When Businesses Go Unregulated

unregulated businesses hurt people

Image: “Passing” by Bigstock

It’s easy to make comparisons between President Obama’s response to Hurricane Sandy and the Bush/Cheney inaction.  When Michael Brown drooled his Tea Party Republican bile, even as Republican Chris Christie was acknowledging the great work of President Obama, we got a glimpse of the difference between a second Obama term and a Romney/Ryan administration, with its promise to slash FEMA.

But Romney’s promise to try to have all disaster relief handled by private enterprise, encouraging businesses to profit from the misery of victims, has been tested.  Romney constantly touts ‘business experience’ as a measure by which to gauge candidates.  After all, businesses use past performance to gauge future success.

In this context, we should rescue a “business experience” news story that was almost washed away by the news coverage of hurricane Sandy.  Before journalists started focusing on the weather storm, a few had been reporting on the dozens of deaths caused by an unregulated, for-profit business, pumping poisoned drugs into the marketplace.  The New England Compounding Center makes drugs for “orphan” illnesses.

Orphan illnesses are medical conditions that do not afflict enough people to attract the interest of the big drug companies.  If there are only a few hundred thousand patients, rather than millions, the big companies don’t see enough profit to make the treatment drugs, even if all the research and testing is paid for by the taxpayers.  So smaller companies, like New England Compounding Center, step in.  They make the orphan drugs and charge ludicrously high prices for them.

Of course, everyone knows that evil government regulators force the drug companies to take ridiculous safety and sanitation measures when making their drugs.  Just as everyone knows that such regulations are totally unnecessary, because for-profit drug companies would never do anything to injure their patients and thereby reduce their profits.

What not everyone knows is that companies that make orphan drugs used to be regulated by the FDA.  The FDA did impose standards and did try to protect patients.  What not everybody knows is that, in 2002, the Tea Party ‘justices’ on the U.S. Supreme Court ruled that the FDA should not regulate orphan drug companies.  The Court ruled that the FDA could not force such companies to adhere to any level of sanitation or safety measures in their factories.  The Court also ruled that the FDA could not prohibit orphan drug companies from lying about the safety or efficacy of their drugs.

So we have what is perhaps the perfect “business experience” model to test Romney’s theory of unregulated business and consumer safety.  Regulated drug companies were freed from regulation.  By the Romney theory, the companies’ business practices would automatically improve, because no business would ever hurt its customers and put its profits at risk.  No business would ever falsely advertise that dangerous products were safe, thereby risking its reputation.

But New England Compounding Center is a for-profit business.  Once regulated, now free of regulation.  New England Compounding Center once made safe drugs in laboratories carefully cleaned to comply with federal regulations.  But as soon as they were freed from the regulations, the laboratories were converted to factories, with all the attention to cleanliness that is common where cars are made or livestock is slaughtered.

New England Compounding Center took advantage of deregulation to eliminate costs for safety measures.  And “customers” died, killed by the contaminated drugs produced in the newly deregulated factories.  But even as “customers” died, the profits went up.  How is that possible?  Doesn’t that contradict the Romney business model?

Not really.  The explanation rests, in part, on the definition of “customer”.  For New England Compounding Center, the “customer” is not the patients who will be killed by the contaminated drugs.  New England Compounding Center sells drugs to doctors and hospitals.  The doctors don’t die from the contaminated drugs.  Hospitals don’t go out of business because of the contaminated drugs.

People die.  The patients who get prescribed these drugs are already in serious trouble.  Many might die anyway, if they don’t get the drugs.  They don’t know the science of their treatments, they and their families are desperate, and they put their trust in the doctors who prescribe the drugs.  The doctors and hospitals put their trust in what orphan drug companies tell them about the drugs’ usefulness and safety.

And the Tea Party ‘justices’ of the U.S. Supreme Court say that it is perfectly legal for the orphan drug companies to lie about the usefulness and safety of their drugs.

Romney’s approach to business follows the Tea Party ‘justices’ model.  Do things that are dangerous to people but lie about what you are doing at every stage of the process.  Also, whenever possible, arrange it so that business profits are extracted from people who are not directly “customers” of your business.  This model has worked for Romney in the past and is an integral part of his desire to privatize FEMA.

Although the numbers are still as secret as Romney’s tax returns, forensic journalists are beginning to unravel what appears to be more than $115 million that Romney pocketed from the auto industry bailout, even as he condemned the bailout process.

It seems that a Romney group bought Delphi Automotive, a former GM parts manufacturer, in 2009 at the depths of the Bush depression.  Then when the federal government stepped in to save GM from failing, the Romney group fired 25,000 Delphi workers, moved all production to Mexico, and extorted GM to buy Delphi parts from Mexican plants.  The Romney group reaped at least $1.3 BILLION in profits from the auto industry bailout funds paid by taxpayers.  Romney’s cut of that $1.3 BILLION was more than 10%.

The ultimate victims of the Delphi rip-off were buyers of GM vehicles.  Just as the ultimate victims of New England Compounding Center are the patients killed by contaminated drugs.  But just as the patients were not the direct “customers” of New England Compounding Center, the car buyers were not the “customers” paying the inflated prices extracted from GM by the Delphi scam.

Taxpayer bailout funds paid for the inflated prices GM paid Delphi, and the taxpayers paid for the 25,000 workers left unemployed when the Romney group fired them and moved production to Mexico.  The taxpayers will pay for the uninsured costs of extraordinary care after New England Compounding Center sold contaminated drugs to hospitals and doctors.

And the taxpayers will pay for all of the costs of emergency contracts issued to private business when a Romney administration destroys FEMA and opens the door to local and state politicians to issue ‘no-bid’ contracts to cronies for responding to emergencies.

We have a model for this.  Think of “FEMA trailers” purchased by the Bush administration after Hurricane Katrina.  These trailers were bought from private, for-profit business suppliers.  The price paid for each trailer was vastly higher than the normal retail market price, because they were sold during an “emergency.”

Then it turned out that most of the trailers were built with no regard to the existing regulations on formaldehyde insulation.  The Bush administration allowed dangerous and illegal trailers to be given to families, as homes for small, vulnerable children.  Again, the ultimate victims were not the “customer” to whom the trailers were sold.

Tom HallThe Romney model for deregulation and for privatizing emergency services has been tried.   “Business experience” is available to teach us what the results will be from deregulating and from privatizing emergency services.  On top of this “business  experience,” Romney also promises to appoint  more ‘justices’ to the U.S. Supreme Court whose legal activism will promote further extraction of business profits from the taxpayer wallet.

Tom Hall

Posted: Saturda, 3 November 2012

Comments

  1. Diane says

    Thank you! I’ve been wondering why the NECC wrongdoing was all but ignored by the media. We heard a lot about patients dying. Nothing about responsibility.

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