All Hail the Prosecutor . . .

. . . seems to be the motif of the day and a well-earned kudos it is. But I've read very little today about the train of events he has set in motion with this limited indictment. Much of the next year's politics will hinge on Scooter Libby's character, which will be sorely tested from this point forward. The man faces 30 years in prison for lying to the grand jury. The best evidence Fitzgerald could have that other high officials -- here I'm thinking the Vice President and Karl Rove -- were involved in the cover-up would be Libby's own testimony. What better way to compel it than a plea bargain that allows Libby to walk in exchange for the truth, a sadly lacking commodity in this administration.

Only A Step in the Right Direction on Conflicts of Interest on FDA Advisory Panels

Senate and House conferees considering the FDA appropriations bill last night approved language that will open up the secretive nature of the FDA a bit. I have been busy this year trying to get Congress to bar scientists who do work for industry from serving on FDA advisory committees. We didn't get that (although it passed the House last June). The Senate version, accepted by the conference committee, requires the FDA to give advance notice (two weeks) when they're appointing conflicted scientists to advisory panels and list their conflicts on the FDA website. Maybe sunshine will help curb the practice.

I issued the following statement today in my role as director of the Integrity in Science Project at the Center for Science in the Public Interest:

The compromise provision to the FY2006 Agriculture/FDA appropriations bill that provides advance notice when scientists with conflicts of interest serve on FDA advisory committees is a step in the right direction. We congratulate the Senate and House conferees, especially Sen. Richard Durbin and Rep. Maurice Hinchey, who helped make this possible.

Consumers concerned that drug, device and food manufacturers have corrupted the FDA’s advisory committee process will soon have 15 days notice when the FDA wants to put scientists with conflicts of interest on one of its 30 advisory panels. Simultaneous publication of the waivers granted to scientists, along with their conflicts, gives the public additional information for evaluating whether their participation may taint the proceedings. Under the current system, where the waivers are kept under wraps pending a Freedom of Information Act request that can take years, the public is effectively kept in the dark about the ties between some scientists on FDA panels and the companies whose products are up for approval.

Moreover, we're glad to see that the FDA will have to document to Congressional appropriators and the HHS inspector general what steps it has taken to avoid appointing scientists with conflicts to its panels. This will encourage the agency to seek out more of the nation’s highly qualified scientists who do not have financial ties to industry.

However, past experiences suggests this bill does not go far enough. CSPI believes the FDA can find qualified scientists without conflicts of interest to serve on all of its advisory panels. That’s why the waivers should be disallowed entirely. At the least, the present disclosure bill could have been made stronger by forbidding scientists with waived conflicts of interest from voting at the conclusion of a committee’s deliberations.

No Thai Flu

While we're all awaiting the special prosecutor's indictments, perhaps my few gentle readers will spare me a few moments to consider Thailand's successful program to curb its Avian flu outbreak.

A little over a year ago, Thailand was the epicenter of this feared pandemic, which officials from the World Health Organization to the White House Oval Office have warned could take millions of lives. Indeed, the WHO has called this pandemic "inevitable, and possibly imminent."

Yet Thailand has shown that countries need not be prisoner to such fear-mongering. The first report that the deadly H5N1 avian flu virus had spread to Thailanders occurred in January 2004. By October, 17 people had been infected, 12 of whom died, a frightening 70 percent mortality rate.

The Thai government immediately instituted a coordinated response plan that involved the national health agencies, local public health and veterinary workers and village health volunteers. They systematically communicated information to the public about the risks and symptoms of the disease and simultaneously launched a nationwide surveillance program.

Health care facilities throughout the country were instructed to isolate potential cases. Anyone with traditional flu was immediately tested and if their flu strain could not be identified, they were treated with potent antivirals. The government also launched a crash program to root out the virus among its chicken flocks, appropriating hundreds of millions of dollars to the effort -- a significant commitment for a middle-income country.

The results of this program were reported this week in PLoS Medicine (this is the free online medical journal). There have been no reported cases of avian flu in Thailand this year.

It's instructive to compare this response to the U.S. response so far. The newspapers here are filled with accounts of U.S. government efforts to stockpile tens of millions of doses of Tamiflu, the one drug known to be effective against H5N1 avian flu. The threat of seizing Roche's patent on the drug hangs in the air. Roche, responding to this threat to its bottom line, is gearing up to meet the demand (and wouldn't you when billion dollar government contracts were in the offing?).

Meanwhile, I've yet to read a single report documenting the government's public health preparations. Yet if Thailand is any example, appropriate public health measures would make isolating the first appearances of the dreaded disease a relatively manageable enterprise. It makes more sense to me than stockpiling drugs to fight an "inevitable" pandemic.

Galbraith on Bernanke

My friend and colleague James Galbraith of the University of Texas last night sent around his six-year-old review of Ben Bernanke's book on targeting inflation. I found it especially persuasive on how conservative mainstream economists have taken to declaring a consensus in the profession where none exists.

Most of the commentary this morning has focused on Bernanke's inflation-fighting skills. Dr. Galbraith issues the necessary corrective in pointing out that the Fed's responsibilities include maintaining full employment (honored mostly in the breach over the years). Here's his review:

The Inflation Obsession: Flying in the Face of the Facts
By James K. Galbraith

From Foreign Affairs, January/February 1999

Inflation Targeting: Lessons from the International Experience. Ben Bernanke, Thomas Laubach, Frederic S. Mishkin and Adam S. Posen. Mishkin, and Adam S. Posen. Princeton: Princeton University Press, 1999, 365 pp. $24.95.

Should a central bank address a broad agenda of economic growth, price stability, and full employment? Or should it focus single-mindedly on controlling inflation? Last autumn this debate mounted in Europe, where calls from social democratic governments for lower interest rates grew louder as the continent prepared for the European Central Bank. In the United States, where federal law stipulates full employment as a policy goal, Republican proposals to require that the Federal Reserve focus only on inflation surface regularly in Congress.

Ben S. Bernanke and his colleagues, each a veteran of the Federal Reserve Bank of New York research staff, make the case for inflation targeting in a book that has the intellectual rigidity of a manifesto. But their tone, worried rather than strident, will seem familiar to followers of the recurrent debates over competitiveness, which cater to national vanity in similar terms. In the authors' eyes, the United States is "lagging behind other industrial countries in considering monetary policy frameworks and institutions that might help ensure good economic performance in the long term."

Since the early 1980s, a handful of countries have formally declared that low and stable inflation should be the overriding objective of monetary policy. These countries, which include New Zealand, Canada, Great Britain, and Sweden, are the main focus of the book. After reviewing these cases, Inflation Targeting uses them as examples to argue that inflation targeting would also enhance American "economic performance in the long term." But the authors have a curious interpretation of this phrase. They do not use it to refer to rising living standards, full employment, declining inequality in pay, or similar recent improvements in American material well-being. Rather, they explicitly deny that monetary policy should be praised for these blessings, since the gains of an expansionary monetary policy are inherently temporary and unsustainable. Economists should therefore not count such gifts among the benefits of a sensible long-term monetary policy.

In other words, America's present affair with full employment is sure to end badly, with an acceleration of inflation leading finally to recession and unemployment. In contrast, the right strategy to fight inflation is to keep unemployment high enough all the time at its "natural" rate, or as low as joblessness can go without sparking inflation. A central bank distracted by the pursuit of economic growth and full employment is to be condemned, while a central bank that achieves price stability at the cost of chronic high unemployment -- as in Germany -- has done its duty. The European Central Bank, charter-bound to price stability whatever the cost, represents the pinnacle achievement for this school of thought. Meanwhile, the Federal Reserve -- unmentioned in the U.S. Constitution, obliged to report on unemployment -- must seem emasculated in comparison.

OFF TARGET?

The case for inflation targeting, as Bernanke and his colleagues present it, rests on a theory -- the natural rate of unemployment mentioned above -- that links monetary policy exclusively to inflation control and denies central banks any important role in determining economic growth or employment. As disciples of the natural-rate doctrine, our authors favor inflation targeting not simply as the better strategy, but as the only strategy consistent with sound economics. But are these principles correct?

The authors do not bother to argue their case, but merely tell us that these truths were presented by Milton Friedman in 1967, refined by Robert Lucas in 1976, and consequently were accepted by most economists. Indeed, the theme of consensus crops up time and again. We read that "most macroeconomists agree" the inflation rate is the only variable that monetary policy can affect in the long run; that there is "by now something of a consensus that even moderate rates of inflation are harmful"; and that there "is a growing belief among economists and central bankers" that low inflation is good for both efficiency and growth. For the authors, the case is closed and consensus has settled the issue.

In fact, no such consensus exists or has ever existed. To take just a few examples, Robert Eisner, a former president of the American Economics Association and a renowned macroeconomist, has never accepted the Friedman/Lucas view. Neither has James Tobin, Paul Samuelson, Robert Solow, or the late William Vickrey -- all Nobel laureates. Neither did Ray Fair at Yale, James Medoff at Harvard, or William Dickens at the Brookings Institution. Bernanke and his colleagues maintain the illusion of consensus by ignoring the actual debate, which has grown more intense, not less, in recent years.

There are two basic reasons why this controversy persists. First, although the Friedman/Lucas doctrine does enjoy some academic dominance, it rests on a peculiar philosophical position that regards the future as a sort of lottery drawing. For example, it would view the Asian financial crisis not as a policy failure but merely an unfortunate, random outcome. Not surprisingly, many thoughtful economists reject this approach. Second, the real world has been openly contradicting the theory for years. Three years ago, every advocate of the natural-rate doctrine firmly held that unemployment below six percent would spark inflation. Unemployment has since fallen, but contrary to theory it not only has remained below the supposed natural rate but has failed to touch off inflation. The Friedman/Lucas arguments have received a clear empirical rebuke.

Instead, deflation, not inflation, reared its head in much of the world last year as the financial crisis spun out of control. But adherents of the natural-rate theory were never able to see this threat. They were still arguing for an anti-inflation policy when the Asian crisis broke in 1997, and they were still clinging to it in the summer of 1998 when U.S. markets began to crack under the strain. As the case for urgent action grew evident to everyone else, including Federal Reserve Chairman Alan Greenspan, the diehard natural raters inside the Federal Reserve obstructed forceful action. The concrete result: interest rate cuts were at first too cautious to impress the financial markets and affect the economy, and so the crisis deepened.

Can a central bank pursue inflation targeting without adhering to the natural-rate doctrine? Although Bernanke and his coauthors make no effort to separate the two, it is possible to base inflation forecasts on something other than the unemployment rate. An inflation targeter could very well have argued at the Federal Reserve last August that the Asian crisis had eliminated inflation risk and that large cuts in interest rates were essential to ward off the threat of deflation.

This supply-side view may be an improvement over an employment-driven inflation obsession, but it is still less sensible than current Federal Reserve practice. Economists opposed to rate cuts could have countered, correctly, that deflation outside the United States will not depress prices inside the country because most wages and prices are unlikely to fall that quickly. However, the great danger of the Asian crisis is not falling price levels but rising unemployment, recession, and income inequality. A doctrine of inflation targeting, even if not tied to the natural-rate dogma, would have weakened the argument for the interest rate cuts needed to stabilize employment and output, not to mention the financial markets and the banking system.

A CASE FOR CUTS

In any case, events have already overtaken our authors. The only potentially effective response to the global slump has been for the Federal Reserve to sharply cut U.S. interest rates and ensure a depreciation of the dollar. These measures help slow the flight of capital to the United States, return confidence to Asian markets, and restore the balance sheets of otherwise insolvent Japanese banks. Inflation targeting would have delegitimized these policy goals. The argument for having our central bank exclusively address inflation not only ignores the reality of the crisis but assaults the urgent present priorities of the Federal Reserve itself.

What of the claim that inflation-targeting countries have enjoyed superior economic performance, even if employment and growth are omitted and inflation alone is considered? A fair evaluation of this claim would require a comparative perspective, which the authors do not provide. We are left then to review the historical record and ask, What kind of evidence do Bernanke and his colleagues actually present that inflation targeting succeeded?

This part of Inflation Targeting merits careful reading, for much of the story in detail is interesting and competently told. But what is striking is that even the authors admit that inflation targeting in practice has actually done little to fight inflation. In the case of New Zealand, they write, "the decision to announce inflation targets occurred after most of the disinflation . . . had already taken place." The same is true for Canada, and Britain also embraced inflation targets when "it was most likely to meet them." Sweden "was in deep recession" with inflation "down to a historically low rate of three percent per year" when its central bank adopted inflation targets.

In other words, the countries in question never introduced inflation targets when inflation posed a serious threat, nor did adopting targets reduce the cost of any ongoing inflation battle. In all cases, the declaration of war came after the fighting was over. So why did the central bankers do it? Bernanke and his colleagues are quite honest about the reasons. Inflation targeting in all cases coincided with high unemployment, and its main effect was to excuse central bankers from addressing this crisis. Second, inflation targeting could substitute for the messy practice of money supply targeting, an earlier misguided enthusiasm that Britain had once embraced and that Germany used until the launch of the euro. Third, and in sharp contradiction with the first motive, inflation targeting provided in a few cases some camouflage for central bankers who were actually planning to ease monetary policy in order to fight unemployment. They said one thing to placate conservatives and did another to accommodate the political and economic realities of the hour.

Central bankers, like generals, are often accused of refighting the last war. But as the motives above suggest, this case is somewhat different. First, inflation targeting commits itself in principle to fight the last war -- the war against inflation -- as a way to avoid addressing the present threat -- unemployment. Second, inflation targeting allows central bankers to change tactics of the last war even though it has already ended. And third, it permits central bankers to assert that the inflation war is still raging, even when they are really planning to fight unemployment. These mechanisms are useful from a narrow public relations standpoint, but it is hard to see how they actually relate to economic performance, including the pursuit of low inflation.

What should the United States do? The Federal Reserve is an independent executive agency under the authority of Congress. It therefore comes under the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978, which rewrote U.S. economic policy goals to specify that they include, among many things, full employment, balanced growth, and reasonable price stability. In particular, the act set interim targets of four percent unemployment and three percent inflation -- goals that are now, within a few tenths of a percentage point, achieved.

The authors of Inflation Targeting do not discuss the Humphrey-Hawkins Act. If they had the chance, however, they would likely rewrite it and order the Federal Reserve to fight inflation alone. They do not say what would become of the Humphrey-Hawkins goal of "full employment." In principle, perhaps some other agency could address the task of sustaining full employment through a jobs program funded by tax increases or deficit spending. But it is unlikely that Bernanke and his colleagues have this in mind. One suspects instead that what they really want is to abandon full employment as a formal objective of American policy.

It is ironic that this book appears just as Alan Greenspan, Alice Rivlin, and the rest of the Federal Reserve leadership have demonstrated how spurious the natural-rate doctrine is by proving that full employment, balanced growth, and reasonable price stability are not mutually exclusive. This is a remarkable accomplishment, and it is due in part to the willingness of Chairman Greenspan to overrule the adherents of the Friedman/Lucas view and experiment cautiously with continuing reductions in unemployment. In this way, Greenspan and company have affirmed the good sense of the Humphrey-Hawkins law. The fact that the unfolding crisis of go-go globalization now threatens this accomplishment does not diminish its validity or its importance. And in their attempt to stabilize the financial markets and the world economy as the deflationary crisis of 1998 unfolded, the Federal Reserve's leadership demonstrated far more sophistication, flexibility, and common sense than Bernanke, Laubach, Mishkin, and Posen show in this evasive, unpersuasive book.

www.foreignaffairs.org is copyright 2002--2005 by the Council on Foreign Relations. All rights reserved.

The Bernanke Fed

The stock market took off today on President Bush's announcement that Ben Bernanke, the former Princeton University economist turned Federal Reserve Board governor, will take over the Fed when Alan Greenspan retires early next year. While the media immediately reported the market's response was due to perceptions Bernanke will be an inflation hawk like Greenspan, some of his recent speeches suggest his mind works in unconventional ways when it comes to prescribing medicine for imbalances in the economy.

Take the current account deficit, currently running somewhere north of $600 billion a year. We're not just importing significantly more goods and services than we export -- the trade deficit. The U.S. is also a major importer of capital with the exporting nations of Asia, especially China, being some our biggest lenders.

The traditional view is that this current account deficit is a mirror image of the nation's budget deficit, which the Bush administration has pushed to near record levels to support his war in Iraq, hurricane relief and undiminished domestic spending. He even faces a minor revolt in the House among fiscal conservatives who want to use the budget deficit to take another whack at what's left of discretionary federal spending. These allies of anti-tax activist Grover Norquist believe the current economic environment presents their best opportunity to, using his words, drown what's left of the government in a bathtub.

Greenspan could usually be relied upon to sound these conservative themes in his periodic trips to Capitol Hill. When it came to fiscal policy, the Ayn Rand devotee never drifted far from his roots.

But Bernanke may not be as reliable an ally for the deficit hawks. In two speeches earlier this year, the Fed governor downplayed the role of the federal budget deficit as a driver of the nation's current account deficit, which most economists see as unsustainable.

"I disagree with the view, sometimes heard, that balancing the federal budget by itself would largely defuse the current account issue," he said. "In particular, to the extent that a reduction in the federal budget resulted in lower interest rates, the principal effects might be increased consumption and investment spending at home rather than a lower current account deficit. Indeed, a recent study suggests that a $1.00 reduction in the federal budget deficit would cause the current account deficit to decline less than $0.20. These results imply that even if we could balance the federal budget tomorrow, the medium-term effect would likely be to reduce the current account deficit by less than one percentage point of GDP."

Supreme Court Justice nominee Harriet Miers will soon face the furies of the right. Bernanke may get the same treatment once the deficit hawks have had time to read of his recent speeches.

Pills to Avoid Heart Attacks? Hard to Swallow

The following appeared in Friday's Los Angeles Times:

By John Abramson and Merrill Goozner

IS POPPING A PILL the best way to reduce your risk of a heart attack?

That's the message Americans and their doctors hear almost every day. The Journal of the American Medical Assn., for instance, reports in its Oct. 12 issue that the growing use of statin drugs in the United States is largely responsible for falling cholesterol levels over the last decade. Coupled with new data showing that the number of heart disease deaths is falling in the U.S., it sounds like great news.

Unfortunately, putting those two facts together gives Americans the wrong prescription for the most effective way to minimize their risk of heart disease.

First of all, cholesterol levels in the U.S. actually fell faster before statins entered widespread use in the early 1990s, as some Americans decreased their consumption of saturated fats. But, despite the falling cholesterol levels, National Institutes of Health data show that the U.S. is still lagging badly behind most of the other industrialized countries in eliminating heart disease as a major cause of premature death.

Not only that, but during the period when statin use exploded in the U.S., the death rate from heart disease was actually falling faster in most of the other countries — which use half as many cholesterol-lowering drugs and a third as many cardiac procedures to open clogged arteries. How can we be taking more than twice as many statins and receiving three times as many cardiac procedures and still have higher death rates from heart disease?

The problem is that while U.S. doctors and public health authorities focus on drug therapy (often working hand in hand with researchers funded by the drug industry), the nation ignores what the scientific evidence really shows to be the most effective way to prevent heart disease: adopting a healthy lifestyle.

For instance, the Nurses Health Study, which began in 1976, shows that women who follow five healthy lifestyle habits — routine exercise, a Mediterranean-style diet (high in fruits, vegetables, unprocessed grains and olive oil; low in dairy fat, red meat and trans fat or partially hydrogenated fat), not smoking, moderate drinking and maintaining a reasonable body weight — develop only 17% as much heart disease as those who don't. Sadly, only 3% of U.S. women do those things.

On the other hand, not a single randomized, controlled study shows that cholesterol-lowering statin drugs benefit women without preexisting heart disease. Yet ubiquitous television and print advertising encourages women to talk to their doctors about cholesterol, and a recent survey showed that two-thirds of Americans have.

How about people over 65, those most likely to be taking a statin? A recent study of European seniors showed that 60% of their deaths from all causes could be attributed to not following simple health habits.

On the other hand, a study published in the British journal the Lancet showed that not treating high-risk seniors with a cholesterol-lowering drug increased their risk of death by an insignificant 3%.

Obviously, healthy lifestyle is far more important for seniors. But they are much more likely to emerge from their doctor visits with a prescription for a statin than a realistic plan to adopt a healthier lifestyle.

There's no doubt that statins can help some people, especially those who already have heart disease and men at very high risk of developing it. But the scientific evidence is clear: Most heart disease results from the way we live our lives, and there's no magic pill to help us change that.

So why all the brouhaha about getting so many people on statins? It's an exquisite example of bank robber Willy Sutton's law: That's where the money is.

JOHN ABRAMSON is the author of "Overdosed America" (Harper Collins, 2004) and a clinical instructor at Harvard Medical School. MERRILL GOOZNER is the author of "The $800 Million Pill" (University of California Press, 2004) and the director of the Integrity in Science program at the Center for Science in the Public Interest.

Did An FDA Advisory Committee Just Approve Another Vioxx?

The Food and Drug Administration advisory panel system got another black eye tonight. The Journal of the American Medical Association just released a study reevaluating the evidence behind a new diabetes drug from Bristol Myers-Squibb and Merck. The drug, muraglitazar, lowers blood sugar levels but more than doubles users risk of serious heart trouble. There are already a number of drugs on the market that do the same thing.

This new drug was approved by a 8-1 margin at an advisory committee meeting that met in early September. The FDA staff, which has yet to approve the drug, almost always follows the advice of its advisory committees. But now they’re going to have to pay attention to this new study, which was actually a reevaluation of the data submitted to the FDA.

Three cardiologists at the Cleveland Clinic, including Steve Nissen and Eric Topol, found muraglitazar more than doubled a diabetic’s risk of suffering death, heart attack or stroke compared to other drugs on the market. The authors concluded that “this agent should not be approved to treat diabetes until . . . safety is documented” in a clinical trial designed to test its cardiovascular safety. Recall that Topol was among the first to raise the alarm about the cardiovascular risk from Vioxx, and in a 2001 article called for a dedicated trial that would measure its safety -- a trial that was never conducted.

Although only one member of the committee had direct ties to the manufacturer (see GoozNews, September 9th), the FDA appears to have picked an especially lame group of advisers in this case. A companion editorial in JAMA pointed out that the two drug companies proposed monitoring safety concerns by sending out questionnaires to about 15,000 diabetics taking the drug once it was on the market. The advisory committee bought it.

Right. Subject hundreds of thousands of diabetics to a possibly dangerous drug while sending out unscientific questionnaires (i.e., not in a controlled experiment) to a relatively small number of people taking the drug. Concluded JAMA: “A premarketing safety trial . . . will provide more secure evidence and has an additional advantage of limiting risk only to study participants while safety concerns are being assessed.” The question now, the editorial concluded, “is which safety message will the FDA buy?”

Von Eschenbach Still at NCI?

The National Cancer Institute put out a press release yesterday announcing grants to cutting edge nanotechnologies for diagnosing and treating cancer. The release prominently quoted Dr. Andrew von Eschenbach, the Bush family friend who indicated two weeks ago he was temporarily giving up his duties at NCI to take over the Food and Drug Administration. The discrepancy was first reported by The Hill, which covers Congress.

These grants -- worth $35 million to 12 university-based research teams -- graphically demonstrate why holding both jobs represents an inherent conflict of interest and can't be allowed to stand. A quick check on several of the awardees reveals many have patented their technologies and several are collaborating with private sector firms.

Take James Baker Jr., M.D., of the University of Michigan, who is working on a nanotech system to deliver drugs directly to cancer cells. So far, it's worked fairly well in mice. In a June report on the NCI website, Baker indicated he was preparing to license this technology to Avidimer Therapeutics, an Ann Arbor start-up in which Baker holds a significant financial interest.

Baker also indicated he hopes to be in clinical trials within a year. When that happens, he'll have to go to the FDA to approve his protocols. At that point, the guy who was in charge of the agency that gave Baker his grants will be in charge of the agency responsible for reviewing the animal data (often from tests in dogs) that claims this brand new technology is safe enough to try in humans.

Recall that the first words out of von Eschenbach's mouth after getting the FDA interim appointment were that he wanted to "streamline" the approval process at the agency. If I were a dying or very ill cancer patient, I would be very interested in participating in early trials of this promising new technology. But von Eschenbach's conflict of interest might give me pause. After all, no one -- not even the dying -- wants to be treated like a dog.

Pollsters on Drugs

I never much liked political operatives and seeing James Carville on TV usually sends me lurching for the clicker. But with President Bush's approval ratings slipping below 40 percent in the latest Gallup Poll, all the signs are pointing toward a classic correction. The midterm elections in the second term of a two-term presidency almost always result in a major turning out of incumbents. So I was curious about Carville's data in his latest poll, which landed in my in-box today.

The former Clinton braintrust (Carville works with Stanley Greenberg and Robert Shrum in an outfit called Democracy Corps) reports the country is "ready for a political upheaval in 2006." But the Democrats, they warn, are "underperforming."

That's putting it mildly. Over the past year, support among the electorate for Republicans slipped from 53 to 48 percent, according to their poll. But support for Democrats fell by the same five points landing at 49 percent. "Both national parties are at a half-century low point in public esteem," they noted.

Okay, so what will it take for the public to turn out enough Republicans to create a Democratic Congress next year? Carville and company ran a number of "attack" lines by their sample voters. Ranking right up near the top of the list of things that angered voters was Republicans giving drug companies the right to raise prices for seniors and barring Medicare from negotiating a better deal.

Sound familiar? This line of attack was typical of their other ideas that polled well. Attack oil companies, score points. Attack Bush's effort to privatize Social Security, score more points. Indeed, virtually all the talking points on their list could have been lifted from political ads run in 2004, 2002 or even 2000.

Well, one doesn't have to be a political specialist to know that the Social Security debate went nowhere this year and no one will be talking about it next year. Likewise, oil prices may be an issue -- or not. If I were running for office next year as a Democrat, I don't know that I'd want to pin my hopes on high oil prices and a recession.

And as someone who has followed the drug issue pretty closely the past few years, I can say with some certainty that this is not going to be an issue next year. Why? The Medicare drug benefit is going to have its intended effect of making drug prices a non-issue for most seniors. In the long run it is nothing more than a massive giveaway to the drug industry. Indeed, within a decade, most seniors will be paying as much or more for drugs as they're paying now and that's on top of the $100 billion a year the feds will be chipping in.

But in the short run, most seniors are going to be paying less because Medicare will be picking up some of the tab. Every senior with income at 150 percent of the poverty level or less -- and that's about one-third of the elderly population -- will have their drug bills reduced to a minor monthly co-pay. Anyone with annual drug bills less than $2,500 will see their out-of-pocket payments reduced to well under $1,000. And people with catastrophic drug bills will get substantial relief.

There will be tons of confusion as seniors are forced to choose among drug plans and the media will have a field day this winter as the program stumbles in its efforts to get off the ground. But by next spring, the issue will be gone -- as it was last year after the Republican Congress stayed up late one night twisting arms to get it passed so it wouldn't be an issue in the presidential race.

Carville and company are so wrapped up in their old way of thinking about issues (poll on it; if it taps a nerve, make a commercial about it) that they can't see the coming catastrophe. The drug bill is symptomatic of a much larger problem: we have an out-of-control health care system that is threatening to bankrupt the entire economy.

Democrats need to start talking about that. Their problem, though, is that the solution -- some variation of national health insurance with either price controls or caps on expenditure growth -- is considered a political non-starter by the high-paid consultants peddling the usual Democratic nostrums.

So the conversation about meaningful reform can never begin. A political constituency is never built. And change never comes.

The Journal and Refco

Admittedly, picking on the Wall Street Journal's editorial page is a cheap thrill, but I just can't stop myself this morning. Last week, I wrote how the implosion of commodities firm Refco would probably put the kabash on the efforts by business lobbyists to gut the Sarbanes/Oxley Act. This morning, the Journal picks up on that theme:

"One early lesson is already apparent: All those new laws, rules and
regulators that Congress created after the WorldCom and Enron failures
weren't able to detect, much less prevent, what is alleged to have been
fraudulent behavior. Sarbanes-Oxley, which was supposed to protect
investors from nefarious CEOs, didn't deter former Refco chief Phillip
Bennett from allegedly disguising that an entity he controlled owed Refco hundreds of millions of dollars."

Right. And we might as well repeal the homocide laws since they haven't put an end to murder.

Refco and Sarbanes/Oxley

Business has launched its fall offensive to roll back the Sarbanes/Oxley act, the legislation passed in the wake of the Enron scandal that toughened reporting requirements for publicly traded companies. The campaign's managers must be gnashing their collective teeth this week as revelations about financial shenanigans continue to pour out of Refco, one of the world's largest futures and commodities brokerage houses.

For those who don't follow the financial pages closely, Refco's CEO Phillip Bennett, who went on indefinite leave Monday, apparently kept a $450 million loan to himself off the books for the past three years. Though he repaid the money as soon as it was discovered, the off-balance sheet transaction was precisely the kind of inside dealings Sarbanes/Oxley was designed to prevent.

The law requires that CEOs and chief financial officers certify that their financial statements are true, thus opening up the top officers to criminal prosecution of that later turns out to be incorrect. Presumably Bennett signed such documents for Refco, which went public a few years ago and sold stock to, among others, the good professors and teachers who invest through TIAA-CREF. General Motors was also a major investor, according to this morning's New York Times.

I wonder if Bennett was among those lobbying to get the law repealed. I'm also wondering if this is one of those butterflies that periodically flap their wings in the financial system and lead to systemic trouble down the road.

Katrina Housing Fiasco

I'm glad somebody finally wrote the story of the Bush administration's failure to deal effectively with post-Katrina housing for the half million displaced persons. Instead of giving housing vouchers for the 300,000 vacant apartments in Texas (his home state!), FEMA and the Red Cross are spending billions of dollars to put people up in hotels.

I was personally offended by this approach when I first heard about it about a week after the hurricane. The Red Cross was pulling in millions and my wife and I were about to donate. But when I heard that much of the money would go to put people up in hotels, I wondered: And at what rates? What were the hotel chains contributing in exchange for guaranteed full occupancy? We decided to donate in other ways.

The irony in all this is that when it comes to housing, liberals are the main support for voucher programs to house low income people. But over the years, while the Republicans have occasionally given housing voucher programs like Section 8 lip service, they usually are the first programs on the chopping block. Why? Effective housing voucher programs are also effective income and race integration programs, and many landlords in suburban areas would rather see their apartments stay empty that rent to people who are not the same class or race as those already living there.

Dems Attack Von Eschenbach Appointment at FDA

Reps. Henry Waxman (D-CA) and John Dingell (D-MI) today called on the Bush administration to remove Dr. Andrew von Eschenbach as interim leader at the Food and Drug Administration and move rapidly to appoint a permanent director. In a letter to HHS Secretary Michael Leavitt, the two senior Democrats on the House Government Reform and Commerce Committees, respectively, said von Eschenbach had irreconciliable conflicts of interest from his previous job as head of the National Cancer Institute.

Ted Kennedy had sounded the same theme on the Senate side immediately after the von Eschenbach appointment. And this website and Paul Goldberg's Cancer Letter have been pounding on this issue since the late Friday afternoon announcement on September 23rd.

Here's most of the House Democrats' letter:

"This dual responsibility - which exists despite Dr. von Eschenbach's pledge to give up his 'day to day' duties at NCI - opens the door to unacceptable conflicts of interest. FDA and NCI each have critical and independent roles in the drug safety system. In order to conduct a study on an experimental drug in human subjects, NCI must demonstrate to FDA that the drug is reasonably safe for initial testing in humans. Later in the drug development process, FDA is responsible for approving the same drugs that were tested at NCI.

"Having the same person at the helm of the NCI and the FDA violates the independent safeguards built into this system. There is no justification for merging these distinct roles.

"Unfortunately, Dr. von Eschenbach's responses to this conflict have been inadequate. For instance, he stated that, at FDA, he will refrain from participating in 'approval applications affecting drugs, devices, and biologics submitted by NCI or where an NCI employee was a Principal Investigator.' There may be occasions in which NCI employees invented or were involved in the early development of a particular drug compound that was then transferred to a commercial enterprise for additional development. Although that commercial enterprise would ultimately be responsible for seeking FDA drug approval, in this instance, NCI clearly would have played a significant role in the drug's development.

"Dr. von Eschenbach's prior involvement with this drug at NCI would still represent a conflict of interest.

"We are also concerned that the administration has explicitly reserved the ability to involve Dr. von Eschenbach in FDA matters in which NCI is a party on a 'case-by-case basis.' This provision negates Dr. von Eschenbach's promise to abstain from such matters. There is also no process by which the public can access information on the administration's handling of Dr. von Eschenbach's conflicts of interest as they arise.

"At a time when public confidence in the FDA has been severely undermined by a series of controversies, appointing a commissioner who faces a variety of potential conflicts of interest is a misguided choice that will seriously weaken both agencies. We urge you to insist on the appointment of an acting commissioner who is free from conflicts of interest and unencumbered by the demands of a second, equally vital role in protecting our nation's public health. Further, we urge you to nominate a permanent full-time FDA commissioner at the earliest possible moment."

Another Resignation at the FDA

In a story that escaped the national press, the Hartford Courant reported last week that 71-year-old Frank Davidoff, the former editor of the Annals of Internal Medicine, resigned from the Food and Drug Administration's over-the-counter drugs advisory committee because of the Bush administration's failure to approve Plan B, the morning-after birth control pill.

The FDA's top women's health official, Dr. Susan Wood, has also resigned because of political interference at the agency. And the trade publication FDA Webreview today published a commentary that suggested Lester Crawford's forced resignation from the commissioner's post was also related to the ongoing effort by the White House to scuttle agency scientists and their outside advisers.

The right-to-life movement has vigorously opposed Plan B, claiming that it would lead to greater promiscuity among teenagers. The FDA advisory panel heard hours of testimony on that issue and decided it was hogwash.

Choice quotes from Dr. Davidoff: "I keep trying to think about the opposition that came in after we voted on Plan B. Why would you oppose a pill that could dramatically cut back on abortions? It makes absolutely no sense."

He also fears for the future of the agency. "I can tell you quite definitely that the FDA staff is more than upset. I got an e-mail today from a prominent FDA official saying that the staff is demoralized and depressed. It's quite a benefit that the American people have, trusting the reliability and safety of their drugs. But for that to continue, people have to believe in the FDA's science. The record of decisions on Plan B could well shred that credibility."

Cruel Mr. Market

Delphi workers are on the chopping block. GM workers are not far behind. Can the Midwest take this bludgeoning without turning into a latter day Appalachia?

According to Alan Murray in today's Wall Street Journal, Delphi workers will have to accept $10 to $12 per hour wages, down from the mid-$20s, because that is what their skills command on the open market. Pensioners will have to have their monthly benefits cut and lose their supplemental medical coverage (leaving the burden to Medicare). Meanwhile, top executives are getting raises because auto industry execs were underpaid compared to colleagues in other industries.

Mr. Market is clearly a cruel taskmaster. Here's a question unaddressed by all the pundits weighing in to support the gutting of this once crucial industrial sector: Why aren't European and Japanese workers, who also face intense competition from auto parts made in China, facing similar cuts? Why is Mr. Market more benign there?

Look Who's Misrepresenting Science Now

Should DDT be reintroduced across the developing world to control mosquito-borne malaria? For several years now, conservative scholars at think tanks like the American Enterprise Institute have been beating the drums for this solution. Their secondary goal (I’ll grant them sincerity in wanting to end the several million deaths a year caused by malaria) is to bash the environmental movement, and by extension, Rachel Carson, whose 1962 book Silent Spring highlighted the environmental damage caused by widespread use of pesticides like DDT.

A number of high profile journalists have taken up this conservative cause. Sebastian Mallaby, writing in today’s Washington Post, called environmentalists’ failure to embrace the DDT solution for malaria “no different from the Bush administration’s indifference to scientific sense on climate change.” He follows in the footsteps of Tina Rosenberg of the New York Times, a writer I admire a lot, who a year-and-a-half ago in the Sunday Magazine issued a 4000-word clarion call headlined “What the World Needs Now is DDT.”

The trigger for Mallaby’s more recent outburst was hearings on Capitol Hill two weeks ago featuring several university scientists testifying that DDT does not do substantial environmental harm. The argument for DDT goes something like this: Most of the damage caused by DDT, which is less than Carson feared, occurs in animal species where the pesticide bio-accumulates and only then because of its widespread use in agriculture. Used sparingly around home portals and windows as mosquito repellant, it can be quite effective in reducing malaria incidence. Under such circumstances, its environmental effects are minimal.

Mallaby cites the examples of Uganda and South Africa, which had spectacular success in reducing the incidence of malaria by using DDT. He drew those examples from testimony offered by the AEI’s Roger Bate on the Hill a few weeks ago.

It’s too bad Mallaby didn’t go searching for the other side of the story. In his book, Bate cites the example of Sri Lanka, which all but eliminated malaria by spraying DDT in the 1960s. The disease reemerged only when the spraying stopped, according to Bate.

Wrong. As Gordon Harrison points out in his Mosquitoes, Malaria and Man, malaria in Sri Lanka didn't reemerge because DDT spraying stopped. It reemerged because the mosquitoes grew resistant to the pesticide. “Within a couple of years, so many Anopheles culicifacies survived that despite the spraying malaria spread in 1975 to more than 400,000 people. So in 1977 they switched to the more expensive malathion, and were able to reduce the number of cases to about 50,000 by 1980. In 2004, the number was down to 3,000, without using DDT,” wrote Harrison (thanks to Brad DeLong's website for this quote).

The Post headlined Mallaby’s column, “Look Who’s Ignoring Science Now.” DDT probably can provide some short-term help in many developing world situations. But history suggests the relief will only be temporary. Pundits who suggest it is quick fix are probably more interested in bashing environmentalists than in grappling with this issue’s complexity.

The Wall Street Journal's War on Cancer

The Wall Street Journal this morning continued its war on the Food and Drug Administration's oncology drugs division, which is headed by Richard Pazdur. Pazdur has been attempting to hold the line on standards for new drug approvals against the howls of the Journal and the drug industry-funded Center for Medical Progress at the Manhattan Institute. Their goal is to throw out the FDA's efficacy requirement, which has been in place since the Thalidomide scare in the early 1960s.

Ironically, today's editorial lambasts the FDA for postponing appoval of Revlimid, a chemical cousin of thalidomide for a rare blood disease. An FDA advisory committee voted in favor of the drug a few weeks back. Never once in the editorial does the Journal mention the reason for Pazdur's and the FDA's so far very brief delay. They're awaiting a plan from Celgene, the drug's manufacturer, that insures that pregnant mothers, young children and others susceptible to drug-induced genetic mutations don't get acccidentally exposed to the drug.

Kickbacks and Cost-Effectiveness

Last week, the New York Times described how Guidant Corp. paid doctors thinly disguised kickbacks to fill out surveys about one of its more expensive implanted cardiac devices, which paid off handsomely in increased sales. A few days later, reporter Barry Meier reported that Food and Drug Administration investigators are conducting a criminal investigation into how Guidant handled the recall of flawed pacemakers.

Tough times for this medical device manufacturer? Don’t worry, the New England Journal of Medicine, which carried many of the industry-funded trials touting the devices, is riding to the rescue. The latest edition includes a special article by a group of physicians at Duke University praising the cost-effectiveness of implantable cardioverter-defibrillators (ICDs), which when working correctly shock patients having a heart attack.

According to this study, which was funded by Blue Cross Blue Shield, the ICDs cost an estimated $34,000 to $70,200 for every added year of life. When compared to the $100,000 it costs to add a year of life to the average dialysis patient (this has become the de facto cost-effectiveness standard since Medicare pays for dialysis), the authors considered ICDs a real bargain.

Medicare has already agreed to pay for expanded usage of these devices. There's never been any question that they helped some people with severely damaged hearts. However, the most recent study, published last January, expanded their usage to much healthier people. At the time, there were strong objections from within the government agency and even among some members of its payments advisory committee (see Jan. 5, 2005 GoozNews).

Apparently even the boosterish NEJM heard the criticism. They couldn’t publish this latest cost-effectiveness study without inviting a comment about how Medicare's decision to pay for expanded usage of implanted devices is contributing to out-of-control Medicare spending. Lee Goldman of the University of California at San Francisco, admitting he couldn’t poke holes in the study’s methodology, lamented the fact that Medicare “does not consider costs in any of its reimbursement decisions and is not permitted to negotiate for lower drug prices.” His rambling commentary suggested perhaps the U.S. should start outsourcing medical work to India to get costs under control.

The Colin Powell Memo

Michael Tomasky, editor of the American Prospect, posted a must-read column on the noose tightening around the highest officials of the Bush administration, including possibly the President himself. Published reports and commentary over the weekend suggest the President may have seen a memo given former Secretary of State Colin Powell that mentioned CIA agent Valerie Plame, whose name ended up in a Robert Novak column a week later. That memo is now a key piece of evidence in the hands of special prosecutor Peter Fitzgerald, who is investigating the administration's leaks of Plame's name.

Tomasky likens the chain of events to the scenario in The Constant Gardner, the new film of the John LeCarre novel where drug company officials don't actually order an assassination, but by the time their displeasure gets translated down the line, the nosey inquisitors into the firm's unethical practices are dead on a rural road. All I can add is, see the movie, read his column.

Von Eschenbach steps down at NCI

Instead of running both organizations, Dr. Andrew von Eschenbach will temporarily give up his post at the National Cancer Institute to take the top spot at the Food and Drug Administration. He released the news late Friday in emails to staff at both organizations.

While this eliminates the blatant conflict of interest (the NCI investigates new drugs; the FDA approves them), it will not put to rest consumer fears about the changes he has in mind for the agency. At NCI, von Eschenbach was a forceful advocate for more rapid approvals of new drugs based on inconclusive markers of their efficacy.

In his new job, he has a similar-minded deputy in Dr. Scott Gottlieb, the 33-year-old physician/writer who has come under media scrutiny in the past week for his ties to a newsletter that touts biotech and pharma stocks based on informed speculation about ongoing clinical trials. (The Securities and Exchange Commission is investigating similar activities by physicians involved in the clinical trials, which if leaked to investors amounts to illegal insider trading. It remains to be seen how rigorously the SEC will pursue these allegations.)

Dr. Von Eschenbach takes over a deeply troubled agency. The FDA has come under intense scrutiny in the past year for failing to protect the public from unsafe drugs like Vioxx and failing to warn the public about the use of antidepressants in children. It has allowed religious zealots inside the Bush administration to bully its scientists on issues like Plan B (the morning after birth control pill). Safety officers like Dr. David Graham have had to rely on whistleblower protection laws to get their views out to the public.

Responding to those concerns, Congress is moving to limit the agency's ability to appoint scientists with conflicts of interest to its advisory committees. The Institute of Medicine -- part of the National Academies of Science -- has undertaken a thorough review of the agency's safety record. A number of Republicans have joined with Democrats to call for revamping the agency by separating its safety division from the new drug approvals division.

These appointments reveal a Bush administration that is openly contemptuous of these concerns. They also suggest the pharmaceutical industry and its allies in the agency, on Capitol Hill and in the administration may be gearing up under the rubric of "speeding innovative new drugs to market" for another assault on the FDA's mandate to protect the public from unsafe and ineffective drugs, medical devices, food and dietary supplements.

It's too easy to say, as New York Times columnist Paul Krugman has, that these appointments are part and parcel of the administration's penchant for appointing incompetent cronies to top jobs. Drs. von Eschenbach and Gottlieb are smart men with not very secret agendas. It will be very interesting to follow the changes they make at the FDA. Time Magazine reported last week that Dr. Gottlieb has already begun questioning some of the drug application rejections made by FDA staff.

It this is a harbinger of things to come, the FDA may soon rival FEMA in its ability to serve the needs of the American public.