More Mass residents have died from COVID-19 than all the Mass soldiers killed in WWII, but let’s “get back to normal,” right?
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More Mass residents have died from COVID-19 than all the Mass soldiers killed in WWII, but let’s “get back to normal,” right?
AG Healey should form independent commission to investigate the failed agreement Last week in the first installment of this two-part column, I ran through the many problems with […]
The official narrative and the real story Readers might feel that this should be a time for me to take a victory lap. The GE Boston deal that […]
July 7, 2018
BY JASON PRAMAS @JASONPRAMAS
Having just been handed an estimated $1 billion budget surplus for the 2018 fiscal year, Gov. Charlie Baker was quick to make a proposal last week to divide up the unexpected spoils.
According to MassLive, “Around half of that will be placed in the state’s reserve account to be available in case of emergency. Gov. Charlie Baker on Friday laid out how he is proposing to spend the rest of that money, introducing a $583 million supplemental budget bill.”
And where does the surplus come from, readers might well ask? Well, the details are still a bit fuzzy, but the Trump administration’s drastic changes to the federal tax code months back seem to have resulted in what’s likely to be a very temporary state tax revenue increase.
Which explains why the Boston Globe paraphrased Noah Berger of the Mass Budget and Policy Center opining that “it would not be prudent for the state to spend the extra money from last fiscal year in the current one.” His preference being that “it should be spent on one-time capital expenses like roads or schools, or put away in the state’s savings account.”
But that’s not what Baker is proposing.
To be sure, there is money allotted for roads and the like. But only two items seem clearly earmarked for infrastructure expenditures: $50 million for cities and towns to fund local road and bridge maintenance and improvement projects, and $30 million for municipal clean water projects. Both worthy candidates for what is likely to be a one-time windfall.
The rest of the proposal is more problematic, however. Especially in its stated focus.
According to a July 13 press release from the governor’s office, “The administration is proposing a wide-ranging $72 million package to make school security upgrades in the Commonwealth’s schools and provide resources to students, staff, and first responders to better respond to threats within schools.”
Which is probably just red meat for Baker’s right-wing supporters. Massachusetts is definitely in dire need of more funding for K-12 and higher education. But it needs that funding on an ongoing basis.
What it doesn’t need is a supplemental budget better dubbed the “More School Cops and Surveillance Plan.”
Yet that’s exactly what Commonwealth students will get from the following proposed items that are part of the aforementioned $72 million section of the governor’s larger supplemental budget proposal:
It’s true that the proposed $40 million in additional aid to school districts in that same section to hire more social workers, mental health counselors, and psychologists is a good idea in general terms. But such an effort can’t amount to much if the funding evaporates next year. Something also true of most of the line items outside the ed-targeted package in the supplemental budget proposal that would provide funding for a variety of decent-sounding programs for K-12 and higher education, and “substance use prevention, education, and screening.” Plus a grab bag of other one-offs of varying importance like “$35.4 million for snow and ice removal costs in FY18” or wastefulness like “$8 million for multi-year municipal police training needs” (in a state that already spends vast sums on cops).
And, sure, we don’t want students (or school staff and faculty) to be vulnerable to killers with automatic weapons. But then we don’t want them to be vulnerable to asteroid strikes either, and most of what we could conceivably fund in the way of preparedness on that front would be about as useless as what the governor is proposing to fund for “school security.” Worse than useless, since the main result of such measures will inevitably be to increase official harassment of students of color and poor and immigrant students in their own schools. And the concomitant danger of their being shot for no reason. As the militarization of police proceeds apace. And their well-documented trigger-happiness is validated by the likes of Weymouth police Chief Richard Grimes in shockingly opportunist remarks at yesterday’s memorial for Weymouth Officer Michael Chesna—who was felled by a rock before being disarmed and executed by a random criminal over the weekend. Even as the K-12 school districts and the state colleges that serve those populations remain starved for funds with or without the FY18 surplus.
Regardless, there’s already a general decades-long trend toward stationing armed police on campuses nationwide, but that hasn’t stopped mass shooters from slaughtering students. There’s a veritable panopticon of surveillance measures from all levels of government on the population in general and on students in particular. Which also hasn’t prevented mass shooters from slaughtering students nationwide.
The things that might actually stop mass shooters from appearing in the Commonwealth—like stronger welfare and public jobs programs and more stringent gun control measures—are not in the cards in the current political climate. Even here in a supposedly left-leaning state that is unable to provide the first of those two needed reforms because it’s constitutionally prohibited from having a progressive income tax. The second, naturally, being blocked by a powerful and triumphalist gun lobby in this Age of Trump.
Fortunately, the legislature hasn’t weighed in on the FY18 supplemental budget yet—having failed to send the regular FY19 budget to the governor’s desk for his signature as of this writing either. So there’s still time for constituents to weigh in on how the surplus funds get spent.
And my suggestion would be to push your state reps and senators to fight for spending whatever part of the supplemental budget is not put into the “rainy day fund” on key capital projects. Like fixing public transportation infrastructure that stubbornly continues to disintegrate no matter how much Gov. Baker’s hand-picked MBTA flacks claim they don’t need any more money—as they had the temerity to do yesterday.
Once that’s done, then start agitating for the progressive tax system that would better fund state education, transportation, and social safety net programs for the foreseeable future. Because we badly need such reforms, and because—for those of you worried about a mass shooting at a Bay State school—families that have a stable income are less likely to produce violent misogynists and racists and nazis (oh my!), since they won’t need to find scapegoats for economic instability anymore.
Progressive taxation will be a very hard reform to win in the Commonwealth, as I’ve written many times in the past. But then so will better gun control legislation. Yet both are needed if we are going to have a more just, stable, and safer society.
We’ve got our work cut out for us. So let’s get cracking.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
June 26, 2018
BY JASON PRAMAS @JASONPRAMAS
No sooner did the Supreme Judicial Court shoot down the “millionaires’ tax” referendum question last week than the Mass legislature rammed a so-called grand bargain bill (H 4640) through both chambers. A move aimed at shoring up tax revenue threatened by the Retailers Association of Massachusetts referendum question that is virtually certain to lower the state sales tax from 6.25 percent to 5 percent if it should go before voters in November.
The house and senate did this by rapidly completing the brokering of a deal that had been in the works between pro-labor and pro-business forces on those issues for months. Giving each side something it wanted in exchange for encouraging the Raise Up Mass coalition to take its remaining two referendum questions—paid family and medical leave, and the $15 an hour minimum wage—off the table, and the retailers association to do the same with its sales tax cut question. Both organizations have not yet made the decision to do so.
If passed, the so-called grand bargain bill will give labor watered-down versions of its paid family and medical leave and $15 an hour minimum wage ballot questions, and give business something that’s explicitly anti-labor: the end of time-and-a-half wages for people working Sundays and holidays, and their ability to legally refuse to work Sunday and holiday shifts.
While Gov. Charlie Baker still has to sign the bill, as of this writing it’s looking like he will do so. Soon.
Which is a pity because it’s not such a great deal for working people as written. True, the grand bargain does ensure that the state minimum wage will raise to $15 an hour for many workers. But it moves up to that rate from the current $11 an hour over five years, instead of the four years it would take with the referendum version. Plus it betrays tipped employees, whose wage floor will only rise from a pathetic $3.75 an hour now to a still pathetic $6.75 an hour by 2023. Keeping all the cards in the bosses’ hands in the biggest tipped sector, the restaurant industry. Although it’s worth mentioning that even the referendum version of the $15 an hour wage plan would have only raised tipped employees to $9 an hour. When what’s needed is a single minimum wage for all workers.
It also makes Massachusetts one of the first states in the nation to institute paid family and medical leave for many workers. Which is truly a noteworthy advance. Yet again, the referendum version is better for workers than the grand bargain version.
But legislators gave away another noteworthy advance from 20 years ago in the process: time-and-a-half wages for many employees who work on Sundays and holidays. Which will hurt some of the same people who the new minimum wage and paid and family medical leave will help.
Thus far, the labor-led Raise Up Massachusetts coalition has had mostly positive things to say about the deal. However, the main union representing supermarket workers—many of whom currently take Sunday and holiday shifts—is already vowing to torpedo the grand bargain. Even though their union contracts also mandate time-and-a-half pay for working Sundays and holidays. And they’ve resolved to take down legislators who backed it over their protest.
Jeff Bollen, president of United Food and Commercial Workers Local 1445, minced no words on the subject in a recent video message to his members:
“I am really pissed off at our state legislature for stabbing retail workers in the back by taking away time and a half on Sundays and holidays for all retail workers in Massachusetts.
“Remember, it was this local union in 1994 with big business and the retail association wanting to get rid of the blue laws; so they could open up their supermarkets, their big box stores, and their liquor stores and make money on Sundays that we fought hard to get a law passed to protect you, the retail worker. And we did.”
The supermarket union leader went on to explain that state lawmakers “panicked” when the millionaires’ tax was derailed and pushed through the grand bargain to avoid losing any more revenue from the referendum question to lower the sales tax. He swore the union was “going to remove those individuals that voted against you. We’re going to get them removed and replaced with pro-labor legislators who are going to fight for the rights of working people.” And defiantly concluded: “We’re going to continue to fight. We’re going to continue to try to get this whole thing repealed.”
How much support the UFCW can expect to get from the rest of the labor movement remains to be seen. But the fact is that some Bay State working families are going to suffer nearly as much pain as gain from the grand bargain.
Worse still, there’s a deeper problem with the bill. It potentially stops the retailers’ referendum drive to lower the sales tax—which they’ve definitely put on the ballot to ensure that big businesses make more profits. But it must not be forgotten that the sales tax is a regressive tax that disproportionately harms working families. And even though the state desperately needs money for many programs that help the 99 percent, it remains a bad way to raise funds compared to a progressive tax system that would force the rich to pay higher tax rates than everyone else. Like the federal government has done for over a hundred years.
Yet since the rich and their corporations continue to rule the roost in state politics, and since a state constitutional amendment would be required to allow a progressive tax system in Massachusetts, there is no way that is going to happen anytime soon. As I wrote last week, the millionaires’ tax would have at least increased the amount of progressivity in the tax system had it been allowed on the ballot (where it was projected to win handily). But business lobbies got the SJC to stop that move.
Given that, the revenue lost from a sales tax cut would really hurt in a period when many major state social programs are already being starved for funds.
Nevertheless, many working families will take a big hit from the grand bargain bill as written: They’ll see the full introduction of the $15 minimum wage delayed by an extra year, they’ll get a worse version of paid family and medical leave, they’ll lose time-and-a-half wages on Sundays and holidays, they’ll see the sales tax remain at 6.25 percent… and if they’re tipped employees, they’ll still be made to accept a lower minimum wage than the relevant ballot question would get them and still have to rely on customers to tip them decently and their bosses to refrain from skimming those tips.
So, it would behoove Raise Up Massachusetts and its constituent labor, community, and religious organizations to stay the course with the paid family and medical leave and $15 an hour minimum wage referendum questions that are still slated to appear on the November ballot. And pro-labor forces should also be ready to lobby harder for a better deal should Gov. Baker refuse to sign the grand bargain bill.
Of course, it could very well be that the bill will be signed into law before this article hits the stands, and that labor and their allies will throw in the towel on their ballot questions. And that would be a shame.
Here’s hoping for a better outcome for Massachusetts workers. Even at this late date.
Note: Raise Up Massachusetts announced that it had accepted the “grand bargain” bill shortly before this article went to press on Tuesday evening (6.26), according to the Boston Business Journal.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
June 19, 2018
BY JASON PRAMAS @JASONPRAMAS
The Fair Share Amendment—better known as the “millionaires’ tax”—that would have gone before voters this November as a statewide referendum question was shot down this week by the Massachusetts Supreme Judicial Court (SJC). So the effort to increase taxes on people making $1 million-plus a year and spend the resulting funds on social needs is over. For the moment.
Organized over the last three years by Raise Up Massachusetts, a major coalition of labor, community, and religious organizations, the initiative had the support of two-thirds of Bay State voters in recent polling and had a good shot at passing.
The campaign was spearheaded by the Commonwealth’s two largest unions, Service Employees International Union and Mass Teachers Association. And naturally, most Massachusetts rich people had no intention of letting anyone—let alone a bunch of union leaders, social workers, and priests—raise their taxes.
Flunkies and front groups were then unleashed. The Massachusetts High Technology Council put together a bloc of capitalist lobby groups—including the Massachusetts Taxpayers Foundation, Associated Industries of Massachusetts, and the Massachusetts Competitive Partnership—and challenged the amendment’s constitutionality.
They were aided in this push by the fact that Gov. Charlie Baker, a Republican, was able to appoint five of seven justices to the SJC since taking office in 2015. Including one that, in fairness, wrote the dissenting opinion on the Fair Share Amendment ruling.
Thus, it was no big surprise that the SJC shot the millionaires’ tax down on a legal technicality. Since the wealth lobby had no convincing political argument against the tax beyond “we don’t want to pay it.” But they had high-powered lawyers, plenty of money, and a court stacked in the right direction. Theirs. A capitalist veto in the making.
Professor Lawrence Friedman of New England Law | Boston explained the decision succinctly on a special edition of The Horse Race podcast—hosted by Lauren Dezenski of Politico Massachusetts and Steve Koczela of the MassINC Polling Group:
“What a majority of the court concluded was that this petition didn’t satisfy the requirements of article 48 [of the Mass constitution] for a valid petition that can go before the voters in November. Because it failed what’s called the ‘relatedness’ requirement—the various parts of the petition didn’t relate to each other sufficiently to pass constitutional muster.
“So the three parts of the petition involve the revenue raising measure, the so-called millionaire’s tax, and then two distinct dedications—one to education and one to transportation. And the court essentially said that, except at a very abstract level, those things are not sufficiently related to satisfy the relatedness requirement.”
The minority of the court, for their part, had a very different view. According to Justice Kimberly Budd (joined by Gov. Deval Patrick appointee Chief Justice Ralph Gants, and pardon the legalese here):
“Disregarding the plain text of art. 48, The Initiative, II, § 3, of the Amendments to the Massachusetts Constitution, as amended by art. 74 of the Amendments, which requires that an initiative petition contain ‘only subjects … which are related or which are mutually dependent,’ the court concludes that, in drafting this language the delegates to the Constitutional Convention of 1917-1918 inserted the words ‘or which are mutually dependent’ as superfluous text. … The court goes on to conclude that the people may not express their opinion on a one section, four-sentence petition because it contains subjects that are not related. … That analysis is flawed.”
In plain English, to rather brutally paraphrase further remarks by Friedman on The Horse Race, activists amended the state constitution a hundred years ago to allow the people of Massachusetts to make laws by referendum because even then the legislative process had been captured by corporations and the rich in ways perhaps unforeseen by John Adams when he drafted the document in 1780.
To block the Fair Share Amendment referendum from going on the ballot for a vote is therefore not in the spirit of the sentence at the core of the SJC majority’s case. The court’s pro-business majority focused on the “relatedness requirement.” Its pro-worker minority countered that referendum questions that contain “unrelated” items that are “mutually dependent” pass constitutional muster. But with five votes to two, the majority prevailed.
The result? The tiny percentage of Mass residents who make more than a cool million a year will not see their state taxes rise from 5.1 to 9.1 percent. And the estimated $2 billion that was expected to be raised from that levy annually will not be applied to the Commonwealth’s education and transportation budgets. Both areas that are ridiculously underfunded given our state’s wealth relative to much of the rest of the nation.
Worse still, the spurious myth that the Mass capitalists’ “coalition of the willing” flogged—and continues to flog in the case of the Boston Herald’s ever fact-light columnist Howie Carr—that rich people leave states that increase their taxes will continue to seem like reality to less careful onlookers of the local political scene. Despite the fact that a major study and a book entitled The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich by Stanford University sociology professor Cristobal Young have used big data to dismiss the idea as mere scaremongering, according to Commonwealth magazine.
Now Raise Up Massachusetts has two options: 1) start the referendum process all over again with language that will pass muster with the narrowest and most conservative interpretation of the “relatedness’ requirement,” or 2) take the fight to the legislature.
With the chances of the legislature passing any kind of tax increase being approximately zero as long as Robert DeLeo is House speaker, starting the referendum process again from scratch is pretty much the only way to go.
Unless Raise Up leaders decide to make some kind of “deal” with the legislature. Which I sincerely hope is not the case. Because the whole Fair Share campaign is already a major compromise given that the real goal of any forward-thinking left-wing reformer in this arena has to be the repeal of article 44 of the state constitution that prohibits a graduated income tax system. Followed by the passage of such a system.
While I’m well aware that every attempt to do that has been defeated in the past, I’m also aware that if referendum questions aimed at the much broader goal of winning a fair tax system were on the table, then it would be possible to negotiate for something smaller like the “millionaires’ tax” if the effort ran into trouble.
As things stand, Raise Up Mass appears to have little room to maneuver. So, better to start preparing for a win in 2022 on an improved referendum strategy—preferably aiming for a graduated income tax to replace our anemic flat tax system—than to make a bad deal merely to be able to declare a false “victory” to its supporters and switch its public focus to the two other drives it still has in play: paid family and medical leave, and the fight for a $15-an-hour minimum wage.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
Online retailer tries to duck sales taxes
For a long time, the internet was like the Wild West for online sales. Companies sold products to consumers all over the US, and the feds and many states were slow to tax those transactions. You know, because “innovation goooood” and all that. On Oct 1, Massachusetts finally started collecting its standard 6.25 percent sales tax on internet sales from out-of-state companies with 100 or more online transactions last year. And last week, according to the Salem News, “online car stereo and electronics retailer, Crutchfield Corp., says Massachusetts’ policy violates interstate commerce laws and is therefore unenforceable.”
Why? In its legal challenge the company is basically saying: You collect taxes on us, but not on other companies who might do the same business by other means. Virginia-based Crutchfield also says it’s covered by a Virginia law designed to protect businesses in that state from having to pay taxes in other states where the business has no brick-and-mortar presence. Yet the Commonwealth has already argued that under a 1992 Supreme Court decision, having “cookies” stored on consumer’s computers from companies like Crutchfield counts as a physical presence in the Bay State. The Salem News also notes that NetChoice—a group representing online retailers like eBay and PayPal—is arguing “that the Baker administration doesn’t have the authority to tax businesses with no actual presence in Massachusetts.”
What’s most fascinating about these developments is the lengths big online retailers will go to avoid paying very standard state taxes (and, of course, federal taxes) in places where they do a significant amount of business. Any corporate victory on this front translates to millions of dollars being effectively stolen from the public that could be used to pay for social goods like education, housing, environmental, and welfare programs. Just what we don’t need.
German multinational faces protests over job promises, tax breaks
Walpole is a town with a population of 24,000 at the 2010 Census, but it’s punching above its weight in lavishing tax breaks on the huge German conglomerate Siemens. And area labor unions—led by the Building and Construction Trades Council of the Metropolitan District (Metro BTC)—are not happy. According to Wicked Local Walpole, hundreds of residents and area union members turned out for an Oct 19 protest on Walpole Common to demand that Siemens Healthineers, the goofily renamed healthcare division of the company (formerly Siemens Healthcare Diagnostics Inc.), follow through on its 2016 promises to the community.
In March of that year, the Walpole town meeting representatives voted 76-51 in favor of giving tax breaks worth millions between 2018 and 2037 to Siemens—an average savings of 75 percent on its property tax for the 20 years, according to the Brockton Enterprise—in support of the $300 million expansion of its existing plant there. The company said it would add 400-700 “permanent jobs” to its existing workforce of about 700 by 2026.
But at the recent rally, Walpole Selectman David Salvatore told the crowd that Siemens has “only hired 32 Walpole residents” to date out of the 170 jobs the company says it has created since the deal was cut. In an earlier Boston Globe article—released just after the town meeting vote on the agreement—he had provided more background: “The benefits of this project are regional, and the burden is local. Of the 620 current employees at the Siemens plant, a mere 33 are Walpole residents; most are not even from Norfolk County, and 83 are from Rhode Island.” So, Walpole is putting a bunch of money on the table for a big company that has thus far only created about 60 jobs for town residents.
Union leaders, according to an Oct 16 press release, are angry that Siemens has not committed to using union labor to build the 300,000-square-foot expansion of the factory or to hiring more local workers—especially since it’s getting such a large tax break. Their pressure campaign is calling for “slowing down the slated expansion for further community input and review.” One would think that a company with a market capitalization of $109.8 billion in May, according to Forbes, can afford to work things out with its critics. But it will be interesting to see how the situation plays out, regardless.
Townie (a worm’s eye view of the Mass power structure) is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
October 24, 2017
BY JASON PRAMAS @JASONPRAMAS
Vertex Pharmaceuticals made a big PR splash last week with an announcement of a significant donation to Boston and other cities where it does business. The Boston-based company, best known for its cystic fibrosis meds, has pledged to “spend $500 million on charitable efforts, including workforce training, over the next 10 years,” according to the Boston Globe, and “much of the money will go toward boosting education in science and math fields as well as the arts.” The company “also wants to set aside money for grants to help young scientists and researchers.”
Well isn’t that nice. Over 10 years, $500 million works out to about $50 million a year. Sounds quite generous, yes? John Barros, Mayor Marty Walsh’s chief of economic development, certainly thinks so: “The establishment of a Vertex foundation is a long-term investment in the people of Boston and the neighborhoods of Boston … That’s ultimately what we hope for when corporations move their headquarters to the city.”
But sharp-eyed locals would disagree. We’ve seen this gambit many times before in the Bay State—most recently when General Electric played it last year: A big business that has gotten bad press for various kinds of questionable behavior and/or outright malfeasance decides it needs to improve its image. And it does so by the simple device of expanding its advertising budget in the form of “charity.”
The important thing to remember with such “donations” is that the corporations in question often get far more money from government at all levels than they ever give back to society. So it’s not really charity at all. It’s just public relations by other means. Aimed at being able to continue to dip from the great public money river largely unnoticed by everyone but the few investigative reporters managing to ply their trade in this age of corporate clickbait.
To that point, let’s look at four ways that Vertex has benefitted from public support. Then reconsider its most excellent announcement in that light.
1) Tax breaks and direct aid
Readers might remember Vertex as the company that got $10 million in state life science tax incentives between 2010 and 2014 and $12 million in tax breaks from the city of Boston—both in exchange for adding 500 local jobs to their existing staff of 1,350 by 2015 and, quixotically, for moving their headquarters from Cambridge to Boston. According to the Globe, the Commonwealth also took out a $50 million loan to pay for “new roads and other improvements” to the new HQ’s Fan Pier site.
Why? As is often the case in the wonderful world of corporate finance, Vertex told then-Gov. Patrick that it might leave the state if it didn’t get the appropriate… um… “incentives.” So that apparently played a role in getting state and local government in gear. The deal was based on the expected performance of Vertex’s blockbuster new hepatitis C drug, Incivek. But things didn’t go as planned. According to MassLive, when the company pulled the plug on Incivek in 2013 after being outgunned by another company’s hep C med, it agreed to pay back $4.4 million of the state money. In 2015, according to the Boston Business Journal, after Vertex failed to meet its job creation target, the city reduced its tax breaks to $9 million—but didn’t ask the company to pay anything back and will keep its deal in place until 2018. Leaving Vertex reaping a windfall of almost $17 million in state and local tax breaks. Oh, and that sweet loan, too.
2) Gouging public health programs
With the release of two major successful cystic fibrosis meds and more new related meds set to breeze through the FDA drug approval process, the company is starting to expand. And how could it not? In July 2017 it raised the price of its newer med, Orkambi, by 5 percent to $273,000 per patient per year, according to the Boston Business Journal. A product that did $980 million in sales in 2016 before the price increase. In 2013, the company had already raised the price of its first major med, Kalydeco, from $294,000 to $307,000 per patient per year. With some patients paying as much as $373,000 per year, according to an October 2013 Milwaukee Journal Sentinel/MedPage Today article. Cystic fibrosis doctors and researchers have strongly protested, but to no avail.
It’s true that most patients don’t pay anywhere near that amount of money for the meds—because public and private insurance eat the lion’s share of the still-outrageous cost. But the final sticker price remains tremendously high. And the company doesn’t say much about who does pay a big chunk of the bill: the government, and therefore the public at large. Stick a pin in that. Vertex, like virtually every other drug company, has a business model based on gouging the public with ridiculously high prices that various government insurance programs are mandated to pay.
Programs like, in this case, federal Children’s Health Insurance Program (CHIP). As an Oct 4 letter from the Cystic Fibrosis Foundation (whose eminently questionable role in the funding and development of Vertex’s cystic fibrosis meds will likely be the subject of a future column) to the Senate Finance Committee explained, about half of all cystic fibrosis patients—who used to die young before the new treatments came online—are under 18 years old. So they’re generally covered by CHIP. That program, sadly, was defunded on Sept 27 by our psychotic Congress as part of the Republican Party’s crusade against Obamacare. Most states will run out of their 2017 CHIP money early next year, and unless they find money in their own budget to replace it or Congress manages to do the right thing, over 4 million kids—including thousands of cystic fibrosis patients—are in danger of losing their health coverage.
Vertex is not directly to blame for that crisis, but the situation does make its promise that some of its $500 million donation “will be spent helping cystic fibrosis patients get access to Vertex drugs that help them breathe easier and live a more normal life” look even more ridiculous than it otherwise would. Because Vertex and other pharmas certainly have no plans to lower the outrageous prices of their top meds for any reason. They’ll give some destitute patients “access” to their drugs. But everyone else pays—primarily through government insurance, often in tandem with private insurance. After what the pharma industry terms “discounts”… that still result in usurious prices. So even if one takes whatever portion of the donation actually goes to helping patients get cheaper meds as an inadvertent giveback of some of the lucre they’ve leeched off the government, it’s going to be even less helpful than it otherwise would have been if half the patients on those meds lose their insurance next year.
But Vertex isn’t content with just draining funds out of the US federal and state governments. According to Forbes, it’s pioneering ways to suck public funds out of countries with national health services. “Vertex seems to have finally cracked a long-festering problem: selling its expensive drugs in European markets, which are tougher at negotiating prices. Ireland recently agreed to give Vertex a flat, undisclosed annual payment; in return, all patients who need the drug will get access … other countries outside the U.S. will make similar deals … new CF drugs, including discounts, will cost $164,000 per patient in the U.S., where a fragmented health care system allows for less tough negotiation, and $133,000 in other countries. With almost all of the 75,000 CF patients in those countries treated, that would be an $8.5 billion market.”
3) Government-backed monopolies
Moving on, there’s another key way that Vertex makes bucketloads of money with government help: gaming the Orphan Drug Act. Passed in 1983, it was meant to create a strong incentive for pharmas to research drugs that treated conditions suffered by less than 200,000 patients. In practice, it’s become a standard way for pharmas to get a seven-year monopoly on many of their meds. And while it’s certainly true that cystic fibrosis afflicts about 30,000 people in the US—well below the 200,000 patient threshold—it’s also true that it’s no accident that Vertex chose to focus on the disease. Because, according to its 2016 10-K annual report filing to the Securities and Exchange Commission, the company has won orphan drug status for both Kalydeco and Orkambi. Guaranteeing it seven years of monopoly production and distribution of both of the desperately needed and wildly overpriced meds. And 10 years in the European Union, under similar laws.
As Johns Hopkins University School of Medicine researchers commented in the American Journal of Clinical Oncology in November 2015, such monopolies make “it’s hardly surprising that the median cost for orphan drugs is more than $98,000 per patient per year, compared with a median cost of just over $5,000 per patient per year for non-orphan status drugs.” The same study demonstrated that “44 percent of drugs approved by the FDA [in 2012] qualified as orphan drugs.” So winning orphan drug status is one structural mechanism that makes it possible for pharmas like Vertex to charge crazy high prices for many meds.
A recent article by Harvard Business Review adds that pharmas enjoy monopolies on many other meds thanks to the 1984 Drug Price Competition and Patent Term Restoration Act—which allows them to enjoy “patent protection to effectively monopolize the market” for new meds. Once that protection expires, the field is then supposed to be open to other pharmas to produce far cheaper generic versions. Which is doubtless what Vertex CEO Jeffrey Leiden was referring to in a June Globe piece when he defended the company’s sky-high drug prices, saying “‘This is a system that actually works. It rewards innovation and stimulates it. And then after the period of [market] exclusivity is over, it actually makes these innovations free’ for future patients.”
What he doesn’t mention, however, is that pharmas routinely lobby and litigate to extend their monopolies on meds, and actually pay off potential generic producers to not manufacture generics. Delaying the cheaper meds’ arrival on the market and costing public insurance programs like Medicare, Medicaid, the VA system, and CHIP huge amounts of extra money. Which then flows into corporate coffers. All the more so because the Affordable Care Act (“Obamacare”) did not finally give the government the power to negotiate with pharmas to rein in drug prices, according to Morning Consult. The HBR story also notes that generic companies themselves often obtain exclusive monopolies for shorter periods of time and that their products are sometimes substandard—resulting in recalls. All these delays can keep cheaper meds off the market for years.
4) Public science, private profit
Finally, there’s the fact that much of the basic research that allows pharmas to exist is done by the federal government through the National Institutes of Health. In the case of Vertex, a direct connection has already been demonstrated. A May 2013 article by Milwaukee Journal Sentinel/MedPage Today explains that the company’s first cystic fibrosis med, Kalydeco, was only possible thanks to “a hefty investment from taxpayers through grants from the National Institutes of Health, which underwrote the cost of early research, which identified the gene that the drug targets.”
If one were to put a price tag on all the basic science Vertex uses to develop its cystic fibrosis meds—and other meds—that comes straight from the NIH, what would it be worth? Tens of millions? Hundreds of millions? It would be a great research project to estimate the total, but suffice to say that it would be a great deal of money. Money that Vertex could never have leveraged on its own back in 1989 when it was a startup.
Conclusion: the racket and the damage done
Add it all up: tax breaks, direct aid, profits from price gouging CHIP and other public insurance programs, profits from orphan drug status, and profits based on research directly attributable to NIH research. How much money will Vertex ultimately get from government at all levels? A hell of a lot more than that $500 million it proposes to give back to communities like Boston—mostly in ways that either benefit the company directly by providing it with a new generation of trained researchers or indirectly by gilding its public image. Assuming that it ever actually gives that much money away. Which the public has no way of knowing at this juncture.
Any more than we can know how much Vertex spends on lobbying annually to guarantee a constant flow of fat stacks of public cash. Since its shareholders at its most recent annual meeting in June thoughtfully shot down an initiative by a small number of religious shareholders to force the company to report its actual lobbying budget going forward, according to the Boston Business Journal. Not long after Vertex successfully colluded with 10 other pharmas to get the SEC to allow them to quash shareholder resolutions from the same religious groups that would have made the company’s drug pricing formula public, according to the Wall Street Journal.
Then, taking all the above into consideration, check out Vertex’s annual advertising and promotions budget for the last three years: $16.2 million in 2014, $24.5 million in 2015, and $31.4 million in 2016, according to its latest annual report. Going up, right? So tack $50 million a year onto that last figure and we get an $80+ million ad budget. Totally doable for a company with cash, cash equivalents, and marketable securities worth $1.67 billion on hand on June 30, 2017. A company that’s now becoming profitable after years of running in debt—all of which has only been possible with massive public support.
Now come back to Vertex’s “donation.” Doesn’t look so generous anymore, does it?
Reforming the twisted wreckage of our drug research and distribution systems in this country will take a massive grassroots effort lasting years. But there’s one way that local advocates can get going on that project fast: demand that municipal and state officials stop giving public money to pharmas like Vertex, or participating in pharma PR stunts like promising to recycle some of that money to educate local kids—more of whom would have a fine education already if our elected officials stopped throwing money at giant corporations that should be going to social goods like public schools.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
October 18, 2017
BY JASON PRAMAS @JASONPRAMAS
The rich and powerful interests that control Massachusetts politics and the state economy have their fingers in every conceivable pie. So numerous are their projects that it’s difficult for most news outlets to keep track of them, let alone cover them all. Yet it’s critical for our democracy that they be covered. Which is why I’m launching Townie—a regular news column that will provide short takes on all the elite wheeling and dealing that most people never hear about.
Business Organizations Sue to Down “Millionaire’s Tax” Referendum
In an era when taxes continue to be slashed for wealthy people and corporations as government social programs are starved for funds, one would think that the Fair Share Amendment (a.k.a. “millionaire’s tax”) proposed by the Raise Up Massachusetts coalition of religious, labor, and community organizations would be a no-brainer. The idea is slated to be put in front of Massachusetts voters as a binding referendum question in November 2018. If passed, it would amend the state constitution to add a 4 percent tax on top of the Bay State’s infamously inadequate 5.1 percent flat income tax for all households earning $1 million or more. The money collected will be mandated to fund public schools, transportation, and road maintenance. All sectors that really need the money. And best of all, only 19,500 families would have to pay in 2019 if the tax goes into effect—0.5 percent of all filers.
Well apparently any tax is a bad tax in the eyes of the Commonwealth’s “business community.” No matter how many people it would help, and how painless it would be for the tiny number of 0.5 percenters. So, according to an Associated Industries of Massachusetts (AIM) press release, the leaders of five pro-corporate organizations are trying to torpedo the referendum before it can be voted on by filing a lawsuit against it at the Supreme Judicial Court. The plaintiffs are: Christopher Anderson, president of the Massachusetts High Technology Council, Inc. (MHTC); Christopher Carlozzi, Massachusetts state director of the National Federation of Independent Business (NFIB); Richard Lord, president and chief executive officer of AIM; Eileen McAnneny, president of the Massachusetts Taxpayers Foundation (MTF); and, Daniel O’Connell, president and chief executive officer of the Massachusetts Competitive Partnership (MACP).
They claim that the referendum language is “riddled with constitutional flaws,” with the MTHC’s Anderson remarking that “Amending the Constitution to achieve taxing and spending by popular vote is just a terrible idea, and could undo much of the good work that Massachusetts has done in terms of creating a successful economic climate.” But no matter what kinds of arguments they try to make, it seems like what they’re most afraid of is democracy. Let’s see how far they get with the SJC.
About That Opioid Epidemic…
More proof that the rising number of deaths from opioid abuse has more to do with corporate greed than any personal failings of individuals suckered into addiction by pliant doctors colluding with pharma sales reps. And also that those few drug companies that pay any penalty at all for their role in destroying communities across the state, get little more than a slap on the wrist. According to a press release by the office of Mass Attorney General Maura Healey, “An opioid manufacturer will pay $500,000 to resolve allegations that it engaged in a widespread scheme to unlawfully market its fentanyl spray and paid kickbacks to providers to persuade them to prescribe the product… Insys Therapeutics, Inc. misleadingly marketed Subsys, a narcotic fentanyl product that is sprayed under a patient’s tongue.” The money will be used to “help fund the AG’s prevention, education and treatment efforts.”
Fentanyl is a synthetic opioid that is 30-50 times more powerful than heroin. The company claimed its spray version of the drug was useful for treating “minor” pain in non-cancer patients—despite the fact that the FDC had only approved the drug for use in more severe pain in cancer patients. It then pushed its sales staff to give kickbacks to doctors in the form of “fees paid to speak to other health care providers about the product.”
Boondoggle in Progress?
When a public college gets involved in land deals, it’s definitely worth keeping an eye on. Especially when that college is UMass—a troubled multi-campus institution whose leadership would rather engage in property speculation than fight the legislature for more money for public higher education.
In 2010, the school’s independent development wing, the UMass Building Authority (UMBA), bought the former Bayside Expo Center property after its owners went into foreclosure. According to the Dorchester Reporter, in August, the UMBA issued “a Request for Information (RFI) as it seeks out ideas for the ‘highest and best use’ of the former Bayside Expo Center site on Columbia Point in Dorchester with an eye toward transforming the 20-acre site into a ‘modern-day Harvard Square.’”
Last week, the newspaper reported that 16 developers have responded to the university’s request, including: Accordia Partners; American Campus Communities; Beacon Capital Partners; Bracken Development; Capstone Development Partners LLC & Samuels & Associates; Corcoran Jennison & BTUHWF Building Corp; Core Investment Inc.; Hunt Development Group, LLC & Drew Company Inc.; The HYM Investment Group, LLC; LendLease; Lincoln Property Company; Lupoli Companies; Rhino Capital & Ad Meliora; SKANSKA; University Student Living; and Waterstone Properties Group Inc. The Reporter says the UMass Building Authority “hopes to leverage public-private partnerships toward the massive mixed-use project.” Which usually means big public giveaways to corporations. One way or the other. Stay tuned.
Townie is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
September 29, 2016
BY JASON PRAMAS @JASONPRAMAS
Last week—as is the case many weeks every fall and spring in Boston—notices of small scripted protests by an array of area progressive nonprofits, unions, and student groups got me thinking about the rut the anti-corporate American left has been stuck in for decades. Most especially about the damage done by the habit of ineffectual symbolic political action on a host of important issues. Combined with tailing after a corporate-dominated Democratic Party establishment. Which, time and time again, ignores or actively betrays its base on key issues like jobs, education, healthcare, global warming, and military spending. As it’s done during the current presidential race.
But what if there was a way to change the whole political game for the oppositional left? After all, we almost saw such a tectonic shift happen this year with the Bernie Sanders campaign. There have also been glimpses of a more vibrant, creative, and successful progressive politics from the Occupy and Black Lives Matter movements over the last five years. What if left activists could get back to a mass politics that can really win solid victories for working families?
The way forward, it seems, is not yet to be found on our shores. However, it might be on view in the United Kingdom … where Jeremy Corbyn just won yet another vote to remain the leader of the Labour Party.
Who is Jeremy Corbyn? Think of him as the Bernie Sanders of the UK. But one who has gotten a good deal farther politically than the original Sanders has to date. In his context, being the leader of the Labour Party is kind of like being the head of the Democratic National Committee. Except that the levers of actual power are more built into the Labour Party structure than the Democratic Party structure. And the party sits within a parliamentary political system where its leaders have a lot more control over what their elected officials do than their American counterparts. At the same time, Labour members get to vote directly for their party leaders—unlike Democrats. So when a socialist like Corbyn wins leadership elections twice in under a year and a half, it means that he has the power to help spark changes in his party of the type that Sanders can only dream of presently.
Since Corbyn first ran for Labour Party leader last year—on a platform well to the left of Sanders that calls for an end to austerity policies that hurt working people, renationalizing the once-public UK rail system, unilateral nuclear disarmament, and refusal to support Clinton-style “bomb diplomacy” (sorry, “humanitarian intervention”) in the Syrian war—he has increased the number of voting party members and supporters from 200,000 to over 600,000. Even while fighting a running battle with the corporate-backed acolytes of the neoliberal warmonger Tony Blair for full control of the party. Many of those new members are disenfranchised young voters of the same type that supported Sanders.
What Corbyn is doing with those young folks is fascinating. Upon winning his second leadership election by 61 percent last week, he didn’t talk about beating the ruling Conservative Party in the next general election. Instead he’s planning to deploy the growing militant grassroots of his party to win political victories in advance of the next election. Which looks like a completely different strategy than the one Sanders is taking post-primary—so far focusing his new Our Revolution organization on electing more progressive Democrats to office. Even as that party remains in full control of its Clintonite corporate wing. [Although in recent days, Our Revolution is starting to sound more like Corbyn’s similar Momentum organization—which is all to the good, and perhaps unsurprising given that the two insurgencies have long been in touch.]
And what issue is Corbyn focusing on? Public education. Namely stopping the Conservatives from increasing the fairly small number of UK public exam high schools known as “grammar schools.” He is calling for the large socialist camp coalescing around Labour to defend the egalitarian tradition of quality public education for all in Britain. Rather than allow the grammar schools to continue cherry-picking middle and upper class students, and helping them get into elite universities over the heads of working class students. Thus attempting to perpetuate the ancient British system of class privilege in education long after it was formally constrained. The Labour left is also likely to push to end the charter school-like “academy” (or “free school”) system that is allowing corporations to run many public secondary schools in Britain. Lining their pockets, threatening unionized teachers, and further limiting opportunity for working class students in the process. The Conservatives, for their part, plan to expand the academy system to 100 percent of secondary schools and many primary schools besides. If allowed to proceed unchallenged.
Street protests are absolutely part of what the reviving Labour Party and its allies are doing to challenge the corporate wing of their own party and the Conservative Party. Plus, Corbyn supporters have the possibility of leading their party to victory in a future general election, and starting to implement significant democratic socialist reforms thereafter. Echoing their predecessors in Labour leadership at the conclusion of World War II. Reforms like massive public jobs programs, building lots of good public housing, expanding government-funded lifelong educational opportunities for all, deprivatizing the still-impressive UK national health system, rolling back the assault on unions—while cutting the military budget and raising taxes on the rich and the corporations to pay for it all.
So their protest campaigns against conservative policy initiatives are not limited to small numbers of people waving signs and chanting slogans at the wealthy and their minions in business and government like latter-day Don Quixotes. Corbyn and his supporters are taking control of the Labour Party away from its discredited neoliberal leadership and using it to build a democratic socialist movement in the UK. That very project has been attempted in the Democratic Party before by movements like the Rainbow Coalition – and has been crushed every time. Based on that kind of experience, some American leftists feel that the structure of the party precludes such maneuvers from succeeding. A position potentially strengthened by Sanders’ dispiriting loss in the primary—after what was arguably the strongest attempt to take over the Democrats from the left in history.
Positioning the left—the actual left—for political victory in the US will therefore be extremely difficult. No two ways about it. And it’s not clear whether trying to commandeer the Democrats like Corbyn’s movement is doing with the UK Labour Party or building up small left-wing formations like the Green Party into a national powerhouse or some combination of the two strategies will lead to the desired outcome.
But one thing’s for sure. Corbyn’s success is built on grassroots activism. If we’re going to see similar successes for the American left at the national level, progressive nonprofits, unions, and student groups in cities like Boston will have to do better than calling sporadic underattended rallies, marches, and teach-ins—coupled with desultory lobby days where their peonage to the Democratic establishment is generally on display to their detriment. And start winning real political battles instead of scoring points on phantom targets.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.
Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.