they die to help co-signers repay. As an agency pamphlet cautions, “Are you prepared for the unthinkable?”
The agency, Karrow said, treats each instance of a deceased borrower case by case and tries to be compassionate, but, she added, “we must also meet our fiduciary duty to our bondholders.”
When consumer lawyers protested the program’s onerous conditions at a 2014 agency meeting, the agency, according to minutes from the meeting, said that giving borrowers a break would make the bonds sold to finance loans “less attractive to the ratings agencies and investors.“
Indeed, in a recent bond assessment, the credit rating agency Moody’s cited the authority’s “administrative wage garnishing, which it uses aggressively” for “significantly higher collections” compared with other programs.
A New Jersey rule adopted in 1998 allows the agency to give borrowers in default a second chance by allowing them to become current on their account through on-time payments. But the agency has never granted a reprieve and instead cuts off contact with borrowers, leaving them at the mercy of collection firms.
Karrow said federal regulations prohibited the agency from offering such relief, but student loan experts disputed that assertion.
“There is nothing in the federal law or regulations that prohibits them from offering private loan rehabilitation,” said Mark Kantrowitz, a financial-aid expert.
The combination of a lack of flexibility, an unwillingness to discharge loans and the state’s power to seize wages has resulted in even “more intractable problems for our clients than predatory mortgages, deceptive car loans or illegal internet payday lending,” said David McMillin, a lawyer with Legal Services of New Jersey, a nonprofit organization that provides free legal assistance to low-income state residents. “Many borrowers and co-signers find themselves facing a lifetime of debt problems.”
Given the lack of options, some New Jersey borrowers have resorted to declaring bankruptcy, even though, as is true of all student loans, their debt is rarely canceled. Declaring bankruptcy also makes it virtually impossible to secure a mortgage, lease a car or even use credit cards for years. But for New Jersey borrowers, such an extreme step at least offers a way to gain manageable monthly payment terms.
As a co-signer, Tracey Timony struggled to help pay off her daughter’s $140,000 in loans. Though the Higher Education Student Assistance Authority can seize wages or tax returns without court approval, it must secure a judgment to dip into borrowers’ bank accounts or place liens on their property. Instead of garnishing Timony’s wages, New Jersey sued her after her daughter defaulted.
“The agency is looking to put as much pressure on the borrower and be as aggressive as possible, and the way that you do that is you go after everybody that is liable,” said Jennifer Weil, a New Jersey student debt lawyer. “In case the garnishment doesn’t work, a judgment will help put pressure on the parents.”
Timony declared bankruptcy and got monthly debt payments that will rise no higher than about $1,000 a month, far less than what the agency had demanded.
“I never thought that sending my daughter to college would ruin our lives,” Timony said.
Few have felt the weight of the agency’s powers more than Gonzalez, the college graduate who was sued after receiving a diagnosis of cancer and losing his job.
He had borrowed the maximum he could in federal loans 2014 a total of about $30,000 for five years 2014 and paid for most of his tuition with loans from New Jersey.
“I felt so comfortable because it was the State of New Jersey,” he said. “It’s the state, my government, trying to help me out and achieve my American dream. It turns out they were the worst ones.”
Over five years, he took out over $180,000 in state loans. Unlike most other states, New Jersey does not impose a strict cap on loans to discourage overborrowing. One family, according to a recent state audit of the agency, took out over $800,000 in loans, more than five times the value of their home.
Gonzalez’s loans had a relatively high interest rate 2014 on average about 7.5 percent. At the time it seemed like a good investment. He graduated with an engineering degree from Embry-Riddle Aeronautical University in Florida and landed a job on Wall Street working as a programmer for Goldman Sachs.
But a few months after he started, unusual rashes began to appear on his legs and underarms. He was diagnosed with non-Hodgkin’s lymphoma and started radiation therapy.
After three years of cancer treatments, Gonzalez was also laid off.
He needed to take care of his student loans. The federal government and his private lenders all deferred his debt for at least six months.
Gonzalez expected New Jersey to do the same, but the agency refused, requiring him to pay at least $500 a month. With unemployment checks as his only income and burdened by continuing health expenses, it was too much for him.
He made no payments while the agency reviewed his case. In June 2014, Gonzalez moved to Florida to lower his cost of living. His health slowly improved and he started his own company, developing technology for small businesses. In his first year, he made just $26,000, but he started to pay back his federal and private bank loans.
On May 8, 2015, after months of hearing nothing, he received an email from New Jersey: His deferral request had been denied and his loan was being sent to a collection agency.
“Unfortunately, because of how the loan originated, the Authority is not in a position to offer forbearance or relief,” Robert Laird, a program officer at the loan agency, said in the email.
Terrified by what a default would mean for his credit rating, Gonzalez told the agency that he would stop paying for health insurance and use the money 2014 $200 per month 2014 to repay the loans.
The agency rejected the offer. “In the event that your doctor declares you total and permanently disabled, please keep me posted,” Laird told Gonzalez in an email.
One day in April, a stranger rang Gonzalez’s doorbell.
“Chris Gonzalez?” he asked. Gonzalez nodded. “You’ve been served with a lawsuit from the New Jersey Higher Education Student Assistance Authority.”
The suit demanded over $260,000 2014 about $188,000 for the original loans, nearly $34,000 in interest, and $44,000 to cover the fees of a collection agency’s lawyer.
Even if his business improves, Gonzalez has no idea how he will afford his ballooning payments.
“I don’t have money,” he said. “I am spending it all on my debt.”
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“Last year was Comcast’s best year in nearly a decade,” the Massachusetts Democrat said in prepared remarks for a speech. “But while big telecom giants have been consuming each other, consumers have been left out in the cold — facing little or no choice in service providers and paying through the nose for cable and internet service.
Warren’s speech at a forum on monopolies came as part of her advocacy for greater enforcement of antitrust laws as American consumers pay higher prices for cable and Internet services than those elsewhere.
Warren cited the cable giant specifically, along with technology players like Apple and Google, the big airlines and Wal-Mart. While the Obama administration has blocked some deals, the U.S. has been through a strong period of business consolidation.
“Strong executive leadership could revive antitrust enforcement in this country and begin, once again, to fight back against dominant market power and overwhelming political power,” Warren said in the Capitol Visitor Center. “But we need something else too — and that’s a revival of the movement that created the antitrust laws in the first place.”
There are few things more corrupt than the for-profit education industry, and the corruption is on both sides of the aisle. This may not be illegal, but it’s not exactly kosher, either:
As the Obama administration cracks down on for-profit colleges, three former officials working on behalf of an investment firm run by President Barack Obama’s best friend have staged a behind-the-scenes campaign to get the Education Department to green-light a purchase of the biggest for-profit of them all — the University of Phoenix.
The investors include a private equity firm founded and run by longtime Obama friend Marty Nesbitt and former Deputy Education Secretary Tony Miller. The firm, Chicago-based Vistria Group, has mounted a charm offensive on Capitol Hill to talk up the proposed sale of the troubled for-profit education giant, which receives more than $2 billion a year in taxpayer money but is under investigation by three state attorneys general and the FTC.
What stands out about the proposed deal is that several key players are either close to top administration officials, including the president himself, or are former administration insiders — especially Miller, who was part of the effort to more tightly regulate for-profit colleges at the very agency now charged with approving the ownership change. For-profit college officials have likened those rules to a war on the industry, and blame the administration for contributing to their declining enrollments and share prices.
There’s been talk of cutting off the federal money to any of these colleges who don’t meet certain standards, including the acceptance of their degrees in the marketplace. I wonder if it will ever happen.