May 1992

Guest Editorial

The UNCED Farce

By Martin Khor Kok Peng

The Front

Torching the Environment

Features

Labor’s Misdiagnosis: U.S. Labor and the Fight for

National Health Care

By Nancy Watzman

RX for the Third World

By Holley Knaus

Economics

The Great Taxol Giveaway

By Daniel Newman

Interview

Toward a Sustainable Future

An Interview with Herman Daly

Labor

Sweden’s Assault on Labor

By Samantha Sparks

Corporate Profile

Hoechst: The Toxic Brewmasters

By Philip Mattera

Names In the News

Book Note

Bending the Law

Resources

Letters

In "China’s Tobacco Wars" (Jan/Feb 1992 ), Judith Mackay notes that Western tobacco companies successfully market and promote cigarettes in China despite that country’s anti- tobacco laws and advertising restrictions.

Having visited China last year, I would like to highlight the way the Asian subsidiary of Philip Morris circumvents Chinese regulations in order to establish a brand presence for Marlboro cigarettes.

As Dr. Mackay notes, in China, all brands of cigarettes, domestic and foreign, are prohibited from advertising in the print and broadcast media. Only hotels and large department stores catering to foreigners are licensed to sell imported brands. However, in the local markets that I visited in Canton and Sian, cigarette vendors hawked smuggled foreign brands from small stalls and three-wheel carts. It was not unusual for me to be approached by Chinese who wanted ["mah-blow"] Marlboro cigarettes.

According to a September 2, 1991 report in Hong Kong’s South China Morning Post, Marlboro succeeds in promoting its name in China mainly by sponsoring high- profile sporting events such as the Marlboro Championships ‘91 tennis tournament. As a result, Marlboro has secured a growing share of cigarette sales on China’s vast black market.

As one specialist on Asian marketing told the South China Morning Post, "They [Philip Morris] are supporting a brand for which the only real source is smuggled goods. They are developing a demand that cannot be satisfied through legal sales."

Branford Trebach

New York City

To the editor:

I read with interest your editorial, "GM’s Crash." I worked at GM Van Nuys for fifteen years. I took a cash "buy out" in 1991. Jerry Tucker is right, the UAW did not fight "whipsawing" between the Van Nuys, CA plant and the Norwood, OH plant. In fact, they encouraged it. In 1987, "team concept" came to GM, Van Nuys. Most of the concessions GM is asking others for now, they got from us then. It did not "save" the Van Nuys plant. It is closing this summer. All this talk of a new labor management relationship to increase "competitiveness," is just a strategy to make union leadership an appendage of the "coordinator class." Rank and file resistance to this plan is growing and is our only hope. Progressives and community activists should not hesitate to join in coalition with the rank and file to fight plant closings and concessions, even when the union "leadership" won’t. The high-flying rhetoric, of Owen Beiber, et al., should be taken with a "pound" of salt. Watch deeds not words. For more information on the Van Nuys plant, contact:

Labor/Community Strategy Center

Campaign to Keep Van Nuys Open!

6454 Van Nuys Blvd., Suite 150

Van Nuys, CA 91401

John Evans

Lake Oswego, OR

Behind the Lines

Dirty Colgate

The demonstrators called on the company to comply with a program issued by a coalition of environmentalists, neighborhood committees and district authorities, according to an Inter Press Service report. The program demands that Colgate present a timetable for relocation, halt all highly polluting practices, reduce "excessive water consumption" and resume talks with local citizens that were called off last November.

Environmentalists say Colgate’s refusal to consider the mayor’s office’s request reveals the weakness of local officials in dealing with multinational corporations. "This whole matter raises questions about official promises that the signing of the North American Free Trade Agreement ... will lead to restrictions on industries that damage the environment," coalition spokesperson Antonio Guillermo told Inter Press Service.

Colgate did not respond to repeated requests for comment.

Inside Traders

"These people are using their training and access to privileged and sensitive economic information ... to sell out to the highest bidder at a later date," said Representative Marcy Kaptur, D-Ohio, in releasing the GAO report.

Officials who have left through the revolving door include: William E. Brock, former Secretary of Labor and United States Trade Representative from 1981 to 1985, who has represented the governments of Taiwan and Panama, as well as the Mexican Ministry of Commerce during the debate over "fast-track authority" for trade agreements; former Senator Mark Andrews, who has represented over 17 Japanese businesses since he left the Senate in 1986; and Michael Smith, former deputy trade representative at the State Department, who is currently serving as a consultant to the governments of Mexico and Canada , and to the Canadian Sugar Institute.

The revolving door is a two-way problem, with individuals who previously represented foreign interests occuping top positions in the U.S. trade bureaucracy, according to a recent report from the Washington, D.C.-based Center for Public Integrity. Current U.S. Trade Representative Carla Hills, for example, was registered in 1985 as a representative for Daewoo Industrial Co., Ltd. , a Korean conglomerate, and has also worked for the foreign companies Panasonic Industries and Reuter.

Several House members have proposed legislation to curtail government officials’ revolving door activities. Kaptur and other legislators are proposing legislation that would restrict trade officials and senior members of the executive and legislative branches from lobbying after leaving government service. The bill will probably be introduced in May, according to Kaptur’s office.

GE & Whistleblowers

Walsh, general manager of GE’s aircraft-engine group in Israel from 1984 to 1988, charges that a group of employees in his division conspired with an Israeli general to submit fraudulent claims for work done for the Israeli Air Force and paid for by the U.S. government. The Justice Department has filed an extended civil complaint against GE in U.S. District Court in Cincinnati. A trial date of November 2 has been set.

Under the False Claims Act, a federal law designed to encourage and protect whistleblowers, Walsh could receive as much as 25 percent of the $120 million in damages that the Justice Department is seeking. GE spokesperson Bruce Bunch says that Walsh should have reported any wrongdoing to company officials. GE maintains that Walsh secretly gathered information about the fraud and failed to report it to the company. The corporation says Walsh violated an agreement all GE employees sign yearly, requiring them to promptly bring evidence of wrongdoing to the attention of management. Walsh’s lawyers hold that he did not report the information internally because he feared he would be physically harmed if he did.

Bunch declined to comment on whether or not the company is considering suing Walsh.

- Holley Knaus

Documents related to Agenda-21, UNCED’s action program, refer to the role of business and industry only in the context of strengthening the rights of major groups, such as women, youth, indigenous people and non-governmental organizations. UNCED is treating corporations as entities which should be relied on to help protect the environment, rather than ones whose activities are destroying the environment and should be strictly regulated.

The UNCED Secretariat is emphasizing the adequacy and willingness of big business to regulate itself. This is dramatically manifested in the Secretariat’s promotion of the Business Council for Sustainable Development (made up of corporate representatives) at a time when the UN Center for Transnational Corporations (UNCTC, the main UN agency responsible for monitoring multinational corporations) has been "restructured" into something called the Transnational Corporation and Management Division.

At an UNCED preparatory meeting in New York in April, two proposals for corporate environmental accountability were withdrawn. Sweden withdrew a proposal calling on corporations to adopt full-cost environmental accounting, and the G-77 grouping of Third World countries and China dropped a proposal calling for the establishment of a framework for global corporate environmental management.

Instead, participants at the New York meeting approved several proposals which look to business as a protector of the environment. Among them was a call to seek the cooperation of multinationals in exploring the use of market mechanisms in the energy, transport, health, forestry and other sectors.

UNCED should be moving in exactly the opposite direction, seeking to rein in, not unleash, multinational corporations.

Multinational corporations are the entities primarily responsible for the global environmental crisis. For example, multinationals in the petroleum, auto, chlorofluorocarbon (CFC), electricity-generating and energy-intensive metals industries and in agriculture account for roughly 50 percent of all greenhouse gas emissions, according to a recent UNCTC study.

There is a wealth of evidence showing that the sort of self-regulation advocated by the UNCED Secretariat is not an adequate substitute for public regulation of industry. It is also clear that individual governments, many of them economically smaller than the multinationals, cannot sufficiently regulate business on their own, especially in an atmosphere of intense economic competition, where companies pit countries against each other to lower environmental, health and safety standards.

For the UNCED to be more than a charade, it should adopt measures such as the following:

o Agenda-21 should contain proposals calling on multinational corporations to publicly disclose information related to the environmental, health and safety, social and developmental effects of their activities.

o Agenda-21 should include proposals to establish multilateral institutions to monitor, analyze and regulate the activities of multinationals.

o UNCED should reaffirm the rights of states to regulate the entry and operations of multinationals.

o UNCED should send a message to the General Agreement on Tariffs and Trade (GATT) negotiators and to other forums that the rights of multinationals are secondary to the rights of the public and states to regulate corporate activities on behalf of environmental protection and development interests.

o Agenda-21 should call for the restoration of the UNCTC and the strengthening of other agencies’ efforts to monitor multinationals.

o Agenda-21 should include proposals for international mechanisms to make multinationals liable for compensation and other payments for the environmental, safety and health effects of their operations.

Reliance on "market forces" and the failure of self-regulation are responsible, in large part, for the world environmental crisis. The time has come for greater and more effective monitoring and regulation of multinationals, the economic agents whose present and future behavior will determine the fate of the earth.

HAZARDOUS WASTE INCINERATORS, and the web of regulations intended to make them operate safely, have come under withering criticism from government scientists, private researchers and the Wall Street Journal during the last several months. Officials of the U.S. Environmental Protection Agency (EPA) and private research scientists now admit that hazardous waste incinerators emit hundreds of times more dioxins and other toxic air pollutants than is allowed by EPA regulations, and the Wall Street Journal revealed a record of malfunctions, including explosions and major releases of toxins, that incinerator operators have tried to cover up and that regulatory officials seem powerless to understand, much less curtail.

Scientists employed by EPA acknowledged in March 1992 that modern hazardous waste incinerators simply cannot comply with existing federal regulations because they cannot destroy all chemicals with 99.99 percent destruction/removal efficiency (DRE), which is the level required by federal law. Federal law further requires that certain wastes of "special concern," such as dioxins, furans and PCBs, be destroyed with 99.9999 percent DRE. EPA scientists said last month that they have known since at least 1985 that hazardous waste incinerators could not meet any of these regulatory requirements.

The Jacksonville debacle

The story broke when Pat Costner, a chemist and research director for Greenpeace, published an independent analysis of dioxin emissions from the Jacksonville, Arkansas incinerator. The Jacksonville incinerator has begun burning 16.5 million pounds of herbicides (2,4,5-T and 2,4-D) left over from the Vietnam War. These wastes are known to be contaminated with total dioxins and furans at concentrations ranging from 3 to 40 parts per million (ppm).

Costner’s analysis revealed that the Jacksonville incinerator was only achieving 99.96 percent destruction of the dioxins entering the incinerator, thus emitting 400 times more dioxin into the community than the law allows. An official with the Arkansas Department of Pollution Control and Ecology acknowledged in telephone interviews that Costner’s calculations are correct. He also said the department had no intention of shutting down the incinerator despite its continuing emissions of dioxin directly into a residential community. He said the department did not know what the total dioxin emissions into the population of Jacksonville would be. But, he asserted, no matter what the total may be, it is safe.

The Jacksonville incinerator is a key demonstration project, established with the cooperation of EPA Administrator William Reilly and Arkansas Governor Bill Clinton to show that dioxin-containing wastes can be incinerated in a residential neighborhood over the objections of the community. In a city-wide referendum in March 1986, the people of Jacksonville voted two-to-one (1383 to 656) to stop the project, but government officials simply ignored the vote and have overridden all objections ever since. Costner’s analysis clearly showed that residents of Jacksonville are being exposed to levels of dioxin contamination that exceed federal health and safety standards by a wide margin. This is the first systematic dioxin experiment on humans using a residential population. Previous dioxin exposures of humans have occurred during industrial accidents and in the industrial manufacture of chemical-biological warfare agents. Dioxin is now known to cause cancer in humans and to disrupt normal growth and development of fetuses and infants at low levels of exposure.

About 100 waste sites in the United States contain substantial quantities of dioxin, and the United States has stockpiles containing billions of pounds of chemical-biological warfare agents which the federal government wants to incinerate. If the Jacksonville dioxin experiment can be maintained despite ethical and public health objections, government agencies will be able to claim they have a green light to incinerate just about anything just about anywhere.

The Jacksonville experiment has brought to light information that could derail the entire U.S. incineration program, however. In preparing her analysis of dioxin exposure of the Jacksonville populace, Costner uncovered a government study showing that tests conducted in 1984 and 1985 by private researchers under contract to EPA revealed that hazardous waste incinerators cannot be expected to achieve 99.9999 percent destruction of wastes that occur in concentrations lower than 10,000 parts per million, and cannot be expected to achieve 99.99 percent destruction of wastes that occur in concentrations lower than 1000 ppm. EPA published the 1985 data in 1989.

When this information came to light, a news reporter from the Arkansas Democrat-Gazette, Sandy Davis, interviewed Bob Hall, chief of the EPA’s Combustion Research Branch in Research Triangle, North Carolina, and he confirmed what the EPA report had shown. "The fact is that you run into problems with your DRE when a low concentration of wastes is fed into the incinerator," Hall said. "Our data clearly shows that." Davis asked Hall why EPA hasn’t changed its regulations since it knows that existing incinerators cannot comply with the regulations. Hall said, "I don’t know why that hasn’t been changed. It’s a regulatory issue. I’m in research."

Costner uncovered a second EPA report, published in 1984 but never widely circulated, showing that, among eight major hazardous waste incinerators studied, none could achieve 99.99 percent DRE. Sandy Davis interviewed the author of that report, Drew Trenholm of the Midwest Research Institute in Research Triangle, North Carolina, who said that incinerators simply cannot achieve the DRE required by federal law. "The trend is very strong in the data that this is the case," Trenholm told Davis.

At public hearings over the past decade, dozens of EPA officials have stated for the record that incinerators can achieve the legally required DREs in what appears to be a coverup of public health information of astonishing proportions.

Many of the most dangerous toxins, such as dioxins, furans and PCBs, occur in wastes at low concentrations. If low-concentration chemicals cannot be destroyed effectively, then all sludge incinerators, contaminated-soil burners and wood-treatment- waste incinerators will fail to meet federal regulations and will emit illegal quantities of potent toxins into surrounding air.

The Chem Waste nightmare

The human management failures of incineration technology are no less remarkable than the failures of the technology itself.

Chemical Waste Management is the nation’s largest and wealthiest operator of hazardous waste incinerators. Joan Bernstein, vice-president for environmental policy and ethical standards at Chem Waste, says, "Environmental compliance is what drives this company." Some of the company’s parent firm’s top executives donate time to sit on the boards of directors of prominent environmental organizations like the Audubon Society and the National Wildlife Federation. If any entity were capable of running an incinerator well, it would seem to be this company.

Yet during recent years Chem Waste’s two incinerators have racked up a list of leaks, spills, releases, explosions, violations and coverups that would fill a hefty book.

According to Wall Street Journal reporter Jeff Bailey’s review of Illinois state EPA inspection and other records and Journal interviews with state and company officials, among Chemical Waste Management’s numerous violations of standard operating procedure are the following:

o Chem Waste has mixed incompatible wastes together, causing chemical reactions that sent plumes of waste wafting off-site.

o Chem Waste on several occasions has been caught feeding wastes to the furnace at excessive rates, reducing the effectiveness of waste destruction.

o Chem Waste sometimes burns wastes at temperatures of only 1300 degrees, far below the required 1600 degrees.

o Chem Waste has permitted carbon monoxide to exceed the limit of 500 ppm in the stack gas.

o Chem Waste has failed to maintain proper manifests indicating where all the wastes come from.

o Chem Waste has failed to keep proper operating records.

o In some instances, Chem Waste has failed to transfer waste in leaking containers to new containers.

o All wastes are supposed to be sampled to avoid putting explosives into the furnace, yet both Chem Waste incinerators have exploded during the past year, offering clear evidence of failure to identify wastes properly.

o Chem Waste has failed to report explosions at its incinerators.

o Waste feed is supposed to cut off automatically when hydrochloric acid (HCl) in the stack gas exceeds 100 ppm, but Chem Waste had its cut-off set for 500 ppm HCl.

o Chem Waste’s incinerators are not licensed to burn dioxins, but on December 3, 1991 Chem Waste’s incinerator at Sauget, Illinois burned a 25 milligram vial of dioxin - enough to provide a maximum allowable dose for 232,000 people.

Government ineptitude

Government regulation has done little to curb industry abuses. The Wall Street Journal’s Bailey pointed out on March 20 that federal, state and local regulatory officials pay close attention to hazardous waste incinerators, but they can’t be everywhere at the same time, and they often learn about accidents, explosions and violations from tips phoned to them anonomously by insiders. There are many other regulatory problems, as well.

The person responsible for developing EPA’s hazardous waste incinerator regulations in 1978 was William Sanjour. In a recent letter to a grassroots activist, Sanjour offered several reasons why the regulations, as finally written, don’t work:

"I’ve talked to many people who live near hazardous waste sites and I have reviewed many records, and this is the way it really works," Sanjour wrote. "Inspectors typically work from nine to five, Monday through Friday. So if the incinerator has anything particularly nasty to burn, it will do so at night or on weekends. When the complaints come in to the inspector’s office the next day, he will call the incinerator operator and ask what’s going on. He may also visit the plant, but he rarely finds anything. The enforcement officials tend to view the incinerator operator as their client and the public as a nuisance."

"Keep in mind that hazardous waste is a factory’s garbage. If they typically ship out, say, 1,000 gallons a month of waste solvents and they find themselves with, say, 50 gallons of waste PCB which they don’t know what to do with, what is more natural than dumping it in with the waste solvent to be hauled away to the incinerator? No one would be the wiser," Sanjour wrote.

He offered other reasons why the regulations are insufficient:

o The regulations require no monitoring of ambient air in the vicinity of the incinerator.

o It is easy for operators to cheat because they maintain the records.

o Government inspectors are typically poorly trained. They have low morale and high turnover. EPA statistics show that 41 percent of inspectors have conducted fewer than 10 inspections. "There is no reward to inspectors for finding serious violations and, indeed, zealous inspectors are typically given a hard time by their supervisors," Sanjour wrote.

Recent events at the Jacksonville, Arkansas incinerator appear to follow a script that might have been written by Sanjour.

The Jacksonville site manager, Robert Apa, issued respirator masks to all employees and sent an inter-office memo April 1 ordering everyone to keep their masks handy because of dangerous "puffs" of pollution being emitted from the furnace. Seals in the fire box are leaking, and periodically, for reasons that are not understood, pressure builds up inside the furnace, forcing "puffs" of contaminants to escape. The puffs last from 5 to 45 seconds and represent emissions that entirely bypass the pollution control system.

When the media obtained an internal company memorandum discussing the puffs, Mark McCorkle, an Arkansas state official assigned to regulate the Jacksonville incinerator, first tried to pressure the Arkansas Democrat-Gazette (the state’s largest paper) not to print anything about it. McCorkle then conceded that the pollution puffs posed a potential hazard to workers, but denied that the public would be affected when the puffs drifted off-site to the homes that lie a long stone’s-throw from the furnace. "If you were to take this memo out of context, it would appear to be a horror story," McCorkle said.

Apa stressed the difficulty of preventing the puffs. "We have taken measures via the procedural changes and a new interlock, to minimize the duration" of the puffs, he said. "However, as soon as one problem is identified, another seems to appear."

Jacksonville citizens continue to work desperately to shut down the incinerator. A new group, Jacksonville Mothers and Children Defense Fund (JAMAC), will soon file a lawsuit seeking a shutdown. They are asking groups across the United States to sign on to their suit.

After a decade of experimentation and experience, the record now indicates that hazardous waste incinerators cannot be operated safely, even when the operator desires to do so. If the operators have any inclination to cut corners, regulatory officials seem unwilling or unable to bring them to justice, intensifying the risks to the public even further.

- Peter Montague/

Rachel’s Hazardous Waste News

by Nancy Watzman

PENNSYLVANIA SENATOR HARRIS WOFFORD edged out rival Dick Thornburgh last fall by proclaiming the need for it; Nebraska Senator Bob Kerrey tried to make it all the way to the presidency on it alone; and now even President Bush has reluctantly come up with a pseudo-plan for it. With public awareness of the health-care crisis heightened by a recession replete with layoffs and benefit cut-backs, the issue of health-care reform is the hottest it has been since the 1960s, when the American Medical Association (AMA) beat back a movement for national health care and the nation got Medicaid and Medicare instead.

More than $756 billion - over 13 percent of the GNP - is being paid out yearly in health care, and 37 million U.S. citizens are uninsured. Even those who are employed and have strong union representation have had their health benefits cut back. "Of the folks going on strike in recent years [and facing permanent replacements], 69 percent are on strike over health care," says Claudia Bradbury, a policy associate for the AFL-CIO.

Public pressure and constant media attention have pushed the issue to the point where the chance for real reform of the imploding U.S. health-care system seems possible. Even CEOs of major corporations are calling for some sort of government intervention. Yet the U.S. labor movement is split on how to solve the crisis, and may be missing the opportunity to make health-care reform a reality in this century.

"The labor movement is paralyzed by divisions. The AFL-CIO can’t get itself together. It’s so riven by narrow self-interest, it keeps it from doing what needs to be done," says Dr. David Himmelstein, a long-time participant in the health reform debate and co-founder of Physicians for a National Health Program. Physicians for a National Health Program advocates a Canadian-style health-care system, often called a "single- payer" approach, for the United States.

It is in the approach to reform that the labor split has occurred. While the proliferation of health care proposals may seem stupefying, they are all essentially variations of three basic types: tax credits, play or pay and single payer. The labor movement is divided between the play-or-pay and single-payer approach.

The alternatives

The tax-credit approach, the sort of policy that President Bush advocated in his State of the Union address in January, barely qualifies as a reform at all. Bush’s plan would give individuals a tax credit that they can use to buy health insurance. This kind of plan is touted by conservatives like those at the Heritage Foundation, who claim that credits will make people smart consumers of health care. Of course, such a plan does nothing to solve the problem of health insurance companies dumping people from policies when they become sick with AIDS or cancer; nor does it include anything to cut rising health-care costs, other than supposed free-market corrections.

Play-or-pay proposals, the type of plan that former presidential candidate Michael Dukakis pushed through in Massachusetts and now trumpeted by Senators Ted Kennedy, D-Massachusetts, and George Mitchell, D-Maine, are, ironically, quite similar to the approach championed in the early 1970s by then-President Richard Nixon. Under this type of plan, employers must either provide their employees with health insurance or pay into a government health insurance program, a sort of expanded Medicaid program. But, critics say, play or pay is more pay than play. In Massachusetts, for example, the hospital and other medical business lobbies kept cost controls out of the program, with the result that the state cannot afford the new plan and has not yet been able to implement it.

The single-payer system, in place in Canada since the late 1960s, severs the link between employment and health care by setting up a national plan that provides health services to all citizens. It makes the federal government the only provider of health insurance, and eliminates all private health insurance. It is the most radical waste-reducing type of plan, eliminating the bloated administrative costs from which the United States currently suffers. In Canada, there is no need for legions of actuaries furiously laboring to calculate whether or not to deny coverage to someone with diabetes: every citizen is covered by the national health insurance program. Canadians pay only 11 cents on the dollar for administrative costs associated with health-care provision; U.S. citizens pay up to 24 cents. Another measure of the single-payer system’s cost-slashing success: Blue Cross of Massachusetts covers 2.7 million subscribers and employs 6,680 people, more than are employed in all of Canada’s provincial health programs, which insure 26 million Canadians. A number of members of Congress have sponsored single-payer-type plans, including Rep. Marty Russo, D-Illinois, and Sen. Paul Wellstone, D-Minnesota.

Anatomy of a split

While the labor movement has worked on the health-care issue for decades, the prospect for reform was stymied throughout the 1980s by the Reagan administration. The AFL-CIO took up the health-care issue with renewed vigor in 1989, organizing a series of hearings around the country and producing television advertisements about the disintegrating system.

After more than a year of information gathering, the AFL-CIO’s executive council split 8 to 8 over whether to support a single-payer solution or a play-or-pay program at a February 1991 meeting in Bal Harbour, Florida. The AFL-CIO decided not to decide; instead, individual unions were allowed to go their own way. The executive council passed a list of basic principles for health-care reform, vague enough to embrace either the play- or-pay or single-payer approach.

Ever since that decision, most unions have been working hard to dismiss it as a minor strategy split. "In a sense, the AFL-CIO fully captures what’s happening in the country," says Liz Novotny, an economist for Communications Workers of America (CWA), which is in the single-payer camp. "The argument and debate is right here [between play or pay and single payer]." She argues that the labor movement has made it difficult for advocates of weak-kneed reform to gain support. "After all, the Bush proposal hasn’t been taken seriously. The labor unions have helped push the debate to that point."

The American Federation of Teachers (AFT), however, which represents 750,000 teachers nationwide, has reached the point of exhaustion over that very debate. "We’ve been fighting among ourselves for about a year about the best way to have comprehensive reform. People treat it like it’s a foregone conclusion that we’re going to get it at all. It’s 1992, and we still haven’t got it," says John Abraham, assistant director of research for the AFT.

Like the AFL-CIO, the AFT has decided not to decide; instead of endorsing one position or the other, Abraham says, "We just want comprehensive reform." The AFT has endorsed a play-or-pay-type proposal put out by the National Leadership Coalition (NLC), a business-led group that also includes the likes of Safeway, Chrysler and Xerox. Abraham insists, however, that the NLC endorsement means little, and that the group would also endorse an independent single-payer proposal.

Those unions supporting play-or-pay proposals find themselves in an awkward situation, since, as even the AFL-CIO admits, the single-payer approach makes more sense to the most people. "Our own closest neighbor has this system, and we look so much like them. It’s easy to explain, and the system is equitable," says the AFL-CIO’s Bradbury. But play-or-pay advocates claim they must work for what can realistically be achieved. "We have to get from here to there," says Bradbury. "If we had a [U.S.] president who sat on the eighth floor [of the AFL-CIO building] and said ‘Whatever you say, we’ll do,’ it’s guaranteed we would ask for single payer. If the president says, ‘Maybe you’ll get one quarter of what you want,’ we have to address [the health insurance issue] in steps."

Labor on the sidelines

Right now, a wide range of health-care reform proposals are languishing on Capitol Hill. The Kennedy-Mitchell play-or-pay proposal, presented with much hooplah in summer 1991, has failed to pick up much steam. No unions have endorsed it. The Russo single-payer proposal has picked up 69 co-sponsors, but has been opposed by some health-care-reform groups for not going far enough to eliminate the for-profit insurance industry. A bill proposed by Wellstone takes the Russo proposal and improves on it, but has only recently been introduced. Meanwhile, Bush’s tax-credit proposal remains the Republican establishment’s best effort toward reform. Given this discouraging scenario, it seems that only a Democratic President would bring the potential for change.

So far, most unions have not endorsed specific legislative proposals. A number of AFL-CIO affiliates are working from a single-payer angle, but have not endorsed a bill. Similarly, unions advocating play-or-pay plans have not endorsed particular bills, although a number have endorsed the play-or-pay proposal of the National Leadership Coalition.

Play-or-pay unions may well find themselves in a box. Tony Mazzocchi, former secretary-treasurer of the Oil, Chemical and Atomic Workers, is a longtime supporter of the single-payer approach. He says that while play-or-pay-supporting unions may believe they are advocating a winning proposal, they are ignoring the importance of being able to mobilize workers in support of a national health-care plan. Reform-by-steps may seem to make sense when one is sitting in a conference room with senators - but it has little appeal to a mother who cannot afford to pay for her daughter’s hospital bills. And without the active support of that mother and others in similar situations, it may be impossible to enact any reform.

Sidebar

There are two basic forms of cost control. First, provinces set budgets for hospitals and clinics to cover day-to-day expenses, such as q-tips and syringes. If hospital administrators want to invest in a new piece of equipment, such as an MRI machine, they apply to the province for the funds. Second, the provinces negotiate with medical associations to determine the amount doctors may charge for specific services. This is not very different from what happens in the United States when states set Medicaid reimbursement rates - except that doctors in the United States are always allowed to charge more than that rate, while Canadian doctors are barred from doing so.

The Canadian system works. According to Consumer Reports magazine, a Canadian who earns the equivalent of $26,000 per year pays about $1,300 in taxes for health care. People in the United States, or their employers, pay $2,000 yearly, plus another $500 or so for co-deductibles and other expenses. Canadians are, by and large, more satisfied with their system than U.S. citizens are: a 1988 Harris poll shows that nearly 60 percent of Canadians are satisfied with their health-care system, compared to only 10 percent of the U.S. population.

- N.W.

Sidebar

American Federation of State, County and Municipal Employees

Communications Workers of America

International Association of Machinists

Oil, Chemical and Atomic Workers

United Auto Workers

United Electrical Workers

United Mine Workers of America

Play-or-Pay Unions

American Federation of Teachers

International Brotherhood of Electrical Workers

Service Employees International Union

United Food and Commercial Workers International Union

United Paperworkers International Union

United Steelworkers of America

Sidebar

CORPORATIONS ARE FEELING the health care crunch too - in the form of spiraling costs for health coverage for employees. "I hope none of us will abandon our employees, but we are going to cut our losses," Richard Heckert, president of the National Association of Manufacturers, told Congress last year, echoing the sentiments of many corporate leaders.

International cost differences are apparent to the heads of major corporations. Chrysler’s Lee Iacocca notes that his company pays $700 in health care for every car it produces in the United States, whereas health-care costs in Canada run less than $225 per car.

Small businesses are hard hit too: horror stories abound of small employers suddenly facing exorbitant premiums because of a single employee’s treatment for cancer or other major disease.

Many corporations have turned to the government, asserting that it will have to take the health insurance burden off of employers. A number of companies, especially in the steel industry, have signed on to the National Leadership Coalition’s play-or-pay-type proposal. Among them are: Bethlehem Steel, Chrysler, Control Data, Georgia-Pacific, Inland Steel, James River, LTV Steel, Lockheed, Northern Telecom, Time Warner, Westinghouse and Xerox.

- N.W.

Sidebar

AARP denies that its position is affected by its role as an insurance provider. A January 1992 document produced by the organization’s national legislative council states, "Although AARP derives considerable revenue from providing health insurance to members, the Association will gladly forgo every penny of it in exchange for a national system that provides universal access to quality care, real cost containment and a way to pay for it that is broadbased and fair."

Yet the AARP consistently has prevented its members from even commenting on a single-payer option. In January 1992, the organization’s national office mailed a questionnaire to 10,000 volunteers asking them about the AARP health-care proposal. The survey addressed only the play-or-pay option, allowing no room for comments on a single-payer approach.

The March 1992 issue of Public Citizen’s Health Letter, edited by Dr. Sidney Wolfe, harshly criticized the AARP’s actions: "AARP members will continue to rise up and demand that their organization give them real alternatives to ‘Play or Pay.’ Such a grassroots revolt has taken place before. It’s time to stop playing with a stacked deck."

- N.W.

by Holley Knaus

APPROXIMATELY FOUR MILLION CHILDREN DIE each year from diarrhea-related causes, primarily dehydration, according to the World Health Organization (WHO). Many of these deaths can be prevented through oral rehydration therapy, which is simply the replacement of fluid and mineral losses caused by the diarrhea with a mixture of clean water, salt and sugar. Yet, according to a 1992 WHO report on the use of drugs in treating diarrhea, appropriate treatment "often remains the exception rather than the rule. In particular, studies of current patterns of diarrhea treatment have shown that a large number of pharmaceutical agents of dubious efficacy and potential toxicity are widely used."

Other anomalies concerning pharmaceuticals are not uncommon in much of the Third World. Dr. Syed Rizwanuddin Ahmad, currently a clinical pharmacology fellow at Georgetown University and coordinator of Health Action International Pakistan, says Pakistani hospitals often suffer shortages of anti-malarials and vaccines for tuberculosis, even while they are stocked with "vitamins, cough syrups and iron pills."

Malnutrition, infection and diarrhea are among the leading causes of death among children in developing countries. The best "cure" for these conditions is prevention through proper nutrition, hygiene and clean water. In much of the Third World, however, these preventative measures are overshadowed by the magical allure of drug therapies.

Multinational pharmaceutical companies, which have targeted Third World countries as markets for thousands of drugs, many of which are ineffective, and some of which are harmful, are significantly responsible for these misplaced priorities. Compounding the problem, pharmaceuticals in many developing countries are sold without prescriptions, warnings or instructions for use, and often are taken improperly or for inappropriate uses.

The consequences of this widespread misuse of medications are devastating: reliance on curative pharmaceutical measures often means that appropriate preventative measures are not implemented; the inappropriate use of drugs often delays or replaces appropriate treatment; poorer countries waste limited currency on unnecessary drugs; and indiscriminate use of drugs can lead to resistance to their effects - chloroquine, for example, widely available and often used improperly throughout the late 1950s and 1960s, is no longer effective as an anti-malarial in several countries because the disease has become resistant to the drug.

Without question, certain drugs and vaccines can contribute greatly to the health of a population. In the late 1970s, as the United Nations recognized universal access to adequate health care as a fundamental human right, health activists and WHO officials began to identify pharmaceuticals that meet the basic health needs of the majority of people as "essential drugs." The idea behind the concept was primarily to broaden access to these essential drugs, but many health activists believe that stemming the flow of useless or harmful drugs into developing countries is equally important.

Making fewer mean more

In 1977, WHO formulated a list of about 200 essential drugs to be used as a guideline by governments. The WHO Action Programme on Essential Drugs and Vaccines (APED) was formed in 1981 to provide training and to lend technical assistance and some financial support to countries implementing policies designed to ensure the widespread availability and affordability of essential drugs. According to WHO, more than 100 countries have formulated essential drug lists for the different levels of health care, and 50 have formulated or are formulating comprehensive national drug policies centered around the essential drugs concept.

The idea is that a country will look to the WHO list to identify those drugs most vital to its health needs. At a minimum, governments should give priority to essential drugs in areas such as foreign exchange allocations and should encourage their production by domestic enterprises. More comprehensive policies include provisions for withdrawing the registration of nonessential and harmful drugs, drawing up narrow selections of drugs for different categories of health workers (making different drugs available to a primary health care worker in a rural area than to a doctor in an urban hospital, for example), and educating doctors, nurses and other health-care workers on the proper use of available pharmaceuticals.

APED updates the model list every two years, which currently includes about 300 drugs and vaccines. Drugs and vaccines included in the list must meet a few broad requirements developed by APED: they must meet common health needs, have significant therapeutic value, be acceptably safe and offer satisfactory value. According to WHO, the drugs on the list meet about 90 percent of the pharmaceutical requirements of developing countries.

An APED report presented in March 1990 to the World Health Assembly states, "From a global perspective, access to essential drugs remains critical for reasons which include lack of resources, poor infrastructure, and shortage of trained technical and management national staff ... [It] must be recognized that a vast number of people - perhaps as many as 1,500 million - still lack regular access to the most-needed essential drugs, either because these are not available or because their cost is beyond the reach of most of the rural and urban poor."

Economics is one of the primary motivations for the adoption of essential drugs lists. Philippa Saunders of OXFAM UK says that the lists are "mechanisms for rationalizing resources against needs." Saunders says that "financial restraints, [particularly] the availability of foreign exchange, govern" what resources a government can purchase. Limited lists ensure that funds are not wasted on useless or harmful pharmaceuticals.

Additionally, almost every one of WHO’s essential drugs is now off-patent and available in generic form. This lowers the price of a drug dramatically, while serving to lessen aggressive promotion of a particular brand through advertising or sales representatives.

Rizwanuddin says that one of the main reasons countries adopt essential drugs lists is to improve access to drugs for people in rural areas where it is hard to get modern medicine.

He also points out that an important aspect of the essential drugs concept is to protect consumers from aggressive producers and marketers of useless pharmaceutical products.

In the United States, Rizwanuddin says, "the FDA is very active in regulating the marketing and advertising" of drugs. In most developing countries, however, "there is no such mechanism to control" the marketing practices of drug producers, he says, and the regulatory bodies that do exist usually lack enforcement power. In many developing countries, consumers buy the same drug (without a prescription) marketed by several different producers under different brand names, not realizing that they are all the same product. Reducing the number of drugs available facilitates pharmaceutical regulation and makes it easier for health officials to educate consumers about the proper use of the available medications.

Lack of education and information about pharmaceuticals is a serious concern which leads to irrational use of drugs, according to the APED report. The report states, "Paradoxically, the ever-increasing demand for drugs is frequently associated with poor compliance [with directions for] their use, often because patients are dissatisfied with the drug, do not understand how to take it or are unable to pay for the full dose."

While most countries have adopted essential drugs lists, implementation and enforcement varies widely. Policies are often adapted to different levels of care - physicians in hospitals will have access to more drugs than primary health care workers in rural areas. Almost all lists are based on the WHO model list, but the lists vary from region to region, as Rizwanuddin points out, because "different countries have different disease patterns."

In most countries, essential drugs lists apply only to the public sector - government hospitals, clinics and health care programs - while non-essential drugs remain available on the private market.

A few developing countries have adopted more stringent national drug policies based around the essential drugs concept. Nigeria , for example, prohibits the import, manufacture, sale or distribution of any drug not on its list of about 200 essential drugs. Drugs must be advertised and sold under generic names. The drug policy applies to both the public and private sectors. The policy does allow doctors to request permits to import pharmaceuticals not on the list for special cases. Nigeria has been unable to strictly enforce the policy, however - over-the-counter drugs are still widely available at pharmacies and quality-control facilities are inadequate. According to a June 1991 report issued by the Amsterdam-based Working Group on Health and Development Issues, "It is estimated that 40-60 percent of the drugs on the market in Nigeria are counterfeit."

In 1982, Bangladesh enacted a national drug policy that identified 150 most essential drugs, and about 100 other drugs required by hospital specialists. The policy banned over 1,700 drugs described as useless, non- essential or harmful. [see Bangladesh bans 1700 drugs; curbs foreign firms," Multinational Monitor, August 1982 ]. U.S. and European government officials and industry interests responded with strong-arm tactics against the Bangladesh government, and the country eventually rescinded the ban on about 40 products. The supply of essential drugs to health-care facilities is still far below requirements, in large part because of low government spending on health - the 1990 health budget was only 3 percent of the total budget, or $1 per head - and because of difficulty in distributing drugs in the rural areas where 85 percent of the populace resides. However, the policy has resulted in lower prices for the most important drugs and better control over dangerous drugs, and has sparked local production of pharmaceuticals. Multinationals’ share of the market declined from 65 percent in 1981 to 41 percent in 1987, and four domestic drug companies were among the top 10 producers as of 1990. By 1987, 75 percent of Bangladesh’s pharmaceutical production was devoted to the 45 drugs determined to be most essential for primary health care.

Rizwanuddin says there are important advantages to drug policies that restrict the number of drugs available. When consumers have access to drugs through private pharmacies, he says, they often come to believe that drugs available for free or at a subsidized rate through government hospitals or programs are not as effective as those available only on the private market. A "general attitude develops," says Rizwanuddin, that if you have to pay more for a medication, "then it must be a better drug."

Business and essential drugs

WHO has generally emphasized the importance of broadening access to essential drugs, rather than curbing the marketing of useless or harmful drugs. Some health activists criticized the organization in the 1980s for not taking a strong position against non- essential drugs and the industry that produces and aggressively markets them. WHO was very slow, for example, to voice support for Bangladesh’s national drug policy, the first to put WHO’s essential drugs concept into practice.

Rizwanuddin says, however, that, in practice, APED policies have worked to stem the flow of useless drugs into developing countries. He points out that numerous WHO publications, intended for use in formulating national drug policies, do advise against the use of certain drugs. Its recent publication on the treatment of diarrhea, for example, strongly recommends that antidiarrheals never be used and advises only very limited use of antibiotics, and those only for dysentary and cholera.

APED has also encouraged local production of pharmaceuticals while acknowledging the potential economic and political consequences of government efforts to promote self-sufficiency. The APED report to the World Health Assembly says, "One of the aims of essential drugs schemes to serve the whole population is to encourage self- reliance in local production, but this raises many economic, infrastructural and technical problems - even political problems, when it threatens the interests of the transnational companies." The same report points out that WHO has had only limited success in stimulating local production, most of it in Africa.

The multinational pharmaceutical industry was strongly opposed to the essential drugs concept when it was first introduced and implemented in the late 1970s, with the International Federation of Pharmaceutical Manufacturers Associations (IFPMA) and the U.S. Pharmaceutical Manufacturers Association (PMA) arguing that limited lists would lower the standard of health care in developing countries and reduce competition, resulting in lower quality and higher priced drugs. A 1985 PMA report asserted that the national drug policy in Bangladesh scared off investors, that it had failed to make essential drugs more widely available and that banned drugs were still available in Bangladesh as a result of an increase in smuggling from India and the manufacture of low-quality imitation products within the country.

The pharmaceutical industry seems less concerned today with issuing dire warnings about the impact limited lists will have on world health (as long as they do not attempt to restrict the private market). An IFPMA position paper on essential drugs says, "The international pharmaceutical industry represented by IFPMA supports the original concept of WHO’s Model List of Essential Drugs for government-funded primary healthcare programs designed to serve the poorest populations in countries with limited resources."

The IFPMA paper does warn against any limits on the private sector: "In countries where a well-developed, private medical sector meets the needs of patients who can afford optimal care, subjective limits on the variety of drugs available can harm medical care. ... [Imposing] such limits on all sectors of the community will do nothing to raise the standard of treatment for the least privileged." The paper also states that restricting the number of available drugs may lead to reduced research and development and competition and to higher prices for drugs. Restricted drug lists, IFPMA contends, "limit the number of drugs available at a serious and unnecessary risk to public health."

Multinational pharmaceutical companies have probably relaxed their rigid stance against the concept because in practice limited lists have had little impact on sales. Very few lists apply to private markets, which remain open to the pharmaceutical manufacturers.

An essential role

Education must be a key component of an effective essential drug program, both OXFAM’s Saunders and Rizwanuddin stress. "An unbiased source of information is an essential component" of a rational drug policy, says Rizwanuddin. Physicians, pharmacists, primary health-care workers and other prescribers must be given objective information (from a source other than a manufacturer) about medication, he says.

Health activists stress that prevention of disease should play as large a role in health care as curative measures. Still, the essential drugs concept is a useful mechanism for determining which medications really are vital to the health standard of developing countries, and which pharmaceuticals those countries should purchase with limited currency.

Sidebar

The group determined that at least 47 drugs banned or withdrawn in Europe were on the market in the Third World in the second half of 1990. The WEMOS list contains both drugs exported from Europe and those produced in developing countries by subsidiaries of European companies. The majority of the drugs on the list are analgesics and antibacterials, for which there are several safer alternatives that appear on the World Health Organization essential drugs list.

Europe has much less stringent pharmaceutical export regulations than the United States, where the 1986 Drug Export Amendment Act severely restricts export to the Third World of any new drug that has failed to gain approval from the Food and Drug Administration, has had approval withdrawn or is otherwise restricted for safety reasons. According to WEMOS, discussions in the European Parliament over the issue of drug exports to the Third World ended in 1989 with the adoption of regulations that lack substantial export restrictions.

"Exposed Deadly Exports" lists numerous examples of "irresponsible industry response" to concerns about the safety and efficacy of a product. The WEMOS report charges many companies with: postponing the withdrawal of obsolete products in the Third World; selling out old stocks after voluntarily withdrawing a product for safety reasons; reformulating a product into a similar drug after a ban, but selling it under the same name and logo, making it almost impossible for consumers to distinguish between the old, unsafe product and the new, safer drug and enabling companies to continue selling their stock of the unsafe drug; and refusing to accept responsibility for the marketing of obsolete products by their subsidiaries outside the Community, even though the products are promoted under the company name and logo.

WEMOS recommends the EC take a number of steps to control the export of harmful or ineffective drugs to the Third World. These include: creating a consolidated list of banned drugs within all European countries; limiting the exports of banned, withdrawn or unlicensed drugs through application of a "prior informed consent" procedure which would allow for the export of a banned or restricted product only if it was specifically requested for import by a country and full information on its use in Europe was disclosed; and enacting a complete ban on the export of products that are considered too dangerous for use in any circumstance.

"The basic premise of export control is that the same standards should be applied for the domestic market as for the export of pharmaceuticals. ... [Most] products are banned because they are unreasonably hazardous no matter where they are used. The same standards should therefore be applied for their export as for the drugs we use in our own pharmacies," the report concludes.

- H.K.

by Daniel Newman

EACH YEAR, 12,500 WOMEN in the United States alone die from ovarian cancer. To public health advocates, women’s rights activists and the friends and families of those who have suffered from ovarian cancer, the disease’s high incidence and mortality rates constitute a national health emergency. But for Bristol-Myers Squibb, the crisis represents a golden opportunity. The pharmaceutical corporation exercises exclusive control of taxol, an experimental drug which shows promise in treating ovarian cancer.

If taxol continues to perform well in clinical trials, Bristol-Myers stands to earn billions of dollars. Patients are already clamoring for the drug, and its price will be high. Zola Horovitz, vice president for business development and planning at Bristol-Myers, says, "Taxol will probably cost more than any oncology product that’s ever been developed."

In a sense, this is not remarkable. By their very nature, pharmaceutical corporations capitalize on people’s illnesses to make profits.

What is noteworthy about the taxol case is that Bristol-Myers Squibb is poised to make so much money for having done so little. It did not discover, develop or test the drug. The U.S. federal government did all those things. Nor does Bristol-Myers own the land where the Pacific Yew tree, from which taxol is derived, grows. The U.S. government owns much of that property, and the company is paying little or nothing for access to the trees that grow on it.

The tale of how Bristol-Myers came to gain control of taxol is a startling story involving the exploitation of a loophole in a federal law, a rapidly spinning revolving door between business and government, short-sighted public officials and an aggressive, greedy company. Representative Ron Wyden, D-Oregon, and a lonely public interest group are trying to halt the government’s virtual giveaway of taxol, but it is not clear what effect they will be able to have.

Public investment, private profits

The National Cancer Institute (NCI) developed taxol over several decades, conducting its first studies of the substance in the late 1960s. NCI has spent more than $12 million on taxol research, tests and clinical trials to date, and it plans to spend at least $23 million more.

In the words of Samuel Broder, director of NCI, "NCI was totally responsible for [taxol’s] development" until 1991. Researchers first discovered taxol’s medicinal value through a government-financed screening program of hundreds of natural products. As well as initially collecting the yew bark, NCI has done all biological cell screening, chemical purification, isolation and identification, large-scale production and dosage formulation of taxol. NCI has done the toxicology, filed and documented an Investigational New Drug application with the Food and Drug Administration (FDA) and sponsored all clinical studies of the drug.

NCI’s work has shown that taxol has tremendous potential. In clinical trials, taxol effectively treated ovarian cancer in 30 percent of patients, even when other chemotherapy had failed. The drug binds tumors, arresting their growth and sometimes shrinking them. Taxol also shows promise in combating breast and lung cancer, and NCI plans to further test the drug for about 30 other cancer indications.

Ultimately, the drug may prove to be among the great success stories of publicly financed cancer research.

But virtually all of the financial benefits from taxol will accrue to Bristol-Myers, as a result of agreements between the corporation and three government agencies. The agreements cede control of the drug, and the tree which contains it, to the drug company.

"The agreements are extraordinary because they give near-total control of a life- saving plant species to one drug company, and because they provide exclusive, federally funded technology to Bristol-Myers Squibb," said Wyden during a recent congressional hearing investigating the taxol agreements.

The giveaway of taxol - and NCI

The agreement between NCI and Bristol- Myers, signed in January 1991, has in effect turned the taxol-researching departments of the government agency into an arm of the private pharmaceutical firm. NCI will cooperate exclusively with Bristol-Myers in bringing taxol to market, and will refuse to show data from its trials to anyone besides that firm.

In 1989, NCI advertised for a private sector collaborator to bring taxol to market. Of the four firms that applied, NCI chose Bristol-Myers, already the market leader in cancer drugs. The resulting agreement, formally known as a Cooperative Research and Development Agreement (CRADA), defines how NCI and Bristol-Myers will collaborate to bring taxol to market.

The CRADA gives Bristol-Myers exclusive access to government-funded taxol research. "All new studies and raw data ... shall be maintained as proprietary and confidential," the CRADA states. "NCI shall make the raw data available exclusively to Bristol-Myers Squibb for use in obtaining regulatory approval for the commercial marketing of taxol."

The confidentiality provision applies not only to government researchers, but also, for example, to university scientists who receive NCI contracts for taxol research. Researchers are permitted to publish the results of their investigations, but only if they do not disclose the underlying data - the detailed, clinical data the FDA requires before it will approve the marketing of a new drug.

The exclusive access Bristol-Myers gains to NCI research virtually ensures that Bristol-Myers will be the first to receive marketing approval for taxol.

NCI defends exclusive agreements like the one with Bristol-Myers on the grounds that they are necessary to bring promising drugs to market quickly. "It has been our experience that pharmaceutical companies require the assurance of some exclusive rights to an agent before they will expend the considerable resources necessary to develop the agent" through marketing approval and distribution, the director of NCI, Samuel Broder, wrote Wyden.

But James Love, director of the Washington, D.C.-based Taxpayer Assets Project (TAP), dismisses Broder’s assertion, at least as it applies to taxol. "The exclusivity isn’t needed," he says. "Why is Rhône-Poulenc trying to break into this market? They were the losers in the taxol bidding. If they are willing to proceed, despite the Bristol-Myers monopoly on the government bark and research, it can hardly be argued that exclusivity was needed for taxol to be developed." Rhône-Poulenc is developing taxotere, a compound closely related to taxol.

If Bristol-Myers is first to market with taxol, the firm will win a marketing monopoly due to the FDA’s designation of taxol as an "orphan drug." For seven years, no other firm will be allowed to sell taxol for ovarian cancer. With no competition, Bristol- Myers will be free to set prices as high as it dares, fettered only by a weak pricing clause in the CRADA that NCI has no criteria to enforce.

The "fair pricing clause" in the CRADA, obtained by Multinational Monitor under the Freedom of Information Act, reads: "NCI has a concern that there be a reasonable relationship between the pricing of taxol, the public investment in taxol research and development, and the health and safety needs of the public. Bristol-Myers Squibb acknowledges that concern, and agrees that these factors will be taken into account in establishing a fair market price for taxol." This will allow Bristol-Myers to set taxol’s price without any reference to its costs in developing and producing the drug.

The National Institutes of Health (of which NCI is a part) reserves the right to intervene if it determines that Bristol-Myers’ price for taxol is not "reasonable." But, according to the pricing clause, an acceptable price for NCI could be one which reaps windfall profits for Bristol-Myers at the expense of cancer patients.

And gigantic windfall profits are almost guaranteed. While Bristol-Myers’ Horovitz says taxol will be the most expensive oncology product ever - meaning it will cost patients at least several thousand dollars per treatment - sources at NCI report that NCI has brought taxol from yew tree bark to medicinal form at a cost of approximately $1,000 per treatment. Bristol-Myers’ production expenses are almost certain to be lower than NCI’s, since the company will produce taxol in greater quantities.

Behind the giveaway

The giveaway of taxol may have been fostered by Dr. Robert Wittes, who has spun through the revolving door between NCI and Bristol-Myers Squibb with amazing speed. In the late 1980s, Wittes oversaw the clinical trials of taxol in his position as associate director for cancer therapy evaluation at NCI. He then left NCI to work for Bristol-Myers, becoming the firm’s senior vice president for cancer research. After a stint of less than a year at Bristol-Myers Squibb, Wittes returned to NCI in August 1990, this time as chief of its medicine branch, which conducts in-house research.

Wittes refused to be interviewed for this article and did not respond to the single written question, "Did you assist Bristol-Myers Squibb in the preparation of its taxol CRADA proposal?" Bristol-Myers did not return repeated phone calls or answer written questions concerning Wittes.

Love asserts Wittes was instrumental in helping Bristol-Myers win control of taxol. "It seems clear that Dr. Wittes gave Bristol-Myers a huge advantage in preparing for the CRADA bid," he says. Love, who calls Wittes "the mystery man of the taxol story," thinks Wittes should be required to disclose more about his relationship with Bristol-Myers. "We would like to know what Bristol-Myers paid Dr. Wittes for his role in preparing the taxol CRADA, but no one in the government is willing to make him answer that question."

In addition to Wittes’ potential conflict of interest, more systemic problems also helped foster the sweetheart arrangement between Bristol-Myers and NCI. Neither taxol nor the idea for using taxol to treat cancer is patentable, since both have been in the public domain for decades. But Bristol-Myers will gain monopoly marketing rights for taxol under the Orphan Drug Act, passed in 1983 to encourage drug companies to develop and market drugs for rare diseases. For diseases affecting small numbers of patients, Orphan Drug Act supporters believed, granting market exclusivity might provide enough financial incentive for pharmaceutical firms to develop treatments in which they otherwise would not have been willing to invest.

Ovarian cancer qualifies as a rare disease under the Orphan Drug Act, even though it is the fifth-leading cause of death among women cancer victims, and even though one out of 70 U.S. women will develop this disease during her life. Ovarian cancer has an estimated client population of 164,000 - large enough for Bristol-Myers to earn huge profits, but well under the 200,000-patient cutoff in the law.

While the drafters of the law were well-intentioned, in practice drug corporations have manipulated the Orphan Drug Act to earn monopoly profits on drugs they would have brought to market even without guaranteed exclusivity. TAP’s Love says, "A drug company can drive a Brink’s truck through the loopholes in the Orphan Drug Act."

One major problem is that once designated an "orphan" by the FDA, a drug retains that status - and the company which controls it maintains exclusive rights to it - for seven years, irrespective of how much the drug earns for the company. (A bill proposed by Senator Howard Metzenbaum, D-Ohio, would create a $200 million cap, so a drug would lose orphan status once it earned that amount.)

Perhaps an even more serious problem is that corporations can file for a very narrowly defined treatment group and later add new orphan designations for different applications of the same drug. Known as "salami slicing," this practice enables drug companies to market a drug to more than 200,000 patients - the Orphan Drug Act’s cutoff point - and still maintain orphan status.

For example, the FDA granted Bristol-Myers orphan status for taxol as an ovarian cancer treatment. If the drug is later approved for other "orphan" diseases, Bristol-Myers will remain taxol’s exclusive marketer, even if the total patient population for taxol is over the 200,000 patient limit.

Calls for reform and restraint

Wyden and TAP are trying to shine light on the taxol giveaway, hoping they can mount enough pressure to have the agreement rescinded or to extract guarantees that Bristol-Myers will not gouge women with its taxol prices. Wyden’s tough questioning of both NCI and Bristol-Myers officials at congressional hearings on taxol have undoubtedly been an important step in this direction.

Wyden and TAP are also calling for fundamental reforms in the Orphan Drug Act. In addition to supporting Metzenbaum’s $200 million cap on orphan drug earnings, TAP is calling on Congress to ensure that orphan drug prices maintain a reasonable relationship to the controlling company’s costs, not just to what the market will bear. It is requesting that Congress require a corporation controlling an orphan drug to disclose its revenues from sales of the drug and its costs incurred in developing, manufacturing and marketing the drug. TAP has also suggested that Congress and the FDA reconsider the policy of automatically granting exclusive rights to orphan drugs.

Despite Wyden and TAP’s best efforts, legislative action seems unlikely. Even if Congress were to pass reforms to the Orphan Drug Act, President Bush would probably veto them; in 1990, Bush vetoed modest amendments to the Orphan Drug Act which would have removed AIDS drugs’ orphan designation. However, NIH has indicated some willingness to rethink its fair-pricing policy; this may be taxol patients’ best hope for affordable treatment.

Bound and gagged

Meanwhile, NCI-Bristol-Myers cooperative efforts continue apace, and it will be very difficult to derail them. The CRADA gives Bristol-Myers the right to terminate its agreement with NCI if it determines that developing taxol will not be commercially successful. NCI can terminate the agreement only if it determines that the company "has failed to exercise best efforts" in commercializing the drug.

NCI also agreed not to help any other company develop taxol, virtually forever. The agreement states, "NCI agrees to refrain from assisting any commercial party other than Bristol-Myers Squibb for the commercialization of taxol during the term of this CRADA, and during any period thereafter in which Bristol-Myers Squibb is engaged in the commercial development and marketing of taxol." NCI is bound by this clause as long as Bristol-Myers does not abandon the drug and "public health needs are adequately served."

If the CRADA were terminated, Bristol-Myers would have equal voice with NCI in determining what happens to all data, studies, raw material and taxol supplies.

The new bark collecting season began with spring weather, and NCI is continuing its taxol trials. "Barring unforeseen delays," says Zola Horovitz, the Bristol-Myers official, "the Food and Drug Administration could approve taxol for treatment of refractory ovarian cancer in early 1993."

Sidebar

Until June 1991, Bristol-Myers paid a small fee for yew tree bark to the Forest Service, on whose land it harvests much of the bark it needs for taxol. "Run-in value was between 5 and 15 cents a pound," says Dick Miller, the Forest Service’s Pacific Yew coordinator.

Now, after signing an agreement with the Forest Service, Bristol-Myers takes the bark for free. Through its bark collecting agent, Hauser Chemical Research, the firm gathered 825,000 pounds of bark from Forest Service land last year.

Forest Service officials defend this giveaway by pointing out that Bristol-Myers pays the agency to conduct yew-related programs. "They’re not getting anything for nothing," says Miller. Bristol-Myers reimburses the agency for "all the costs for administration, permits, transfers" and for other expenses, including an environmental impact statement and an inventory of the yew on federal land. Bristol-Myers paid the Forest Service $882,692 for these activities in 1991.

Bristol-Myers can potentially receive half of this money back from the government as a tax credit, because the bark collected from public lands will make taxol for clinical trials. The Orphan Drug Act provides a 50 percent tax credit for expenses related to clinical tests of "orphan" drugs, like taxol.

The Bureau of Land Management, which controls different federal lands than the Forest Service, sold 64,391 pounds of yew bark to Bristol-Myers last year for $13,216, or 20 cents per pound. Bristol-Myers paid 15 cents per pound the year before: $1,555 for 10,368 pounds.

BLM justifies the low price by pointing to how the bark will be used. "Our highest priority is to make the bark available to cancer patients. Cancer patients are as much a part of our public as anyone else," says Leslie Robinette, a BLM spokesperson.

Wyden has challenged the legality of the Forest Service and BLM agreements, questioning whether the yew bark should be given away so cheaply and whether the Forest Service and BLM have the authority to give Bristol-Myers access to the trees. A Congressional Research Service analysis of the agreements, commissioned by Wyden, found that the agreements "seem vague and ambiguous in several critical ways. It is not clear that the free disposal of this resource is authorized; it is not clear what actions beneficial to the United States BMS [Bristol-Myers Squibb] definitely will perform; ... it is not clear what the costs to the federal government will be; and it is not clear how yew harvests will relate to the usual land and resource planning and decision-making process."

Killing the goose

In their rush to supply bark for taxol, both resource agencies have come under fire for allowing bark to lie wasted and yew needles to go unused, and for paying insufficient attention to the needs of future cancer patients.

According to Wendell Wood of the Oregon Natural Resources Council, bark collectors, who are paid by the pound, often strip bark that is easily accessible and leave the rest behind. "They have no incentive to take bark off the top of the tree; they just take the bottom," he says.

Hauser claims it monitors harvested areas to check for wasted bark. "If [collectors] don’t take the bark, they’re out of a job," says Phil Hassrick, vice president of Hauser.

The Forest Service and BLM contend that they have learned from the past harvest seasons and that this year bark collection will be more closely supervised.

Even if the bark is not wasted, stripping it kills the tree; large-scale bark-collecting efforts thus endanger the future of the species. There is, however, an alternative, as Wood notes. Yew tree needles also contain taxol (though it is more difficult to extract taxol from needles than from bark). Harvesting the needles does not kill the tree, so the needles could provide a sustainable source of the drug. If taxol production does not shift to needles, says Wood, "You kill the goose that laid the golden egg."

The Forest Service’s Miller says concerns about the sustainability of the tree species are unwarranted. He contends that synthetically produced taxol will soon be available, making the yew tree an unneeded source. "In three to four years, we’re going to be out of the woods. The amount of bark used will be diminishing rapidly," he says.

- D.N.

An interview with Herman Daly

Multinational Monitor: You criticize the economics profession as biased towards growth. What is wrong with that bias?

Herman Daly: I think the economics profession should look at growth in economic terms. It should say, "We don’t want growth if further growth increases costs faster than it increases benefits." If growth in population and per capita resource use is increasing pollution and depletion and congestion and other problems faster than it is increasing real wealth, then growth is not making us richer, it is making us poorer.

MM: Why do you think the profession is biased towards growth?

Daly: It is politically convenient for growth to be the answer to everything. If growth is not the answer to problems of poverty, then you have to go back and ask what is the answer. If you have poor people and you can’t make everybody richer by growing, then you have to share, or you have to face up to population limits. But population limitation and sharing are both politically taboo, they are sacred cows; our politicians can’t face up to those issues, and neither can economists for the most part.

There are other problems in economic analysis. It also gets traced back to what I like to call - using a term from Schumpeter - the basic pre-analytic vision of economists. It makes all the difference in the world where you start your analysis from, what your basic starting point is. I see the economy as an open subsystem of a larger but finite and non-growing ecosystem. If the economy is a subsystem of a bigger system, and the bigger system is not growing and the economy is growing, then the economy is assimilating within itself a larger percentage of the total system. At some point that process cannot continue.

The economist doesn’t look at it that way. His pre-analytic vision is that the economy is the total system and that nature or the ecosystem is just a subsector of the total economy, like agriculture or industry. And you can substitute for nature just like you substitute for other things, and the whole economy just keeps on growing unconstrained by any larger system.

MM: You have proposed the Index of Sustainable Economic Welfare (ISEW) as an alternative to the conventional reliance on gross national product. What does your index do differently than GNP?

Daly: This, I should make very clear, is the product mainly of John Cobb, my co-author [of For The Common Good], and a group that has worked with him at the School of Theology at Claremont, including especially Clifford Cobb. I served as a helper and a critic, but they did most of the work on that. That doesn’t mean I am disclaiming it; I support it and am proud of it. But it was largely their work.

What does it do? It plays by the basic economic rules of the game. It is not a far- out measure of welfare. It says welfare is basically a function of personal consumption. So we don’t subtract cigarettes and pornography and other things which one might believe would make people worse off; we leave all that in there, just the way the economists do. In that sense, it is very conservative.

[But] we make some adjustments. We subtract a figure for depletion of natural capital: depletion of oil wells, deforestation, depletion of soils and water. We subtract something for regrettable necessities, that is, increased commuting costs, extra medical payments which are due to stress and on-the-job problems. We make a correction, perhaps most controversial, for changes in the distribution of income, on the grounds that an extra $1,000 to a poor person means much more than an extra $1,000 to a rich person in terms of that person’s welfare. That is pretty firmly grounded in the law of diminishing marginal utility in economics, so we count income to the lower part more than income to the upper part. That makes a big difference, because over the Reagan years income distribution became decidedly more unequal. And we make a correction for the increase in foreign debt. Foreign debt has to be repaid at some point by U.S. citizens, so increasing indebtedness is not sustainable consumption. Those are the kinds of things we correct for.

With the ISEW, we found that there was actually a slightly inverse correlation in recent times between GNP and welfare.

MM: How does the recent history of the United States measure up on the ISEW scale?

Daly: We found that, up until the early 1970s, GNP and ISEW move along together, they track each other. But then there is a divergence, which becomes greater as the seventies go on and into the eighties. The ISEW becomes flat while the GNP keeps on rising, and then eventually the ISEW declines just a bit. Our findings do not support the hypothesis that GNP and welfare are highly correlated. In fact, they contradict that.

MM: How do you explain the divergence starting in the early seventies?

Daly: I think it is [largely] due to increasing inequality; the debt, with the United States moving from a creditor to a debtor position; and then the problems of depletion and pollution begin to weigh more heavily.

MM: One of the dominant trends in the world economy is integration, and it is one widely praised by economists. Yet you are quite critical of that. Why?

Daly: I am very critical of the general celebration of the increasing world interdependence of the economy because free trade and free capital mobility really mean an erasing of national boundaries for economic purposes. And when you erase economic boundaries, then there has to be an equalization of prices across the larger market. You are not going to have great divergences of prices and wages within the same market. So when you expand the market to the entire world, then you are going to have a tendency toward equality of prices and wages worldwide, with due allowance for transport costs and so forth.

In particular, that is going to mean a movement toward equality of wages. That means wages in the industrial, high-wage countries will tend downward, as we in fact have seen them doing. Wages in the Third World and poorer countries would theoretically tend to move upward as capital moves to the low-wage countries and increases the demand for labor. So there is this tendency toward equality. You might say, that is not so bad, what is wrong with a little equality in wages across the world? Well, the problem is that the movement is going to be almost totally downward. The supply of labor in the Third World, with large populations of underemployed people, the very rapid growth of those populations of underemployed people, the fact that India and China, two huge cheap labor economies, are just now really getting into the world market - all those things are going to keep the supply of labor very large, and will make it impossible for wages worldwide to be bid up very much, certainly not to the U.S. or European level.

What is really happening is that the capitalists in the North are saying to the laborers in the North, "Well you guys have to compete in the world market for labor, and your wages are going to go down. That is just the way it is." And that seems to be what is happening. I think that for the employing class basically to say they have no obligation to their own laboring class and they will just go wherever labor is cheaper is an enormous breach of community within a nation. That just means an economy’s high wages, plus social gains like laws against child labor, limiting the working day, [protecting the] environment, anything which raises costs, are going to tend to be competed down to the lowest common denominator in free international trade. In a nutshell, that is the problem I see with this movement toward world integration.

In addition to that, [with increasing economic interdependence] people who are farther away from you - both physically and culturally - will have a greater impact on your life. This separation of ownership and control, which already creates difficulties within a country, becomes even more difficult when it becomes international.

MM: Is there a broader ecological concern about sustainability being incompatible with free trade, in addition to the concern about environmental standards being bid down?

Daly: Yes, there really is. To the extent that a country engages in trade with the rest of the world, it can escape the carrying capacity of its own limits. Take, for example, the Netherlands. I think for something like every hectare farmed within the Netherlands, something like five hectares outside the country are preempted in order to supply the animal feed and other inputs to their system. So clearly the Netherlands is living beyond its domestic carrying capacity. It is not cheating or exploiting the rest of the world; it is playing by the rules of the system and making things and paying for the carrying capacity it imports. Nevertheless, it is still the case that the whole world cannot emulate the Netherlands. That is, all countries cannot become net importers of raw materials and ecological capacities of other countries.

Free trade masks that fact; it makes countries tend to think they can escape the bounds of carrying capacity by international trade. And indeed, that is true, except that when you do the sum, the total cannot escape. Free trade means that instead of running into carrying capacity constraints nationally and sequentially, in different countries, there will be a tendency to run into those constraints globally and simultaneously, which will make them more difficult to handle. In that sense, free trade or trade in general tends to obscure the overall limits.

MM: A mainstream economist would criticize your argument, saying it overlooks the consumer interest in the lower prices which free trade brings. How would you respond to that criticism?

Daly: That is only true with a very restrictive notion of price and cheapness. Yes, people who still have jobs in rich countries will benefit from cheaper, imported products produced by cheaper labor somewhere else. There will be that benefit. However, that is only part of the picture. You have to set against that the social cost that has been paid in gaining that cheaper product: a general reduction in the standard of living of your laboring class; a reduction in the purchasing power of your internal market; social dislocation of laborers, of people who are disemployed in one area and have to be employed somewhere else.

If you factor in all those costs, [free trade] doesn’t look cheap at all. Yes, there is a benefit to consumers, but I think that is more than offset by the social costs, which are not counted, such as the disruption of community and people losing jobs and having to relocate and be retrained.

MM: Mainstream economists would also say that Third World development would be hurt by restrictions on free trade. This is also a major concern of people who feel their primary allegiance to the Third World and even Third World leaders themselves. How do you respond to this argument?

Daly: Third World economists will make the same argument, and I think that is not particularly surprising because most of them got their economics degrees from institutions that the standard economists are teaching in or got their degrees from. The vision is: the more the North grows, then the bigger will be the markets in which the South can sell their raw materials and their products. The South is presumed to be incompetent to develop along any path other than just selling raw materials and a few minor manufactured goods to the North. In exchange for their export earnings, Southern countries import more sophisticated goods, consumer toys for their elite class and also some capital goods.

If your vision of the world is the one I started out with, that the economy is the subsystem of a larger total system, then you see the North growing more and more as taking up a larger and larger ecological space and therefore leaving less for the South. You would then say it may not be a good idea for the North to continually grow. Maybe the South should not rely simply on exporting things to the North. They should transform their own resources into products for their own people and develop their own internal markets so that people within their countries can buy the things they produce.

On the other hand, if you have a vision of the economy as being the total system and nature as just a little piece of the economy, then you don’t see any reason why the North can’t grow forever. If the North can grow forever, then it will drag the South along behind it. It’s the basic trickle-down theory.

MM: What would be the role of trade in a sustainable world economy?

Daly: That is a good question and a very difficult one. I do not have a fully satisfactory answer. I think trade is certainly beneficial, and no one is arguing for autarky or total self-sufficiency. There are too many benefits to trade. But trade has to be in some fundamental sense balanced. You can’t go on with large imbalances being made up by debts which are piled up in one country.

As a general rule, I recommend the principle of short supply lines. To the extent possible, try to keep your supply lines short. If you can get it locally, get it locally. If not, get it from as near as you can. If you have to get it from another country, try to get it from a near country. If you can’t get it from a near country, then go a little further, and just try to keep supply lines short. But that doesn’t mean don’t have international trade. It means trade should be balanced.

Economists usually justify free trade according to the doctrine of comparative advantage, which guarantees mutual benefit to all trading partners if they specialize according to their comparative advantage and then trade. That is all very logical and neat, except that one of the assumptions of that position is that capital is not mobile internationally, that capital stays home and is reallocated within a nation according to the principle of comparative advantage. If capital is free to cross national boundaries, it will pursue absolute advantage; that is, it will go to wherever it is absolutely cheapest to produce, and it doesn’t matter where. And, in today’s world, capital is highly mobile across international boundaries. So all the comforting conclusions of the doctrine of comparative advantage are groundless.

One [response to this situation], in terms of policy, is to restore this basic assumption of comparative advantage by having greater limits on the free mobility of capital. Or, if capital wants to go to, say, Mexico and employ Mexican labor to make goods to sell in the U.S. market, let’s put a tariff on those goods and tend to equalize prices to protect wages in the United States.

But I do not speak on this subject with great confidence. This is a difficult area. The only thing that I feel fairly confident about is that the present celebration of increasing interdependence and the reliance on comparative advantage is badly flawed. Let’s slow down this increasing global interdependence, and let’s go more in the direction of national self-sufficiency and pay more attention to our own working class. I think there has been a tendency to write off the interests of the working class in industrial countries, and I think that is just wrong.

MM: Are there other policies industrialized countries should adopt to foster a shift to greater self-reliance?

Daly: I am very much in agreement with the standard economists on the idea of internalizing environmental costs into prices. Let’s try to get prices right. Let’s quit subsidizing water and energy and get realistic prices; that should help efficiency.

When you improve efficiency by raising prices, you create an equity problem, because it hurts the poor more than the rich. But you can take the revenue from the new taxes and reallocate those toward the poor to make up for this. So you can gain in both equity and efficiency.

For example, the most important, simplest thing the United States could do would be to impose a stiff tax on petroleum at the wellhead and on imported petroleum to raise the price of gasoline and energy in general. That would increase efficiency, and it would raise a lot of revenue. We could then serve equity by reducing income taxes on poorer people.

MM: How should natural resource use, in both the industrialized and developing world, be regulated to achieve sustainability?

Daly: I think the basic principles would be: On the input side, seek to harvest renewable natural resources at a rate equal to the rate at which they can regenerate. On the output side, the waste outputs from processes should be limited to rates which the local ecosystem can absorb without degrading the system beyond a reasonable or acceptable point. A third rule would be for inputs which are nonrenewable. We should exploit nonrenewable resources at a rate equal to the rate at which we can develop a long- run renewable substitute.

MM: What does operating sustainability mean for Third World economies?

Daly: If the governments are interested in the welfare of their citizens - and that is a big if; I think there are a lot of governments that are really not interested in the welfare of their citizens, or don’t appear to be - then they will have to pay attention to their own poor class, their own lower class. They will have to face up to problems of land redistribution and of population limitations. Certainly family planning should be extended vigorously to all who want it. I think those two things - population control and redistribution - plus sound policies of growth at local, small-scale participatory levels, would be the things that would increase welfare in the Third World.

MM: If the U.S. or other industrialized countries’ governments were to follow your prescriptions, it clearly would have an effect on Third World economies which have been either persuaded or forced to pursue export-oriented policies. What would be the obligation of industrialized countries to soften the impact on the Third World?

Daly: I think there would be an obligation to be gradual in the adjustment, to phase things in. If you move towards a greater degree of self-reliance, you announce that and cut back gradually. I think it would be to everyone’s advantage to be a little bit gradual in moving back.

by Samantha Sparks

STOCKHOLM - Forget Sweden ’s eternal winter nights. There are many reasons for trade unionists in the rest of the world to envy their counterparts here. Swedish unions boast an average 81 percent membership rate, and hold a number of impressive rights in and out of the workplace. Workers also enjoy nationally mandated benefits such as sick pay, one year’s parental leave that covers 90 percent of the normal wage and five vacation weeks each year.

Seen from within Sweden, however, things could hardly look worse. A new coalition government, elected last October 1, clearly favors employers over labor. The leading Moderate Party has strong ties to the Swedish Employers Confederation (SAF), and has already initiated a number of significant changes in labor legislation based upon SAF position papers. In a move that holds uncertain consequences for unions, the government has also launched a drive to smash the public sector’s monopoly on welfare services. For its part, after years of growing hostility to cooperation with labor, SAF has seized the opportunities opened by the new government to launch what looks like an all- out counterattack.

"I don’t know why, but they [SAF] are trying to make life worse in Sweden," says Lars Nyberg, of the steering committee of the blue-collar Swedish Trade Union Confederation.

In the international arena, Sweden’s decision to request membership in the European Community (EC) was broadly supported by the major trade union federations, although they have not taken a formal position. At the same time, the move has raised questions about the effects of EC membership on the country’s unusually good labor laws.

All this is taking place at a time when the Swedish economy is deep in recession and unemployment is rising fast. Although it does not appear worrisome by international standards, the official rate of 4.1 percent unemployment is the highest here since World War II. And when the thousands of workers in retraining or education programs are counted in, unemployment rises to 7 percent - a shocking figure given that, until last year, 4 percent unemployment would have been considered a national disgrace.

Says Rolf Andersson, research director of the 640,000-strong Municipal Workers Union, "We will in a rather short time be a normal European country in terms of unemployment. That’s a reason to be very pessimistic."

Sweden is in crisis, and labor is the hardest hit.

Down, but not out

Certainly, Sweden’s unions are far from weak. More than half the country’s approximately 8.5 million inhabitants are union members - even though the "closed shop" rule (requiring all workers to be union members in a workplace where the majority of employees supports union representation) does not apply to the vast majority of workplaces. Unlike women in almost every other country, women in Sweden tend to be active union members, although there are still relatively few at the top levels of the national unions.

There are three main trade union organizations. The largest, the Swedish Trade Union Confederation (Landsorganisation, or LO), represents about 90 percent of the blue- collar workforce, or 2.3 million people. The white-collar union, the Central Organization of Salaried Employees (Tjanstemannens centralorganisation, or TCO), with 1.1 million members, represents about 75 percent of eligible workers. Finally, professional workers and civil servants are represented by a joint confederation dubbed SACO (Centralorganisation), which has about 300,000 members.

Yet the great strength of unions in Sweden has always been not just their numbers, but a broader administrative, political and economic system which made labor an active participant in a wide range of policymaking processes. Now it appears that structural changes are taking place which could greatly diminish labor’s power. And there are indications that the trade unionists are unprepared to respond to the challenges they face.

The fading, fabled Swedish model

Relations between labor and employers have been deteriorating more or less steadily since the mid-1980s. The biggest shock for labor was the Social Democrats’ recent loss at the polls, which put the party in opposition for only the third time since 1932. A big - perhaps the main - reason for Swedish unions’ strength has been their long alliance with the ruling party. The Social Democrats set up the LO in 1898, and the union and the party have maintained extremely close links ever since. The alliance was made possible in part by workers’ willingness to cooperate with both employers and politicians on policies considered good for the country as a whole. To be sure, Sweden has seen many periods of sharp industrial disputes. But on the whole, the Social Democratic approach to labor relations has worked well.

The give-and-take between unions, employers and the government is evident in the broad economic principles, drawn up by two LO economists, that the country followed from the late 1950s until the 1970s. The policy had three main points. The first was a restrictive fiscal policy intended to keep inflation down. The second was the principle of equal wages for the same work, which applied across the board to workers in different companies and in different industries with the same job. This principle implied costs for both workers and employers at different times. On one hand, workers throughout the country were expected to exercise restraint in wage demands, and accept wage levels broadly negotiated by the LO and SAF. On the other hand, employers in failing industries could not cut wages to stay afloat. Those unable to afford the nationally negotiated wage standards should be allowed to go broke. This is where the third point of the program, a selective labor market policy, kicked in. New jobs for workers would be found by the country’s labor market board, which would pay the costs of relocating and help with retraining, if necessary.

The fabled Swedish welfare state was built on the economic success that these principles helped to achieve. However, from the 1970s on, the "Swedish model" began to falter. There was growing opposition to the social costs of relocating workers. Sweden became more and more dependent on international trade, and companies increasingly turned outside the country to invest in new production. Spending on social welfare began to rise faster than revenues could support.

The 1980s ushered in a period of economic and political turmoil from which the country has still not recovered. The new prime minister, Moderate Party leader Carl Bildt, has declared the traditional Swedish model dead, and has vowed to set the country on a new course. Still, nobody in the labor movement imagined he would be able to move as quickly as he has.

The last time the Social Democrats lost power, from 1976 to 1982, the government was formed by the Center Party, the Liberals and the Moderates (then called Conservatives). But the Moderates were a minority partner, and the government made no real changes in the policies the Social Democrats had left in place.

This time, the Moderates are the biggest party in the government coalition. The others in government are the Center Party, the Liberals and a new parliamentary party, the conservative Christian Democrats.

Business on the offensive

There are many signs that, as part of the changes underway, confrontation will replace cooperation in relations among labor, capital and the state. "If this government goes on as it started," says Nyberg, "we will have much more conflict in Sweden, and the two sides [labor and capital] will be much more distinct - if they are foolish [enough] to go too far in their politics." Echoes TCO’s Anders Forsman, who deals with public sector employees for the union, "We don’t know what’s going to happen in the next five or 10 years. If the right-wing forces retain power, there could be a much more concerted effort" against unions.

In many ways, however, the new government is only hastening a trend that began under the Social Democrats. Wage negotiations are one example. Although the centralized system of wage talks began splintering in the late 1970s under pressure from both unions and employers, the definitive blow came only in 1990, when SAF declared it was permanently withdrawing from central talks.

Some workers in certain industries may gain in the short run from negotiating directly with their employers, but in the long run labor seems sure to lose. At present, the two main federations are trying to preserve some solidarity by negotiating among their member unions before decentralized talks are held. But they are also under internal pressure, as the rift between blue-collar and white-collar workers and between the public and private sector employees grows.

In January 1991, SAF officially ended its tradition of cooperation with labor in another sphere. The employers’ organization announced that it would no longer participate in the traditional system of national boards, which essentially administer laws covering a wide range of work-related activities. Among the most important of these are the National Labor Market Board, with responsibility for labor market practices, including employment offices, and the National Board of Occupational Safety and Health, which has significant power over the enforcement of work environment legislation. On both these boards, union and employer representatives had sat together and negotiated the regulations affecting work life. Employer representatives often dissented, and presented minority views. But the process kept workers and employers working together to hammer out acceptable rules.

Now that SAF has pulled off the boards, the government has decided to add a new system in which one civil servant will be authorized to convene investigations into specific issues, with representatives from both sides offered the opportunity to testify. While administration will remain in the hands of the boards, it is the new investigative commissions which will propose legislation to the government. Birger Viklund, of the Swedish Work Life Center and a former labor attache at the Swedish embassy in Washington, says this change is monumental. "The most typical Swedish administrative system has been done away with just like that. Swedish politics has been based on these boards." The fear, Viklund says, is that Sweden will shift to an "American-style" legislative lobbying system, in which those able to mount the best publicity campaign and exert the most pressure on government will win.

Unionists also fear that SAF has targeted Sweden’s key labor relations laws, and will seek to use its sway with the Moderate Party to get them overturned. The laws regulate collective agreements, workers’ influence in the workplace, union stewards’ rights and the work environment. "If the Moderates can do what they want, they will take [the laws] away," contends Forsman. He holds out hope that the Center and Liberal parties will act as a buffer against the right-wing forces in and near government.

Still more changes are underway. Workers’ contribution to the union-administered unemployment funds are slated to increase from 5 percent of paid-out benefits to 10 percent this year, and then to 30 percent in 1993. (The state pays the remainder.) Meanwhile, as of this year, trade union membership fees are no longer tax-deductible. The government has also appointed a new commission to investigate the possibility of taking unemployment funds away from the unions’ administration. Studies from Norway, where this was done, suggest that this could cost unions 20 percent of their membership or more.

The removal of government subsidies for the educational and training activities of national unions has cut the national unions’ budgets by one third. The withdrawal of government support has taken place within the context of spending cutbacks that the government hopes will contain Sweden’s approximately $17 billion central government budget deficit, its largest ever.

Backpedaling labor

As if all the changes launched by SAF and the government were not enough, many unionists say the labor movement itself is foundering on weak leadership and an inability to adapt to shifts in the Swedish economic and political reality. The dilemma for unions, many analysts say, centers on the decentralization process that is taking place in many areas of Swedish life. On one hand, the unions recognize that decentralization allows for greater shop-floor democracy, and gives individual workers more say over their individual lives. On the other hand, this means less power for the central leadership, without which it is impossible to implement the wage policy of solidarity. The challenge is to find ways to maintain union organization without a stifling central bureaucracy.

Many also recognize that, to a large extent, the Bildt government and SAF are doing now what the Social Democrats and the LO did in the 1970s and early 1980s, when labor scored many legislative victories. "In the past, the Social Democrats acted on what the LO proposed," notes one labor analyst. Says TCO’s Forsman, "The unions were too successful [in the 1970s] and are paying for that now. I think that if a Social Democratic government gets back in power, they have learned their lesson."

Indeed, many of the most impressive rights that Swedish trade unionists now hold were obtained not through the traditional system of direct negotiations with employers, but by legislative appeal to the government. "We had negotiations, and they didn’t lead to the agreement we wanted, and then we could turn to the government of that time and say, ‘We tried, now it’s your turn,’" recalls Nyberg. That strength has now become a weakness, he says, noting that "there are really no links between us and the government now."

Some analysts even assert that the aggression coming from the employers’ side is a defensive reaction to workers’ gains of that time. Along with laws mandating such things as advance notification of dismissal (between one and six months, depending on age), workplace safety and rights to conduct trade-union activity on paid time, the then-Social- Democrat-controlled parliament approved legislation which significantly increased workers’ influence in company decisions, both in the workplace and in the financial realm.

One act of the 1970s labor reforms, for example, grants local unions the right to appoint employee representatives to the board of directors of a private company with at least 25 employees. Another stipulates that employers must discuss major changes in policy with the local union, and, if the two sides cannot agree, the matter can be negotiated at the national level, although employers still have the final word.

Most bitterly attacked by employers, however, was a 1983 law mandating the creation of special funds to be used in the workers’ interests and financed by a tax on company profits. The LO had been pressing for this kind of initiative since 1975. Under the law, 20 percent of company profits over SEK 500,000 (about $86,000) were to be placed each year from 1984 to 1990 in an account in the central bank, where they would sit without earning interest if workers and management could not agree on how it should be spent. No less than SEK 22 billion (about $3.8 billion) was accumulated in this way.

To the unions, the so-called wage earner funds were just the first step towards true economic democracy. But to SAF and the Conservative party, the initiative was reviled as an outright attack on the sanctity of the free market, since the funds represented a (small) socialization of profit.

It came as no surprise, then, when the new government moved quickly to announce that all but one of the funds would be disbanded. What will happen to the money collected is still unclear, but it will likely be distributed to employees in some way.

Confronting European integration

At the same time as they are confronting a wholly new situation inside Sweden, unions here are trying to understand the implications of Sweden’s application for membership in the European Community. This request was made by the Social Democratic government in 1991. Recent opinion polls show the public split about evenly over the issue, with one third in favor, one third opposed and one third unsure. Swedish citizens will be asked to decide definitively in a 1994 referendum.

Unlike their counterparts in the United States and Canada , who oppose many aspects of the proposed U.S.- Canada-Mexico free trade agreement, Swedish trade union leaders have generally supported the application to the EC. The basic reason for the difference is simple: with about 35 percent of Sweden’s trade taking place with EC countries, Swedish unions think EC membership will improve the national economy, and increase prospects for jobs. "It’s easy to see how much we depend on Western Europe," says LO’s Nyberg. "It’s crucial for Sweden to belong to [the EC], to have our companies treated in the same way as the others. It’s an overall question for the Swedish economy." Agrees TCO’s Forsman, "We cannot isolate [ourselves]. That would be going backwards."

Indeed, Swedish firms have made it clear that they intend to integrate with the rest of Europe even if the rest of the country stays behind. Large Swedish companies such as Volvo , Saab- Scania , Asea Brown Boveri and Tetrapak began moving production into EC countries years ago, in order not to get shut out of the market. Acording to one analysis by sociologists Goran Ahrne and Wallace Clement, by 1986 Swedish firms already had more employees abroad than at home. "If Sweden becomes a member of the EC, then at least no [companies] will need to leave," Nyberg reasons.

But if Sweden’s unions generally accept the necessity of economic integration with the EC, they still balk at the political merging that membership would imply. It is unclear how much scope individual EC countries will have to preserve their national laws on a wide range of issues, including those affecting labor relations and - of critical importance to Sweden’s large public sector - tax policies.

According to Nyberg, it is uncertain how the EC will treat the numerous Swedish labor-employer industrial agreements, since the agreements are not laws. Even if they were, it is not certain how far legal integration will go in the EC. On the other hand, Nyberg says, under the current Swedish government, "We are moving in a direction where it could get so bad that the EC could become our partner" against industry, with EC-wide standards protecting Swedish workers from a further deterioration of working conditions. Agrees Forsman, "In the future, it may be that the trade union movement in Sweden relies on the EC to set its standards." And, he adds, even if Sweden joins the EC and maintains its generally higher industrial relations standards, "it will be very difficult for us to go ahead with [even] higher standards." He also notes the EC’s labor laws tend to be based on individual workers’ rights, rather than unions’, as is the case in Sweden.

Certain sectors of Swedish industry are also likely to be hit by tough competition from the EC; in particular, Nyberg believes, transportation workers "are in danger." Municipal workers may be threatened if, as appears likely, Sweden brings its high individual taxes into line with the rest of the Community. That would mean drastic cuts in public spending, and more loss of public jobs. Public sector job losses began even under the Social Democrats, as they struggled to contain the budget deficit. But spending cuts are accelerating, many believe to pave the way for lowering tax rates.

The only real hope for the unions seems to be the re-election of the Social Democrats in 1994. So far, however, there is no sign that this any more likely than it was in 1991.

by Philip Mattera

HOECHST IS ONE OF THE BIG THREE GERMAN chemical companies that formed the giant IG Farben combine in the 1920s and were split up again after World War II. Like BASF and Bayer , Hoechst enjoyed a dramatic resurgence during the 1950s and rose to the top tier of the industry.

Hoechst is heavily involved in synthetic fibers and pharmaceuticals as well. It owns a majority interest in the French company Roussel- Uclaf , which is best known as the producer of the abortion pill RU 486. Hoechst has been accused of pressuring Roussel-Uclaf to limit the availability of RU 486 in the United States and other countries. Hoechst, which is 20 percent owned by the government of Kuwait, has also made major investments in the United States, including the $2.9 billion purchase of Celanese Corporation in 1987.

Hoechst’s sordid history

A chemist named Eugene Lucius founded Hoechst in a village of that name in 1863. The firm - originally called Meister, Lucius & Co. - aimed to join in the new business of synthetic dyes. The company rigged up a small engine and a boiler to mix anilin oil and arsenic acid, and soon it was producing fuchsia dye. This was only the first in what would be a huge portfolio of coloring agents created by the rapidly growing company.

In 1883, the company made its first move beyond dyes when one of its chemists discovered Antipyrin, an early analgesic. This led to work on the anesthetic novocaine and on salvarsan, the first effective medication for syphilis. The company went on to achieve the first synthesis of adrenalin in 1906 and the isolation of insulin in 1923, by which time the firm had been renamed Hoechst.

The dye industry in Germany (and other countries) commonly engaged in anti-competitive practices, with the major corporations joining cartels early in the twentieth century. In 1904, Hoechst joined the Dreiverband cartel; BASF and Bayer were part of another grouping called Dreibund. The cartels carved up the market among themselves and undermined the growth of the dye industry in countries like the United States. During World War I, the German dye companies altered their formulas to produce mustard gas and explosives.

In 1916, the two dye cartels joined forces to create the Interessengemeinschaft der deutschen Teerfarbenfabriken (Community of Interests of the German Tar Dye Factories). Known later as the Little IG, this combine exerted total control over the dye industry and soon acquired extensive coal mining operations to carry out a plan initiated by BASF to create liquid fuel through hydrogenation of coal.

In the 1920s, dye industry leaders, led by Carl Duisberg of Bayer and Carl Bosch of BASF, successfully pushed for the merger of the dye makers into a single company. In 1925, the companies merged into the Interessengemeinschahft Farbenindustrie AG or IG Farben (Interest Community of the Dye Industry, Inc.)

This huge corporation, which soon included related industries such as explosives and fibers, was the biggest enterprise in all of Europe and the fourth largest in the world, behind General Motors, United States Steel and Standard Oil of New Jersey.

In 1926, IG Farben entered into a non-competition arrangement with Jersey Standard for oil and chemicals while agreeing to cooperate on the development of synthetic rubber (though Jersey Standard later came under fire from the U.S. federal government because of evidence that the Germany company was impeding its progress in this crucial area).

Although Carl Bosch, the head of IG Farben’s managing board, opposed the anti- Semitism of the Nazis, the company gave financial support to Hitler and (without Bosch, who resigned in 1935) became indispensable to the German military effort during World War II. The company used slave labor, locating one of its synthetic rubber facilities in Auschwitz to be near the captive labor supply of the infamous concentration camp. Lethal gas made by IG Farben was used in the death camps. After the war, a group of IG Farben executives were convicted of war crimes at the Nuremburg trials. Several years later, in 1952, the company was divided into several independent firms, including BASF, Bayer and Hoechst. (IG Farben survived as a shell company and remains one today.)

Unlike BASF and Bayer, Hoechst rebounded rapidly after the war, since its manufacturing facilities escaped heavy damage. The company emphasized synthetic fibers like polyester along with polyethylene and petrochemicals. By the 1960s, the company, once again a leader in the chemical industry, was making investments throughout Europe, in Holland, Austria, Spain and France. Hoechst also made a major investment in a French pharmaceutical company.

That company was Roussel-Uclaf, founded in 1920 by Dr. Gaston Roussel and built over the following decades by him and his son, Jean-Claude Roussel, into one of Europe’s leading producers of drugs, chemicals and related products. In 1968, the younger Roussel met a Hoechst director and was inspired to pursue a policy of "Europeanizing" his family’s firm. Although the French government was uneasy about the deal, Roussel sold a 43 percent interest in the company to Hoechst.

The two firms proceeded to share many of their marketing and research operations and jointly launched new products such as the broad-spectrum antibiotic Claforan. After Roussel was killed in a helicopter crash in 1972, Hoechst ended up taking a majority stake in the company. The French government held most of the rest but later sold a 35 percent interest to Rhône-Poulenc. Hoechst itself also came under partial foreign ownership: in 1982, government-owned Kuwait Petroleum took a 24 percent interest in the company (now down to 20 percent) and gained a representative on Hoechst’s supervisory board.

Meanwhile, Hoechst continued its international expansion, acquiring British paint maker Berger, Jenson and Nicholson (later sold) and Hystron Fibers in the United States, which strengthened Hoechst’s position in the fields of colors and synthetic fibers. The company also has opened new foreign markets for its drugs, becoming a world leader in diuretics, oral insulin, steroids and hookworm medication.

During the 1980s, with biotechnology research in Germany stalled because of environmental protests, Hoechst made a 10-year, $70 million investment in a genetic laboratory at Massachusetts General Hospital (MGH) in Boston. The Hoechst-MGH agreement, which gave Hoechst exclusive licensing rights to MGH’s inventions, came under fire from public officials and private commentators alike. At a congressional investigation into biotechnology, then-Representative Albert Gore, D-Tennessee, challenged the appropriateness of the agreement. "How should we react to the fact that you’ve signed this exclusive licensing agreement with a foreign chemical company," asked Gore of Dr. Ronald Lamont-Havers, director of research at MGH, "in light of the fact that the American taxpayers are providing $25, $26 million to your institution?" Gore charged that Hoechst was skimming the cream off of a publicly built and maintained resource.

Hoechst undertook a bigger U.S. initiative in 1987, when it acquired Celanese, the eighth-largest chemical producer in the United States, for $2.9 billion. This put Hoechst at the head of the invasion of the U.S. market by the leading European chemical companies. Now called Hoechst Celanese, the U.S. operation is best known as a producer of clothing and home furnishings like Trevira.

Hoechst is one of the leading producers of polymers, especially high density polyethylene, with plants in Europe, the United States, Australia and (through a joint venture with Lucky-Goldstar) South Korea. The company is also a major producer of synthetic resins and paints used in automotive and other industries.

Other Hoechst products include the artificial sweetener Sunett (Sunette in the United States), herbicides and insecticides, surfactants used in detergent production and superabsorbers used in disposable diapers.

Hoechst vs. women

Despite its strength and size, Hoescht has refused to stand up to anti-abortion pressure and make its abortifacient RU 486 more widely available. Proponents of the drug claim that it is a safe and effective means of inducing abortion, and that it may be useful in treating cancer.

RU 486 is under the immediate control of Roussel-Uclaf, but officials of the French company have told feminist groups supporting wider distribution of the drug that the top management of parent company Hoechst has insisted on limiting availability. RU 486 has long been available by prescription in France and several other countries, and has recently been introduced in Britain.

Hoechst justifies its position by claiming that the company does not want to get embroiled in public controversy in countries like the United States where there is significant opposition to abortion.

This stance has been more difficult to maintain, however, with the increasing evidence that RU 486 may be effective in treating breast cancer, endometriosis and other diseases particularly affecting women. Cancer researchers in the United States have protested the federal government’s ban on the use of RU 486 in cancer research, and scores of medical associations have gone on record to call for wider availability of the drug both for abortion and other applications. They charge Hoechst is withholding a medication that could save the lives of thousands of women every year in the United States alone.

Another factor which may affect the drug’s availability is the change in attitudes toward abortion in Germany following reunification. Women living in the former East Germany, who had come to take easy access to abortion for granted, have been pressuring Helmut Kohl’s Christian Democratic government to soften its anti-abortion stance.

Jennifer Jackman, director of the Feminist Majority Foundation (FMF), the leading group campaigning for distribution of RU 486 in the United States, believes that pressure from women in Eastern Germany has decisively changed the terms of debate. In Germany, Jackman says, "The question is no longer if RU 486 will be available, but when."

Jackman admits that getting RU 486 into the United States will require greater effort. After several years of doing public education on the drug, the FMF has embarked on a campaign to bring economic pressure against Hoechst, Hoechst Celanese and their corporate and financial allies. Last year, FMF President Eleanor Smeal announced that the group had received a $10 million contribution from Peg Yorkin, chair of the FMF, specifically to pursue the RU 486 campaign. At the April 5, 1992 pro-choice march in Washington, D.C., the FMF began circulating a questionnaire to collect names of people who do business with banks, insurance companies and other companies that are tied to Hoechst through stock holdings, credit relationships and interlocking directorates.

Hoechst vs. the environment

Hoechst has not racked up an environmental and health record as dismal as those of the other two big German chemical companies, BASF and Bayer, but its history is far from spotless.

o Environmentalists have targeted Hoechst because of its production of chlorofluorocarbons (CFCs, used as coolants and in various industrial processes) that destroy the ozone layer and thus raise the risk of skin cancer. For several years, the German branch of Greenpeace made Hoechst the focus of a campaign that included the use of billboards depicting Hoechst chief executive Wolfgang Hilger as an environmental criminal. In early 1992, the company relented and agreed to phase out its use of CFCs by 1994.

However, Hoechst, like Du Pont in the United States, announced that it would replace the CFCs with alternative products called hydrofluorocarbons that also destroy the ozone layer, though not as rapidly as CFCs.

o In 1991, the U.S. Food and Drug Administration (FDA) fined Hoechst $202,000 for failing to disclose that the company’s anti-depressant drug nomifensine had caused several deaths in Europe. The FDA in 1984 had approved the drug for sale in the United States under the name Merital.

o A group of residents in Pampa, Texas brought a lawsuit against Hoechst Celanese in 1990, alleging that toxic emissions from its chemical plant had caused near- epidemic levels of leukemia and Down’s Syndrome in the area [see Hoechst Harms Pampa," Multinational Monitor, May 1990 ]. The suit charges that "the people in Pampa are worse off than if they lived in Los Angeles always at rush hour. Celanese has certainly created a uniquely dangerous atmosphere for people in and around the plant." The company denies that the plant was responsible for the health problems and has been fighting the suit.

o Hoechst Celanese was among 23 companies which agreed in 1990 to pay a total of $3 million for the clean-up of a Superfund site near Louisville, Kentucky. Hoechst Celanese has been named as a potentially responsible party in connection with a total of 85 Superfund sites in the United States.

o A study of data from the U.S. Environmental Protection Agency by the Citizens Fund found that Hoechst Celanese was responsible for the seventeenth largest volume (48 million pounds) of toxic releases among all U.S. manufacturing companies in 1989 (the most recent figures available).

Hoechst may no longer be identified in the public mind with concentration camps, but it still has a long way to go before it can be deemed a model corporate citizen.

Petrolies

"The advertised recycling programs do not transform used oil into clean new oil products. Instead, the used oil is burned in refineries and boilers, producing toxic emissions," says Daniel J. Weiss, Washington director of the Environmental Quality Program of the Sierra Club. "Used oil is contaminated with lead, chromium, arsenic and other toxic chemicals that are released into the air when used oil is burned."

"Criticism of our advertising is plain wrong," Mobil replied in a prepared statement. "The objective of our advertising is to encourage the proper disposal of used oil ... The efforts to kill used oil collection programs threatens a legitimate remedy to a real environmental problem - the unsafe disposal of used oil that contaminates land and waterways."

According to the Mobil statement, 175 million gallons a year of used motor oil are disposed of improperly. The EPA and state governments encouraged the oil companies to help solve this problem, according to Mobil.

The specific advertisements cited in the complaint use generic "green" symbols, such as the "arrows" recycling emblem and wilderness scenes of trees and rivers, to create the impression that the companies’ used oil recycling programs safely handle the problem. The ads fail to mention burning oil.

Chicken Swindlers

The agreement settled a lawsuit filed by the Justice Department in Tampa, Florida in 1989 against Cargill and two employees at its Paramount Poultry unit in Jacksonville, Florida.

According to that lawsuit, Cargill, based in Minnetonka, Minnesota, cancelled its contract with Arthur Ray Gaskins, president of Northeast Florida Broilers Association, after he and more than 30 other farmers sued the company in 1989. Gaskins and the other farmers charged that Cargill’s Jacksonville unit underweighed their chickens from 1980 through 1988, and thus underpaid them.

Gaskins, who was left without a market for his chickens since Cargill is the only major buyer in Northeast Florida, appealed to the U.S. Department of Agriculture, which conducted an investigation and referred the matter to the Justice Department.

The farmers’ lawsuit against Cargill alleged that Cargill had intentionally falsified its growers’ live poultry weights to cheat them on compensation. The Justice Department then filed its own lawsuit, alleging that Cargill had retaliated against growers who brought the suit by terminating or threatening to terminate their contracts.

Guilty Rockwell

Rockwell pleaded guilty to four felony violations of the Resource Conservation and Recovery (RCRA) Act and to one felony and five misdemeanor violations of the Clean Water Act.

The company claimed victory after the announcement of the guilty plea. "After nearly three years of intensive scrutiny, the government could only find technical violations and was forced to admit that the sensational charges it originally made were simply not true," says Donald R. Beall, Rockwell chairman and chief executive officer. "This should put to rest any concerns the citizens of Colorado may have that Rockwell’s environmental practices while operating the plant put the surrounding communities or the environment at risk."

But the violations to which the corporation pleaded guilty were not insignificant. Federal officials charged that Rockwell illegally stored and treated hazardous wastes generated during the production of plutonium "triggers" and other components of nuclear weapons at Rocky Flats. Federal officials also charged that the company improperly and illegally discharged wastes through its sewage treatment plant, creating the potential for contamination by runoff to a reservoir used for drinking water.

The four felony charges brought under RCRA allege that the company knowingly treated and/or stored hazardous wastes, including cadmium and chromium, as well as salt brine concentrate and vacuum filter sludge, without a permit or interim status.

The Clean Water Act felony charge is based on the allegation that the company knowingly operated its system for spraying treated wastewater improperly.

- Ben Lilliston

Bending the Law:

The Story of the Dalkon Shield Bankruptcy

By Richard B. Sobol

Chicago: University of Chicago Press, 1991

408 pp.

A DESIGN DEFECT IN THE DALKON SHIELD, an intrauterine device marketed by A. H. Robins Company in the early 1970s, seriously injured thousands of women; some died as a result of septic abortions, while others experienced nonfatal septic abortions, pelvic inflammatory disease or perforated uteruses, or gave birth to children with birth defects. Robins suspended sales of the product in the United States in 1974 and halted foreign sales in 1975.

The special tragedy of the Dalkon Shield disaster was that it easily could have been avoided, had Robins demonstrated a minimal concern for the health of the women in whom the devices were implanted. The company relied on inadequate tests, and ignored warnings from a co-inventor of the product and a quality control supervisor at the plant which produced the Dalkon Shield, as well as early reports of injuries suffered by Dalkon Shield users.

Bending the Law is Richard Sobol’s compelling account of how a second injustice - also one entirely preventable - was done to Dalkon Shield victims in the Richmond, Virginia court of Judge Robert Merhige. In a careful and detailed fashion, Sobol traces how Robins manipulated bankruptcy law to limit its liability and how Merhige abused the rights of the injured Dalkon Shield users in order to resolve the case according to his predetermined plans.

In August 1985, having resolved more than 7,000 suits by Dalkon Shield victims but facing thousands more, Robins filed for bankruptcy in Richmond. The filing led to the transfer of all Dalkon Shield victims’ cases to Merhige’s court.

Among the results of Robins’ maneuvering and Merhige’s handling of the case: a group of aggressive attorneys representing Dalkon Shield victims in the suits against Robins were prevented from representing them in the bankruptcy proceedings; Dalkon Shield victims were prevented from suing Robins for punitive damages; andthe victims were unable to sue E. Claiborne Robins Sr., chair of the company’s board, and E. Clairborne Robins, Jr., president and chief executive officer of the corporation, despite their potential personal liability for the company’s misconduct.

One of the most striking aspects of Sobol’s account is how the women injured by the Dalkon Shield were denied any voice in the proceedings. At the hearing to estimate the amount owed to all of the injured women, for example, Merhige refused to allow any of the victims to testify. In fact, Merhige determined that the women had no special right even to attend the hearing, despite their status as "parties in interest" and their legal right to be present. The overflow crowd at the first day of the estimation hearing, Sobol writes, "was treated just as curiosity seekers are treated at a sensational trial: they were admitted if there was room." Merhige’s decision not to move the proceedings to a sufficiently large room, Sobol notes, was consistent with his stated view that there was not "any need for the ladies to stay around."

Ultimately, the bankruptcy proceedings were resolved by American Home Products’ purchase of Robins. AHP paid $2.255 billion to a trust fund set up to compensate Dalkon Shield victims and issued $916 million of its own stock to Robins’ stockholders. AHP - which, one industry analyst said, accomplished "the steal of the century" in acquiring Robins - and Robins’ shareholders, particularly the Robins family, which received $385 million in AHP stock, were the winners in the proceedings. The big losers in the action were women outside of the United States, who are likely to have failed to have filed a claim by Merhige’s imposed deadline, and U.S. women with serious injuries. Merhige denied women with serious injuries their right to have a jury determine their just compensation, and those women’s share of the trust fund will be diluted by hundreds of thousands of claims by women with relatively minor injuries.

- Robert Weissman

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