Health and Safety | Publications | Competitive Enterprise Instittue

ObamaCare's Killer Device Tax

Nicole Ciandella — Mon, 14 May 2012 15:30:03 +0000

Much of the political conversation in Washington these days concerns innovation, job creation and competitiveness. But talk is cheap, and elected officials must enact policies that enhance economic activity and job creation. The medical device industry is an example of Washington doing exactly the opposite.

Medical device manufacturing is one of the nation's most dynamic and vibrant industries. The United States is the global leader in medical technology innovation, and it is one of the few major industries with a net trade surplus. This industry is responsible for more than 400,000 American jobs—and is indirectly responsible for almost two million more that supply and support this highly skilled workforce. Most important, its products are essential elements of modern medical care. They include everything from CT scanners and pacemakers to blood pressure cuffs and robots used by surgeons.

Yet instead of protecting this paragon of American ingenuity and innovation, the Obama administration and Congress have viewed the industry as a cash cow from which they could milk profits to help pay for the president's health law. So they added to the Affordable Care Act a 2.3% excise tax on medical devices that will take effect at the beginning of 2013.

This tax is especially pernicious because it is assessed on sales, not profits. To put this in perspective, imagine that you've manufactured medical devices and had sales of $1 million, after all your costs and expenses—everything from materials and labor to research and development—your profit was $100,000. The excise tax would be $23,000, wiping out almost 25% of your profits.

Many medical device companies have to ramp up sales before they become profitable. Due to the long, draconian and sometimes unpredictable regulatory process that must be negotiated before a product can be sold, it can take from $70 million to $100 million in total sales before these businesses make their first cent of profits. Nevertheless, they would have to pay the excise tax on their revenue.

The nation's medical device industry is vulnerable. It is not comprised of behemoths: 80% of its companies have 50 or fewer employees, the very businesses we are relying on to turn the U.S. economy around. The new excise tax comes when regulatory delays and uncertainty are increasing, and as many device firms are shutting down or moving abroad to take advantage of the more favorable tax and regulatory climate in Europe. The tax will force companies to lay off employees, cut back on research and development, or diminish capital investment.

The governors of five prominent states—Tom Corbett of Pennsylvania, Mitch Daniels of Indiana, Nikki Haley of South Carolina, Robert McDonnell of Virginia and Scott Walker of Wisconsin—agree. "As governors of states with a significant concentration of medical technology manufacturers, we believe that this tax could harm U.S. global competitiveness, stunt medical innovation and result in the loss of tens of thousands of good-paying jobs," they wrote in an April 30 letter to congressional leaders.

Anticipating the excise tax, several companies already have announced layoffs or withheld investments. Recent surveys show that medical technology executives are examining a host of other undesirable options, including passing along the added costs through price increases. Even if the market would tolerate that—which is surely questionable given the current pressure to drive down costs—it would, ironically, raise the costs of medical care. That was not supposed to be an outcome of ObamaCare.

The U.S. remains the global leader in medical device development and manufacturing, although reports from PricewaterhouseCoopers and others show that its lead is tenuous, in part due to regulatory uncertainties and dysfunction that thwart innovation. If we allow foreign competition to seize the lead, it will be difficult to regain.

We need to create a more nurturing entrepreneurial climate, one in which ingenuity and innovation are rewarded, not penalized. Legislation has been introduced in both the House and Senate to repeal the medical device excise tax. That would be a good start.

Henry I. Miller

Fri, 2012-05-11

Citation Source:

The Wall Street Journal

http://online.wsj.com/article/SB10001424052702304451104577387870788041912.html?mod=WSJ_Opinion_LEFTTopOpinion

The Off-Label Drug War of Words

William Frezza — Mon, 07 May 2012 19:43:32 +0000

If knowledge is power and ignorance is bliss, what is power used to prevent knowledge from eliminating ignorance?

I don't know; ask the FDA (U.S. Food and Drug Administration).

The practice of prescribing a drug "off label" to treat an illness other than that for which it was originally intended predates not only the FDA, but Western Civilization itself. The trial and error process by which medicine has advanced-and continues to advance-has certainly been made more scientific by the clinical trial processes required before the FDA approves a drug for a new use. Thankfully for the cause of progress, this is not the only place where trial and error occurs.

Once a new drug has been deemed safe by regulators and is released to the market, it is still lawful for scientists and physicians to use their judgment and experience, as well as that of their peers, to advance the clinical frontier. Nowhere is this more important than in treating deadly diseases like cancer, where the stakes of waiting for new drug approvals are extremely high, and so-called orphan diseases, where the financial motivation to develop new treatments is low.

Many of these off-label uses have proven so successful that they have gone on to become "standard of care" treatments. Other off-label uses, particularly for treating allergies or psychiatric ailments, are widespread despite the fact that 75 percent of off-label treatment lacks scientific evidence demonstrating improved efficacy compared to a placebo. A few off-label uses, like the notorious Fen-Phen combination once prescribed for weight loss, proved to have disastrous side effects. Yet such risk of error is inherent to the trial-and-error process.

The most commonly quoted estimate is that 21% of all prescriptions are written for off-label use. This generates valuable clinical experience and knowledge that is formally disseminated through peer-reviewed journal articles, medical conferences, and manufacturer sponsored educational outreach programs. It is also informally disseminated through doctor-to-doctor, doctor-to-patient, patient-to-patient, and patient-to-doctor conversations, increasingly mediated by online social networks.

Some of this dissemination-even if it is proven to be 100% truthful, such as distribution of a peer reviewed paper-can land you to jail. Even more strangely, one person can be sent to jail, or a corporation fined millions of dollars, for disseminating the same information which it would be perfectly legal for another person or corporation to distribute. The fact that the information is both truthful and beneficial to doctor and patient is no defense.

How is this possible in the USA?

I don't know; ask the FDA.

Despite acknowledging the importance and even necessity of off-label prescribing, the FDA has been waging war on it for years. The regulatory logic behind the agency's position is that no one would submit to the enormous expense of additional clinical trials of already approved drugs for new uses if those new uses enjoyed a level playing field in the marketplace despite lack of FDA approval. The FDA cannot directly control the actual practice of medicine (at least not yet), and the First Amendment unambiguously protects free speech if it is truthful and non-commercial. So the only club the agency has left in an effort to encumber the off-label market is to go after commercial speech, which enjoys a lower level of constitutional protection.

The FDA has waged much of this war through enforcement activities, including the use of undercover agents posing as doctors. This has led to multi-million dollar settlements, jail terms, and in at least once case the suicide of a doctor after his life was ruined. Most of those caught in the FDA's snare were never accused of disseminating untruthful information. Rather, they were accused of having a financial interest in the dissemination of truthful information in contravention to FDA regulations. This rendered their activities commercial speech, whose First Amendment protection-attenuated as it already is-has been under assault for over a century.

The FDA has gotten away with this despite the fact that its regulations are muddled and subject to capricious enforcement. In response, manufacturers have been begging both the FDA and the courts to make the rules clear and unambiguous, in order to create a bright red line between permitted and banned activities. Patient groups also have petitioned the FDA to get its act together. Lawsuits abound. A comprehensive review of the courtroom battles trying to clear up this mess can be found in an August 2011 article in Health Matrix: The Journal of Law & Medicine, titled, "Hidden Truth: The Perils and Protection of Off-Label Drug and Medical Device Promotion."

But don't hold your breath. Capriciousness, unpredictability, obfuscation, and delay are central to the FDA's regulatory campaign to sabotage off-label prescribing. Meanwhile, offering inducements, such as patent extensions or tax advantages, to convince manufacturers to submit approved drugs to additional clinical trials for new uses seem not to have occurred to the FDA.

The chilling effect of this regulatory overreach on innovation is devastating. But innovation isn't the only victim. The damage to the rule of law is profound as well.

William Frezza

Wed, 2012-05-02

Citation Source:

Bio IT World

http://www.bio-itworld.com/2012/05/02/the-off-label-drug-war-of-words.html

Critical Drug Shortages Reaching Crisis

Gregory Conko — Wed, 11 Apr 2012 19:32:10 +0000

From Ashley Bateman's article on Heartland.org:

But according to Greg Conko, a senior fellow at the Competitive Enterprise Institute, more mandates on companies to notify the FDA would be of little help.

“To some extent, these measures may help, but the FDA has taken some modest steps on its own to address some of the most problematic shortages. And nothing in the legislation is likely to change the fundamental nature of how the agency operates. Nor would any of the bills address the fundamental underlying economic considerations that are the primary cause of the shortages,” Conko said.

Conko says delays in the FDA’s approval process and overly strict regulation of drug manufacturing facilities are the primary culprits for drug shortages.

“Drug shortages are a real problem. But the way to alleviate them is not to eliminate the market signals that incentivize adequate production,” said Conko. “In the end, we would be better off if Congress did nothing at all. Better still, though, would be for Congress to lift the rules that have contributed to the shortages in the first place.”

Gregory Conko

Wed, 2012-04-11

Citation Source:

Heartlander (Heartland Institute)

http://news.heartland.org/newspaper-article/2012/04/11/critical-drug-shortages-reaching-crisis

Mayo v. Prometheus and Diagnostic Patents: What Does the Supreme Court Decision Really Mean?

Gregory Conko — Fri, 06 Apr 2012 15:15:15 +0000

I finally had a chance to read the Supreme Court's recent decision in the Mayo v. Prometheus Labs case, which invalided two patents claiming methods for analyzing blood test results to determine correct drug doses. The decision is likely to have substantial impacts on the drug, diagnostic, and biotech industries because it calls into question the validity of a huge amount of intellectual property that those industries rely upon.

My take is that the Court got this one right as a matter of patent law - though it's a closer call than many intellectual property skeptics have claimed. Here, I should note that some colleagues and I contributed to an amicus curiae brief to the Court urging the justices to find the patents invalid. Even so, the decision raises several new questions about scientific innovation. And it may be worth reconsidering the structure of our patent laws or finding another way to incentivize the very important research work that could become less common in the absence of market exclusivity for these kinds of discoveries.

So, what's the case all about?

Prometheus Laboratories held exclusive licenses to the patents at issue, which described a way for physicians to titrate an appropriate dose of thiopurine drugs in the treatment of autoimmune conditions such as Crohn's disease and ulcerative colitis. It has been known for many years that patients vary widely in the way they metabolize these drugs, severely complicating their dosing. Too low a dose, and the drug is ineffective. Too high a dose could lead to toxicity problems. The challenge is finding the sweet spot.

Scientists had already known that certain metabolites of the drugs could be used to guide dosing, but they did not know exactly what range was optimal. And that led to a lot of guesswork in thiopurine prescribing. Enter Ernest Seidman and Yves Theoret, researchers at the Sainte Justine Hospital in Montreal. In the mid-1990s, after a huge amount of investigation and testing, they discovered the appropriate range for two particular metabolites and created a relatively precise test keyed to that discovery.

The problem, though, was that their patented test wasn't a new "invention," as that term is usually understood, but simply a stepwise process that relied on knowing the correct metabolite range: (1) administer the drug to the patient; (2) measure the resulting metabolite levels in the patient's blood; and (3) titrate the drug dosage up or down until the metabolites fall into the appropriate range.

In 2004, the Mayo Clinic and its laboratory, Mayo Collaborative Services, argued that patents on that kind of test method should be invalid because the correlations between the metabolite levels and the appropriate doses were a "naturally occurring phenomenon," which is not patentable subject matter under Section 101 of the US Patent Act. The federal trial court agreed, and so did the Supreme Court by a unanimous vote.

In between, the U.S. Court of Appeals for the Federal Circuit -- a special court created by Congress specifically to hear and develop expertise on a limited area of jurisdiction, including intellectual property law -- concluded that the patents were valid because the administration and measurement steps involved a "transformation" sufficient to "confine the patent monopoly within rather definite bounds." Therefore, the fact that the patented test relied on measuring a natural phenomenon was not sufficient to render it invalid. The patents did not monopolize the correlations; they merely applied those correlations in a specific process.

For the Supreme Court, however, the transformation was not sufficient because the patented process still relied upon a fairly abstract idea: Physicians should give patients a drug and then consider test results when making additional treatment decisions. And, "[b]ecause methods for making such determinations were well known in the art, this step simply tells doctors to engage in well-understood, routine, conventional activity ..." The only thing that was new was knowledge of the appropriate metabolite range, a natural phenomenon.

Just as important, the Court was concerned that affirming the patent could inhibit future use of the correlations in scientific research and patient treatment by "improperly tying up the use of laws of nature and the like." And it's worth noting that the patents could have been enforced even if the physician chose not to alter the patient's dose "in the light of the inference he draws using the correlations." Monopolizing a natural phenomenon becomes a genuine threat, according to the Court, "when a patented process is no more than a general instruction to 'apply the natural law'."v The Court also rejected the argument offered in an amicus brief by the Patent and Trademark Office and U.S. Department of Justice that the transformative steps ought to render the correlations patentable subject matter, but that the patent should fail for other reasons. To secure a patent, inventions must be (1) novel, (2) not an obvious extension of existing inventions or concepts, and (3) useful. The PTO/DOJ brief conceded that Prometheus patents should be invalidated because the test method was either not novel or because it was obvious or both, but argued the minimally transformative nature of the test should otherwise be sufficient to secure a patent.

Justice Steven Breyer's opinion for the Court rejected that argument out of hand, suggesting it would render the "law of nature" preclusion "a dead letter". Furthermore, the Court argued, neither the novelty nor obviousness elements of the Patent Act are well suited to address such a fundamental question. So, shifting the inquiry to novelty and non-obviousness would create significant legal uncertainty in a field of law that is already rife with nuance. Thus, the Court addressed the question of patentable subject matter head on.

In short, patents may rely on a law of nature or other natural phenomenon only if they incorporate other sufficiently transformative steps that are genuinely new or inventive. (That seems, incongruously, to bring novelty and non-obviousness into the underlying patentable subject matter question. But I'll leave it to the patent experts to fight about that.) The decision in this case would not necessarily affect a different diagnostic test that did incorporate genuinely novel steps or processes. But the patents here were invalid because the claimed transformative steps involved things that physicians routinely do already.

That's the good news. The bad news is that much of what medical science is likely to learn from its study of the human body - particularly the human genome and proteome - will almost by necessity involve the discovery and application of natural phenomena and processes. Unless the application of those discoveries in the field of medicine leads to entirely new "inventions," no patent protection will be available to help researchers recoup their significant R&D expenses. That, in and of itself, could eventually prove to be as big a disincentive to innovation as affirming the patents would have been.

The Court's unwillingness to grapple with this question is understandable. After all, it is a court's job to interpret the laws as they are, not as a judge may wish them to be. And under the existing statute and case law, the Prometheus tests are simply not patentable.

What bugs me about Justice Breyer's opinion, though, is that it functionally pretends the problem does not exist. He writes, "[a] patent upon a narrow law of nature may not inhibit future research as seriously as would a patent upon [a much broader phenomenon, such as] Einstein's law of relativity, but the creative value of the discovery is also considerably smaller."

I agree with the Court that allowing patents on natural phenomena with little new "inventiveness" would significantly stifle future research. But to dismiss the added value of Seidman's and Theoret's efforts with a simple wave of the hand is appalling. In truth, their discovery is of tremendous scientific, medical, and financial value, and its importance should not be underestimated. What's more, the quest to continue funding for such research into basic biological mechanisms in the future will be severely undercut by the Court's decision. It is unfortunate that the Court took the matter so lightly.

That said, I'd like to repeat my belief that the Court arrived at the correct decision here. But it does raise some very important questions about how our society will finance the future research that Justice Breyer felt so compelled to protect. And we'll need to begin answering those questions if we hope to benefit from the vast potential that medical science could deliver.

Gregory Conko

Wed, 2012-04-04

Citation Source:

Medical Progress Today

http://www.medicalprogresstoday.com/2012/04/mayo-v-prometheus-and-diagnostic-patents-what-does-the-supreme-court-decision-really-mean.php

The Orphan Drug Conundrum

William Frezza — Fri, 06 Apr 2012 14:22:27 +0000

It's not a crisis. Yet. Bigger health care issues loom. Right now. There are still fortunes to be made. While it lasts. But one could hardly ask for a more interesting case study on the collision of medicine, economics, and democracy than the explosive growth of so-called orphan drugs. These are drugs designed to extract extraordinary amounts of other people's money serving the needs of tiny, desperate patient populations.

The figures are indeed large: $500,000 per patient per year in the case of the current record holder, Soliris, which treats a rare blood cancer; $30,000 per year for the “cheap” stuff. And many of these, particularly the enzyme replacements, are treatments, not cures. Which means that the health care system bleeds money for the life of the patient.

Fatal but rare diseases are an integral part of the human condition. Experts estimate that there are more than 6,000 serious maladies that each affect less than 1% of the population. It's a difficult number to digest because it seems to imply that we must all be sick. Then again, it is certainly true that every one of us will die of something someday.

The interesting question is: How much is "society" willing to spend to forestall that day, for whom, and why? Framing the question and seeking a mechanism for its solution is the hardest part of the problem. Unfortunately, dodging the question—in a cultural milieu where the notion of health care as a “right” is ascendant—seems to be the order of the day.

The Orphan Drug Act of 1983 was designed to encourage pharmaceutical manufacturers to develop drugs for diseases that affect less than 200,000 Americans. While many industries serve niche markets without special government encouragement, few face the extraordinary regulatory barriers that pharmaceutical companies face. These barriers add hundreds of millions of dollars to the cost of product development. Recouping these costs—including costs of products that fail—traditionally forced the industry to focus on large markets with blockbuster potential.

So Congress, in response to the clamoring of advocacy groups, decided to: a) lower the procedural barriers for the approval of drugs that are awarded orphan status; and b) grant seven-year market exclusives, allowing manufacturers to command extraordinary prices. And, oh, by the way, we've all been signed up to pay for it through both Medicare reimbursement policy and insurance mandates.

Making Hay While the Sun Shines

It took a while, but orphan drugs are now the hottest segment of drug development. Big Pharma has become particularly adept at "slicing the salami" to the point where more and more drugs are awarded orphan status. Drugs that treat multiple orphan conditions have become billion-dollar blockbusters in their own right. All while serving tiny patient populations.

The good news is that thousands our fellow citizens who otherwise would have died are still with us. Every survivor story warms the heart. Each advocacy group that achieves success encourages three more to spring up. Social media spreads the word, knitting pockets of isolation into communities—vocal communities, ready to work the levers of democracy.

Economist Frederic Bastiat's allegory of the "seen and unseen," originally formulated to challenge protectionist trade policy, frames the problem. When benefits are concentrated and visible and costs are spread across the population as a whole, buried in a sea of other costs, politicians become quite skilled at fishing for votes with your money.

The total cost to the nation's health care system is still down in the single-digit percentage range, too low to set off alarm bells. But it's growing fast. In 2011, 37% of new-drug approvals were for orphan drugs, the largest portion in the three decades since the FDA started offering incentives to develop treatments for rare diseases.

As Big Pharma struggles to deal with looming patent cliffs and declining R&D productivity, the orphan premium pricing bonanza is attracting a lot of attention. Estimates indicate that if current trends continue, orphan drugs can become a trillion-dollar business—larger than the entire global pharmaceutical industry today.

It gets scarier. The normal mechanisms that encourage manufacturers to invest in a cycle of cost reductions—which in turn lead to price reductions that help expand the market, increasing profits even as prices decline—are entirely absent when prices are fixed and costs are paid for by someone else. Demand is inelastic for maintenance drugs without which patients will die.

The only way out of this economic box canyon is profit regulation, which ultimately leads to consolidation and then nationalization. Which leads to stagnation. Which is how these stories usually end because if something can't go on forever, it won't.

All of this is playing out just as our health care system is moving toward a regime where therapies will have to be economically justified (please don't call it rationing). The process has already started in Europe, where it has become the norm for cash-strapped governments to deny or delay coverage for new therapies.

Our turn will come. When it does, orphaned R&D dollars could be the last nail in Big Pharma’s coffin.

William Frezza

Tue, 2012-04-03

Citation Source:

Bio IT World

http://www.bio-itworld.com/2012/04/03/the-orphan-drug-conundrum.html

Stearns' Healthcare Record Questioned

Nicole Ciandella — Thu, 29 Mar 2012 16:40:46 +0000

From Bill Thompson's article in The Gainesville Sun:

Such remarks echo a common refrain among conservative critics of President Barack Obama's health care reform law, whose key provision — the constitutionality of the government requiring individuals to buy health care coverage — was contested during three days of hearings by the U.S. Supreme Court that wrapped up on Wednesday.

Yet the above quotes were not written this week, this month, or even within the past two years since the law was enacted.

They appeared in a 22-page report, published in June 1994 by the Cato Institute, in which Tom Miller, senior policy analyst for the Competitive Enterprise Institute, a conservative Washington-based think tank, scolded a proposal for universal health care coverage offered by U.S. Rep. Cliff Stearns, R-Ocala.

CEI Staff

Wed, 2012-03-28

Citation Source:

The Gainesville Sun

http://www.gainesville.com/article/20120328/ARTICLES/120329526/1183?Title=Stearns-health-care-record-questioned

No to Broccoli Mandate, Yes to Health Insurance Mandate?

Ryan Young — Wed, 28 Mar 2012 15:11:43 +0000

The results of a Reason-Rupe poll that was released on Monday are more interesting than the pollsters may have intended. Two of the questions they asked rely on the same basic principle: whether or not the government should be able to force you to purchase a certain product. The answers were wildly different.

In one question, the mandatory product was broccoli. Eighty-seven percent of respondents said this would be unconstitutional. Eight percent said it would be constitutional, and five percent didn’t know.

In the other question, the mandatory product was health insurance. Sixty-two percent said this would be unconstitutional. Thirty percent said it would be constitutional, and eight percent didn’t know.

That’s a 25-percent difference in how many people thought the different product mandates were unconstitutional, even though the principle at hand — the power to mandate — is exactly the same. Weird, huh?

There are many ways to interpret this. One is that a lot of the respondents have better things to do with their lives than study public policy, so they simply aren’t aware of the basic principle at hand. Most people prefer to spend their time on their careers, kids, hobbies, you name it. Economists call this rational ignorance. People aren’t stupid about politics because they’re stupid, they’re stupid about politics because they’re smart. People know how to prioritize their time.

Two other factors are what psychologists call priming, and the ugly reality of political partisanship. The health insurance mandate is at the heart of a headline-dominating Supreme Court case, while the broccoli mandate languishes in obscurity. Insurance is on the brain, and a certain delicious vegetable is not. Or in psychology lingo, health insurance is primed. Broccoli isn’t. That should explain some of the difference.

But it doesn’t explain the direction of the difference. Even people who are rationally ignorant have probably heard about the health insurance mandate debate on the TV or the Internet. It’s everywhere, so most people have formed some opinion on it. Ninety-two percent have, to put a number on it. But opinion-forming takes time and effort. It’s a lot easier to just take the same position as one’s preferred political party.

That would explain why the 25-point swing favors the health insurance mandate being constitutional, instead of moving more against it. The Red Team opposes it, so its partisans mostly remain against it. The Blue Team favors it, so most of their partisans will change their broccoli mandate-no vote to health insurance mandate-yes. For partisans on both sides, this mental shortcut sure beats thinking about it.

But the GOP — thankfully — commands far less than 62 percent of the vote. Only 28 percent of the Reason-Rupe poll respondents self-identified as Republicans. That leaves independents, who made up 37 percent of respondents, to make up most of the gap. They’re a fairly polyglot bunch. Some are libertarians, some are centrists. Others are so far to the right or the left that they outflank their natural party, and reject it. In other words, independents occupy almost every point of the liberal-illiberal spectrum. But by and large, they seem to be skeptical of the health insurance mandate.

Public opinion has precisely nothing to do with whether a policy is a good idea or not; anyone who thinks otherwise would do well to read Shirley Jackson’s short story “The Lottery.” But since I think that government should not have the power to mandate that people buy certain products — think of the lobbying and rent-seeking by companies that stand to benefit! — it is heartening that the majority of Americans think the same way as I do about broccoli. And, to a lesser extent, health insurance.

More importantly, we’ll soon find out how the Supreme Court polls on the broccoli mandate issue. Er, health insurance mandate. Same principle.

Ryan Young

Wed, 2012-03-28

Citation Source:

The Daily Caller

http://dailycaller.com/2012/03/28/no-to-broccoli-mandate-yes-to-health-insurance-mandate/?print=1

HHS Deems Rate Hikes Excessive in Nine States

Hans Bader — Thu, 12 Apr 2012 19:48:18 +0000

From Michael P. Tremoglie's article on Legal Newsline:

But the issue of the government telling insurers how much premiums should be is a controversial one. Hans Bader is with the Competitive Enterprise Institute, a non-profit public policy organization dedicated to advocating a free market. He was critical of Sebelius' comments.

"Average profit margins in the health insurance industry are just too low for price caps to provide any meaningful relief to consumers," he said. "Instead, price ceilings - or pressure not to raise insurance rates to cover rising healthcare costs - will likely lead to fewer insurers in the insurance market, fewer choices for consumers, and more people unable to obtain private insurance."

Other insurers are getting out of the market already, Bader said. He noted that Principal Financial, which insures about 840,000 through its employer-based health insurance plans, said it would stop selling health insurance.

Hans Bader

Fri, 2012-03-23

Citation Source:

Legal Newsline

http://www.legalnewsline.com/news/235596-hhs-deems-rate-hikes-excessive-in-nine-states

The Anti-GM Food Circus Rolls Through Connecticut

Gregory Conko — Mon, 27 Feb 2012 17:37:45 +0000

From the American Council on Science and Health's "Health Facts and Fears":

But as Gregory Conko, a senior fellow at the Competitive Enterprise Institute, argues in his latest op-ed, there’s no need to label GM foods: A myriad of highly accredited scientific bodies, such as the American Medical Association and the World Health Organization, have already deemed them safe. In fact, he says, biotech produce may actually be safer than plants developed with conventional methods.

Something few people know is that, since the 1930s, conventional crops have been intentionally mutated with ionizing radiation and highly toxic, carcinogenic chemicals in order to produce the best possible species. Many anti-biotech activists may be surprised to learn that, nowadays, these mutant varieties may actually be categorized as “organic.” Alhough these mutant or cross-bred plant varieties are safe and not a cause for concern, Conko does point out that the imprecision and unpredictability of these methods is one reason that scientists say GM foods are at least as safe as, if not safer than, conventional plant varieties.

But facts aren’t what matter to most anti-biotech activists, given that they are frequently uninformed about the science behind the practice. For instance, the results of a poll against GM foods called “Just Label It” demonstrate that, although these folks are nominally opposed to agricultural biotechnology, the large majority have little knowledge about the process in general or about how these foods are regulated.

This is another reason, Conko says, why such products should not be subject to labeling. And according to the U.S. Constitution, the government does not have the right to mandate product labeling unless the added information affects consumer health or safety. But since plants developed with biotechnology, as the FDA has determined, are not inherently more risky than those bred with conventional methods, they need not be subject to special labels. In fact, a U.S. Second Circuit Court of Appeals followed this logic when striking down a Vermont statute that would have required labels on milk derived from cows treated with bioengineered growth hormones. “[W]ere consumer interest alone sufficient, there is no end to the information that states could force manufacturers to disclose,” the court concluded.

Gregory Conko

Fri, 2012-02-24

Citation Source:

American Council on Science and Health

http://www.acsh.org/factsfears/newsID.3419/news_detail.asp

Shoppers already have a choice regarding biotech foods

Gregory Conko — Tue, 01 May 2012 16:49:43 +0000

Consumers increasingly base food purchasing decisions on individual preferences about product content. For many, this means a focus on nutrition or fat. Others care more about production methods, such as whether a product is kosher, halal or organic. Some choices reflect concerns for personal health and well-being; others, subjective value preferences. In all cases, information on labels helps consumers select the items they prefer.

With some consumers now concerned about the “genetic status” of their foods, scores of food producers are supplying information that helps those who wish to avoid genetically engineered products. Today, there are many thousands of affirmatively labeled, non-biotech foods available in stores as varied as Whole Foods Markets and Wal-Mart.

From just 2000 to 2009, some 6,899 new food and beverage products were introduced in the United States with explicit non-biotech labeling. And groups ranging from Greenpeace to the Organic Consumers Association have created websites, print pocket guides, and even smart phone apps that direct purchasers to “biotech-” and “GM-free” products.

That market-driven approach is not enough for many biotechnology critics, who argue that a government mandate is needed to truly give consumers the choice they desire. Last year, a who’s who of organic food corporations and advocacy groups launched the “Just Label It” campaign to agitate for mandatory biotech food labeling. Another group has proposed a labeling initiative for California ballots in November.

Although many of these activists have called for greater regulation or bans, they insist that, at the very least, there ought to be a law requiring a label on products containing biotech ingredients. After all, they argue, shouldn’t consumers have the right to know what’s in their food?

Consumers certainly have a right to ask for information about the products they buy and to choose those that most closely meet their needs or desires. That’s how our vibrant consumer products market works. But decades of sound public policy -- not to mention the U.S. Constitution -- have reserved government labeling mandates for information that has a material impact on consumer health and safety.

At least as safe or safer

Dozens of scientific bodies, including the American Medical Association, the National Academy of Sciences and the World Health Organization, have found biotechnology to be at least as safe as and, in some cases, safer than conventional breeding. Biotech foods have nevertheless undergone more testing and government scrutiny than practically any other products in history. So, there is no scientific justification for mandatory labeling, which is why FDA doesn’t mandate blanket labeling of all bioengineered foods.

FDA’s policy requires specific labeling if, and only if, the composition of those foods differs significantly from their conventional counterparts. Material differences would include, among other things, the introduction of an allergen that is not present in the new variety’s conventional counterpart, a reduction or increase in nutrients, or even a change in the product’s expected storage or preparation characteristics.

It is the change itself that must be identified on labels, not the breeding method involved. After all, if you want to alert consumers to the presence of a potential allergen, telling them only that biotechnology was used to develop the plant or animal variety conveys no useful information.

This science-based labeling requirement is applied to all foods, whether they were developed through conventional breeding or more advanced genetic techniques. Thus, it is consistent with the broad scientific consensus that plants developed with new biotechnologies are not inherently more risky than those developed with conventional methods, and that regulation and labeling ought to be based on the specific characteristics of the products that could make them more or less safe, not how they were produced.

Public support a mile wide but an inch deep

The case for a labeling mandate rests entirely on public support that, as it turns out, might be a mile wide but only an inch deep. Look at any of the opinion polls touted on the Just Label It website, and you’ll find large majorities agreeing that biotech foods should be labeled. Dig a little deeper, though, and you’ll also find that these large majorities admit they know little or nothing about biotechnology in general or how bioengineered foods are regulated.

Asking people to evaluate the merits of a proposed policy with little or no background knowledge can give a misleading picture of the public’s true attitudes. Ask the right question, though, and one finds broad support for the FDA’s current labeling policy. In a series of polls commissioned by the International Food Information Council, respondents were first read a summary of the FDA policy and then asked their opinion. In every one of the 14 surveys, conducted between 1997 and 2010, a majority of respondents agreed that FDA has chosen the right approach.

Why then are critics so adamant about labeling? And why does the organic food industry, which makes billions of dollars peddling affirmatively labeled non-biotech products, keep funneling money into these campaigns? The answer seems to be that forced labeling acts to stigmatize products made with biotechnology and producers who use it.

Altering thousands of product labels isn’t cheap, but the biggest cost comes from the huge burden of carefully monitoring and tracing, from farm to fork, every single ingredient in tens of thousands of packaged foods. Perhaps more important, from the activists’ perspective, regulatory stringency serves as an unmistakable signal to consumers that there is something fundamentally different and worrisome about biotechnology.

Critics have scared many consumers with claims that biotech methods could introduce new allergens or toxins into the food supply, unnaturally move genes across some supposed “species barrier,” or make other unpredictable changes in a plant’s native DNA. A mandatory label would make it easier to say, “See! Even the government thinks these products are different enough that you should worry about them.”

What about other technologies?

What labeling advocates don’t say is that every one of the risks they associate with biotechnology is also present – often to a greater degree – with conventional breeding. Though most consumers imagine that conventional plant breeding entails little more than mating one variety with another and selecting the best seeds for propagation, scientists have been using other, far more (or, depending on one’s view, less) sophisticated techniques since the dawn of the 20th century.

In nature, plant pathogens commonly cross the so-called species barrier and insert their viral or bacterial genes into a plant’s DNA. A typical mouthful of broccoli or cauliflower, for example, exposes consumers to millions of viral DNA particles. Breeders too, long ago discovered how to forcibly mate plants of different species, and even of different genera, often to produce entirely new species that do not exist in nature. These “wide-cross” hybrids, which include dozens of common wheat, rice, and other varieties, frequently are produced by artificially mating food crops with wild plants known to contain potent natural toxins, carcinogens, and anti-nutrients.

Arguably the most significant sea change in plant breeding came in the 1930s, when scientists began intentionally mutating crop species with ionizing radiation and caustic chemicals to randomly scramble the plants’ DNA in unpredictable ways. Mutation breeding has been in common use since the 1950s, and more than 2,250 known mutant varieties have been bred in at least 50 countries, including the United States. A careful search would probably find several of these varieties or their progeny labeled as “organic.”

Yet today, as anti-biotech activists condemn the bioengineered herbicide-tolerant crops produced by companies such as Monsanto and DuPont, multinational chemical giant BASF is breeding herbicide-tolerant crops using mutation techniques. But because the latter are considered products of “conventional” breeding, they are subject to no special regulation, and the self-appointed guardians of our food supply don’t seem to care.

Of course, there is no reason to worry about mutant or wide-cross varieties because the basic testing done by breeders to ensure consumer and environmental safety is fairly robust. But their inherent imprecision and unpredictability is why scientists agree that biotechnology is at least as safe as, and generally safer than, conventional breeding. How then can labeling advocates justify singling out biotech foods, and only biotech foods, for special labeling? Why do consumers have a right to know about one but not the other?

Consumer interest not enough

Fortunately, previous attempts to mandate biotech labeling in the U.S. have failed, either at the ballot box or in court. Although commercial advertising is afforded less protection than political or scientific speech, the U.S. Constitution forbids commercial speech regulation that does not directly serve a pressing governmental need.

In striking down a Vermont statute that required the labeling of milk from cows treated with a biotech growth hormone, the U.S. Second Circuit Court of Appeals concluded, “[W]ere consumer interest alone sufficient, there is no end to the information that states could force manufacturers to disclose.” In the absence of “some indication that this information bears on a reasonable concern for human health or safety or some other sufficiently substantial governmental concern, the manufacturers cannot be compelled to disclose it.”

Neither consumers nor governments have a right to force producers to disclose information about their products that is irrelevant to health, safety, or some other important interest. Singling out one of the safest, and certainly the most heavily regulated, breeding method in order to stigmatize it simply does not qualify. It is also unnecessary, because competitive market pressures have already created a vibrant and expanding market for voluntary labeling options that gives consumers the choice many seem to want.

Gregory Conko

Fri, 2012-02-17

Citation Source:

Food Chemical News, Vol. 53 No. 48

http://www.agra-net.com/portal2/fcn/home.jsp?template=pubarticle&artid=1328784691201&pubid=ag096