Citizens Win Huge Supreme Court Victory Over Big Pharma And The Fda

In a stunning and unexpected 6-3 ruling the right-leaning Supreme Court went against the wishes of the last president, took the wind out of the sails of health care reform of the current president, sent irresponsible Big Pharma a major wake up call, and bluntly told the arrogant FDA that they are indeed not above the rule of law. It is a major victory for every American citizen.

Central to the issue is a power a struggle between the federal government and states, which in this situation meant the federal government authority to pre-empt your state rights to sue if you are injured by a drug. The FDA, acting on behalf of the Bush administration and on the side of Big Pharma, has helped tie up thousands of drug injury lawsuits across the country. The FDA, who is supposed to be protecting consumers from drug injury and ensuring a correct risk/safety picture for any person taking a drug, was instead trying to shirk their responsibility and simply claim that Americans had no right to sue.

This convoluted attempt by the FDA to undermine consumer safety was one of the main themes in my 2006 book, Fight for Your Health: Exposing the FDA’s Betrayal of America. The Bush Administration had intentionally appointed anti-safety people in high positions within the FDA, starting with its Chief Counsel, Daniel Troy (and continued as a legal philosophy after Troy was forced out for his Big Pharma connections). Troy set in motion the legal problem the Supreme Court just decided.

During the final years of the Bush administration cancer industry insider Andrew von Eschenbach, MD, was appointed to run the FDA, and Wall Street insider, Scott Gottlieb, MD, was second in command. These individuals sought to fully implement the FDA label as senior to any rights of citizens. Their intention was to make sure that new biotech drugs would be protected from lawsuits, as the FDA wanted to speed new and even more dangerous drugs onto the market so as to foster the development of the biotech industry. In essence, the FDA management wanted to turn the American public into one large clinical experiment, with no right of recourse when injured.

This was occurring against a backdrop wherein the FDA couldn’t even name all the drugs currently on the market, had failed to demand required aftermarket follow up safety testing on drugs, and had intentionally withheld safety information on existing drugs from the public. The current situation with drugs is that almost no drug, even blockbusters and those in use for decades, have an accurate risk/benefit profile.

Americans who use medications are already taking risks of unknown magnitude, which is a main reason over 100,000 Americans are killed every year and over 3 million are injured so seriously they need hospital care (ironically, over half those injuries occur while already in the hospital).

The FDA knows full well that when a drug is approved for the market the full extent of the side effects won’t be known for years. History shows us time and again that Big Pharma actively hides risk data from the FDA and pays for “science” that distorts reality. This irresponsible behavior goes along with closed-door negotiations with the FDA, and has resulted in numerous drug disasters like Vioxx. FDA managers oftentimes go against the wishes of their own safety scientists and then move on to six figure salaries in the industry they regulate. Doctors are not apprised of the actual risks and consumers are in the dark.

Currently, there are 450,000 additional new cases of heart failure every year in Americans over 65, a fact that parallels the increased use of heart-weakening statins in this older group. It is only a matter of time before the shoe drops on the 20-billion-dollar-a-year statin industry.

The FDA insistence that a drug label, based on what is known at the time of approval, should supersede citizen’s states rights to sue if they were injured, has almost nothing to do with consumer safety. Rather, it is a federal power grab that is in the best financial interests of Big Pharma and Big Biotech, industries that do not have consumer safety as their top priority.

By the way, don’t think President Obama is on the side of the citizens. In the health care section of the stimulus bill, there is specific pre-emption language. If the federal government is in charge of health care it will be named in future lawsuits when patients are injured from the care it doles out or doesn’t allow.

The current Supreme Court ruling will undermine any system of federal health care wherein the drugs being used are injuring people. Experts believe this system is so badly broken, due to gross FDA management incompetence, that it will take 10 years of studies and many billions of dollars just to understand the actual risks of the drugs Americans are already taking.

In writing for the majority, Justice John Paul Stevens put Big Pharma on notice. The defendant in this case, Wyeth, had argued that it could not comply with both federal and state law. Stevens told them they had a fundamental misunderstanding of regulation and were trying to hide behind the FDA, going on to say that it is a central premise of federal drug regulation that the manufacturer bears responsibility for the content of its label at all times. That is not the news Big Pharma wanted to hear.

Stevens went on to write that there was no merit in the argument that the FDA’s labeling decisions could supersede state law, saying that this argument was “an untenable interpretation of congressional intent and an overbroad view of an agency’s power to pre-empt state law.” He pointed out that the FDA tried to push this on the public without any opportunity for comment from the public or from states, all done against a backdrop wherein the FDA is not able to keep up with safety issues in the first place, meaning that the FDA position lacked “thoroughness, consistency and persuasiveness.” Stevens stated that under such lacking standards the Bush position “is entitled to no weight.”

Hedge Fund Vs Mutual Fund, Understanding The Differences

In 1949 Australian Alfred Jones was credited with the term “hedge fund”. Historically it derives its name from the use of hedging to manage risk while achieving superior returns. Today, a hedge fund is an un-regulated investment vehicle designated for sophisticated, also known as the “Accredited Investor”.

Mutual funds gained popularity in the 1980’s. Prior to this time, the problem of the small investor was in obtaining sufficient knowledge to make informed investment decisions, and so the average person avoided stock market investing. Instead money was held in traditional savings accounts or placed with a bank in a Guaranteed Investment Certificate (“GIC”) or Certificate of Deposit (“CD”).

What to do. The small investor was not able to obtain a professional money manager without $10 million or more to start. But what if he could pool his money with other small investors to reach this minimum threshold. And so the mutual fund was created to address these exact concerns.

The mutual fund concept was simple, allow the un-sophisticated investor access to the strategies of the professional money manager. This was done by pooling small sums of money, as little as $20.00 deposited monthly. In return, the fund company would use professional money managers using professional investment strategies to easily out perform traditional bank savings products.

The mutual fund investor had other problems. Because they did not understand the nature of the investments made for them, government regulators got involved to protect investor rights. And so mutual fund investing became regulated and soon took on a life of its own. Rules were set in place to govern what could be held within a mutual fund and how the investment strategies were marketed to the public. Even what could be invested and what should be avoided.

While much evolution has transpired since the early days of the 80’s. One thing is for certain, mutual fund investing is all about what it cannot do. While this article is not focused on these issues, there are some glaring examples the investor needs to know. In times of market un-certainty, the mutual fund cannot sell and move to cash for safety. The manager must remain fully invested at all times making the investor, in consultation with his Investment Advisor, responsible for proper asset allocation. The mutual fund also cannot employ risk management or hedging techniques because they are deemed too sophisticated for the small investor to understand. So to avoid investor complaints, these important strategies are discouraged by managers and outlawed by regulators.

In the end, all of the benefits started by the mutual fund industry to provide safety of capital have been regulated away from the interests of the small investor. In fact, these are the exact investors which need safety of capital most of all. Many market observers believe the industry has become over regulated and as such, do more harm than good.

To-date, the hedge fund industry has been able in all country jurisdictions to avoid nuisance government meddling. The recent wall street initiated financial melt down has proven that even a self regulated industry is not immune. It seems big company rights take precedence over investor rights. So some regulation may be forth coming. Historically, the hedge fund industry has been able to avoid regulation by offering its products only to the Accredited Investor. There is a strict agreed upon formula based on wealth accumulation. The premise being if you were smart enough to accumulate wealth, then you are smart enough to understand the sophisticated investments being recommended.

Typically hedge fund investors are in direct contrast to mutual fund investors and thus have different needs. The mutual fund investor has modest wealth and little investment knowledge. The hedge fund investor has significant wealth with greater investment understanding. Therefore one is regulated to protect the investor and the other is not.

The above description is not the only difference that separates the two. Hedge funds can employ a complex strategy of investment vehicles known only to the fund manager. Many hedge fund managers are protective of any proprietary trading formula which will provide an edge over their competition and disclosure of their trading style is not required.

Mutual funds are sold through an Investment Advisor who will make comparisons, explain and make recommendations for a balanced portfolio. Hedge fund investing can be more difficult. Firstly, there can be difficulty in locating a list of the availability of funds. There are however helpful data-bases for this. Then you must undertake your own due diligence to ascertain if it is the right asset mix for your overall portfolio.

Thirdly, you’ll need to have an understanding of the different investment strategies. Do you choose a value fund or a growth fund. CTA funds are out performing these days and what about a suitable bond fund. Does my fund employ hedging and should I invest in an off-shore fund to obtain the tax benefits.