Oil Spies

Alyeska Pipeline Service Co.--an Alaskan oil consortium representing Exxon, Arco, British Petroleum, Amerada Hess and Unocal--publicly apologized to the Alaskan people in September for hiring corporate spies as it faced growing regulatory and congressional scrutiny of its environmental and safety problems.

The apology was ill-received, however. Randall Weiner, the director of Trustees for Alaska, a public interest law firm that was targeted by the spies, rejected the apology, saying that "Alyeska must come clean with details about how many Alaskans were targets, and the extent to which their privacy was infringed."

Alyeska originally commissioned the Florida-based security firm Wackenhut Corp. to determine who was leaking information to Charles Hamel, a business person who has provided information regarding environmental problems and pipeline safety to regulatory agencies, congressional committees and the media.

Representative George Miller, D-California, contends there is "substantial evidence" that Wackenhut may have violated several federal and state laws, including recording telephone conversations without consent, burglarizing Hamel's home, paying for the unauthorized release of telephone records and obtaining computer equipment fraudulently.

"There can be no doubt that the goal of this activity was to chill any future efforts to detect and expose violations of environmental safety and laws," Miller concludes in a memorandum to members of the House Interior and Insular Affairs Committee, which Miller chairs and which is investigating the Alyeska/ Wackenhut corporate spying operation.

Pill Profiteering

Calling the pharmaceutifal industry's pricing strategy "despicable," Senator David Pryor, D-Arkansas, recently released a report showing that prescription drug prices have soared at a rate high above that of inflation. The report says that the pharmaceutical industry is by far the most profitable in the nation.

From 1980 to 1990, while the general inflation rate was 58 percent, prescription drug inflation was almost three times higher, 152 percent, the report found. While the average Fortune 500 company earns average profit margins of 4.6 percent, the pharmaceutical industry is bringing in profit margins of 15.5 percent.

Last year, Congress enacted legislation designed to force pharmaceutical manufacturers to give their best prices (based on bulk sales) to the Medicaid program, thereby saving taxpayer dollars. But in an apparent effort to offset the new law, drug manufacturers have raised their best prices by implementing drastic price hikes for those historically receiving the best prices (HMOs, state agencies and Veterans Administration hospitals), forcing taxpayers and consumers to pay the added costs. Du Pont, for example, raised the bidding price of one drug for a state pharmaceutical buying group by 2,130 percent.

Pryor says he is "frustrated" that despite continual congressional oversight of drug pricing and last year's Medicaid law, "drug manufacturers keep pushing up prices so fast it is making our heads spin."

Robert F. Allnut, a vice president of the Pharmaceutical Manufacturers Association, says Senator Pryor's "facts are bad and his policy is even worse." Allnut asserts that prescription drugs are the best bargain in health care.

Shiley's Shenanigans

Shiley, Inc., a subsidiary of Pfizer, Inc., marketed a heart valve that it knew was defective and then obstructed federal regulatory efforts in its desire to ensure continued marketing of the flawed device, a task force of the Food and Drug Administration charged in a September report. The Shiley heart valve has been linked to over 250 deaths.

"Shiley, Inc. has engaged in a continuing scheme to interrupt, deflect, and misdirect FDA's regulation of the Shiley Convexo- Concave heart valve," the report concludes. The task force says the heart valve was defective "from the time of its [FDA] approval," which Shiley secured by supplying incomplete information to the agency. "As the defect materialized and worsened, Shiley engaged in conduct designed to assure continued marketing of the valve by interfering with and obstructing FDA's intervention."

Facing government investigations and a wave of lawsuits, Shiley ceased marketing the valve in 1986--after having sold approximately 80,000 of the devices.

According to the task force's report, Shiley delayed FDA regulatory action, changed manufacturing and quality control processes without FDA approval, repeatedly provided incomplete information regarding patient complications and shipped valves that it knew were manufactured under conditions in "serious violation" of good manufacturing processes.

A Shiley statement said that the company "vigorously disputes the conclusions reached by the report." The company says the task force's "historical recitation of the Shiley heart-valve story omits important information essential for a full understanding of the issues." Shiley says it is continuing a program it implemented to pay the legal claims of the valve's victims, however, "despite the availability of legal defenses."

- David Lapp