Wednesday, April 8, 2009

CEI Comment on EPA’s Reconsideration of California’s Request for a Waiver to Establish Emission Standards for new Motor Vehicles

CEI Comment on EPA’s Reconsideration of California’s Request for a Waiver to Establish Emission Standards for new Motor Vehicles, by Marlo Lewis, Jr.
CEI, April 6, 2009

EPA should stick to its guns and deny California’s request for a waiver of federal preemption of State motor vehicle emission standards. Granting the waiver would allow the California Air Resources Board (CARB) to impose potentially lethal burdens on an industry in crisis. California has no “extraordinary conditions” with respect either to atmospheric greenhouse gas concentrations or the potential impacts thereof, and consequently does not “need” a waiver. The CARB program massively and directly regulates fuel economy, and thus violates the Energy Policy and Conservation Act (EPCA), which prohibits State law and regulation “related to” fuel economy. Granting the waiver would allow CARB and other “California” States to nullify the fuel economy reforms Congress adopted through EISA, violating the Supremacy Clause. Finally, granting the waiver would create a State-by-State patchwork of vehicle rationing programs, an economically-ruinous policy clearly at odds with congressional intent.

Docket ID No. EPA-HQ-OAR-2006-0173
California State Motor Vehicle Pollution Control Standards; Greenhouse Gas Regulations; Reconsideration of Previous Denial of a Waiver of Preemption

Full report: Marlo Lewis - CEI - Comment on California Waiver Request - 2009-04-06.pdf

Rise of the Luddites

Rise of the Luddites, by Fred Smith
Open Market/CEI, April 07, 2009 @ 3:57 pm

When it comes to things such as environmental policy, the Progressives have been rather successful at promoting their world view. They realized that it would be futile to argue that property rights and human ingenuity could not solve anything - so they did not try (immediately) to socialize oil or other sub-surface minerals but they did succeed in derailing the evolutionary process by which institutions emerged to resolve emerging problems. The economist Ronald Coase noted this in an essay pointing out that the EMS (Emergency Medical Services) was well on its way to being homesteaded with rules for allowing multiple uses - and then the Feds created the Federal Communication Commission and the spectrum is still terribly managed to this day.

The environment is valuable and valued by many. The difficulty is that we have relegated its “protection” and “management” to bureaucrats - and suppressed the evolution of property rights in environmental resources (wildlife, groundwater, fisheries). These resources remain as common property resources - and we experience repeatedly the Tragedy of the Commons. However, the most distressing aspect of the debate over environmental policy, is that the view gaining prevalence from the Progressive side is decidedly anti-human, and anti-technology at its core.

There are many features of the growing anti-human-relevant-science campaign.

* One is the selection of the fearful – the Malthusian wing of this movement that sees “technology” as change, as a move into an untested future and, thus, to be slowed if not banned. These people champion the Precautionary Principle – a totally Luddite rule. Has there ever been a market innovation (one that we hoped people would buy) that created more harm than good?

* The Economic Rational wing, which has championed “comparative effectiveness” and so on. After all, they argue, it would be foolish and wasteful to approve a new drug or device that was not “cost effective for the median individual.” A wonderful capture of the rational language but, of course, that approach argues that we can know in advance that a specific innovation will or will not prove beneficial (the French minitel system comes to mind). Most – all – innovations appear first as clunky, expensive toys or (for a very few) necessities. The purchasers are the ‘Early Adopters’ – often rich or eager to “be the first on their block.” However, the freedom to create an infant market for a product that would be too expensive and too inefficient for most people made it possible for the thousand dollar 1940s television sets with tiny blurry pictures and very low quality to become the few hundred 34-inch flat screen marvels of today. We will suffer in many areas for this loss but the greatest losses may be in the medical innovation area.

* The Government Research Must be Dominant school is characterized by those who sought on “scientific” grounds for removal of any restraints on stem cell research – not because such research was banned (private parties were largely free), but rather because it meant that their approved source of scientific funding – the government – was kept from the field. Indeed, this group is much more ambitious – their effort to drive the market from the marketplace of ideas is one of the most threatening themes. Research that has been funded by a company, individuals who have done consulting or worked for a company, groups who’ve received support from a company – all inherently more suspect that a government-funded scientist. One can expect that such individuals and the research work they do will soon have to wear a yellow C (for corporate) patch on their clothes, appended on every page of their journal articles.

* The Science Good, Technology Bad sub-class. This refers to the observations of Joel Mokyr and others. That it has been the close link between (largely) non-economic driven science and (largely) economic-driven technology that transformed the slow progress of most of mankind’s history to the exponential growth we have experienced in the last several centuries. Brilliant individuals have popped up from time to time throughout history. They expand man’s knowledge and some small use is made of that knowledge to improve man’s welfare. In the Industrial Revolution, however, the growth of economic freedom created a more receptive and attentive audience for such knowledge. Electricity would be discovered and Edison and others would immediately begin to think, “What is it good for?” Then, in turn, they would go back to the science and note – “this worked OK but … why?” and those questions would both prompt and interest the science community in expanding knowledge in directions more likely to prove human beneficial. The resulting positive “feed back loop” is critical to progress. This group would sever that link — Science Good, Technology Bad!!

As I have stated above, the environment is valuable, and its preservation is valuable to many. Therefore, at CEI, one of the things we have tried to do in our work is not ridicule the environmentalists or argue that environmental values are irrelevant. We simply make the point that the Malthusian goals - less people, less consumption, less technology - is far less inspiring that the view of mankind as the Ultimate Resource.

I am proud of the work we have done, but we have much work to do to improve our marketing skills. The other side of this debate seems rather adept at garnering popularity, and is much better funded. My message to those who may share our views is that we needed to find ways to create a more effective and powerful alliance between the entrepreneurial elements of the business community and the free market community. We face many problems. Keep up the good work – and help find the scientist-entrepreneurs who have not succumbed to this insanity. There must be a handful of people who recognize that the politicization of science by conservatives was stupid, but the politicization of science by the Luddites is suicidal.

Now banned on campus: bottled water

Now banned on campus: bottled water. By Angela Logomasini
Originally published in The Union Leader. April 6, 2009

There is a new “sin” industry on college campuses. It’s not beer, fast food or tobacco. It’s water! Universities around the nation have begun to deny students the option to drink bottled water, removing it from vending machines and campus stores.

Why? They are following the advice of environmental activist groups that say students should “drink responsibly” — which to them means tap water. Drinking bottled water is supposedly wasteful because you get basically the same thing from a tap. Yet their claims don’t hold water, and surely don’t warrant this silly prohibition.

At the extreme is Washington University in St. Louis, MO. As part of its “Tap It” campaign, the school took a symbolic step in promoting sustainability, according to student body representative, Kady McFadden. This “step” basically banned bottled water from campus stores and vending machines, except where sales must continue until bottled water contracts expire.

These actions ignore the important reasons why some people choose bottled water. Among them is predictable quality. Tap water, on the other hand, periodically experiences quality problems that cause governments issue health alerts.

In the spring of 2008, Penn State — a campus considering prohibitions on bottled water — declared a tap water health advisory, calling students to boil water or drink bottled water. Fortunately, it was eventually determined that the water was OK. Such incidents reveal that overreliance on tap water doesn’t make sense and why people appreciate other options.

Even places that claim to have exceptional tap water — such as New York City — experience problems. New York’s Columbia/New York Presbyterian Hospital has provided bottled water to its patients for drinking and brushing teeth since 2005 after two patients died from Legionnaire’s disease which transmitted via city tap water. Because tap water must travel through pipes, it can develop such quality problems along the way.

In addition to safety issues, piped water can suffer flavor defects from contaminants found in pipes, disinfectants, or from the water source. Some sources, such as the Potomac River next to Washington D.C., are home to species of algae that periodically impact tap water flavor.

This is not to suggest that most tap water isn’t generally pretty safe. The United States has some of the best quality tap water in the world. However, it is not correct for environmentalists to deny the unique challenges and quality differences that tap water possesses. Nor is it fair to deny students and other consumers the option to pick a product with fewer such issues or one they simply like better.

In fact, bottled water delivers consistent results. Seventy five percent of bottled water is drawn from non-municipal sources, such as springs and aquifers, which provide water on a sustainable long-term basis. Many of these sources have supplied quality water for decades. Other distributors purify municipal water, providing a higher quality product than simply opening the tap, and the packaging ensures the quality is maintained during delivery.

Still opponents of bottled water argue that plastic bottles have been the source of excessive waste. Yet the bottles contribute less than 0.3 percent of solid waste, which is managed safely via recycling and landfilling.

This debate over bottled water has taken calls for “dry” campuses to a whole new level! Many people desire their water will taste just as sweet or crisp as the last time they bought it. And why not? There is no good reason why anyone else should deprive them access to those products—on campus or anywhere else.

Charles Huang is a student at the University of California, Berkeley, and Angela Logomasini, Ph.D., is director of risk and environmental policy at the Competitive Enterprise Institute.

The Advantages of Incremental Innovation in Drug Development

Pharmaceutical Evolution. By Albert I. Wertheimer and Thomas M. Santella
The Advantages of Incremental Innovation in Drug Development
CEI, April 7, 2009

Innovation is the lifeblood of the pharmaceutical industry. Over the last century, that industry has been responsible for thousands of new drugs, based on hundreds of thousands of smaller incremental innovations. The breakthrough “blockbuster” drugs taken by millions of patients today were not produced from thin air. Most represent the combined weight of seemingly small improvements achieved over time. The advantages of incremental improvements on existing drugs are paramount to overall increases in the quality of health care. As the pharmaceutical industry developed, classes of drugs—those with similar chemical composition and which treat similar conditions—have grown to provide physicians with the tools they need to treat diverse patient groups.

Still, critics have been highly condescending about what they call “Me-too” drugs—drugs within the same chemical class as one or more others already on the market—which they claim add little or no therapeutic value and are nothing more than an opportunity for pharmaceutical companies to fleece unsuspecting consumers. While some claim that there are too many similar drugs, and that pharmaceutical industry research and development could be more profitably directed toward developing entirely new classes of medicines, drugs based on incremental improvements generally represent advances in safety and efficacy. They also provide new formulations and dosing options that significantly increase patient compliance—both of which lead to improved health outcomes. From an economic standpoint, adding new drugs to a class of medicines also offers the possibility of lower drug prices as competition between manufacturers increases. Additionally, pharmaceutical companies depend on incremental innovations to provide the revenue that will support development of the riskier, capital-and research-intensive blockbuster drugs.

When critics refer to Me-too drugs, they do not mean exact generic copies of already existing drugs, or illegal counterfeits. Instead, Me-toos have a similar chemical composition to one or more others on the market, and have similar biological effects. But, in order to be approved, Me-too drugs must undergo the same extensive clinical testing as other new drugs to determine their safety and efficacy because they are chemically different. In addition, these differences, even if small, typically must represent a medical advancement—such as fewer side effects or improved efficacy for patient sub-populations—in order to attract a portion of the market away from the first approved drug in the class. Nevertheless, many drug industry critics have called for federal policies to inhibit the development and marketing of such incrementally improved medicines. But policies that curb incremental innovation will ultimately lead to a reduction in the overall quality of existing drug classes and could arrest the creation of truly novel drugs.

Research in any industry is a building process. Few scientists develop groundbreaking drugs from no prior research. Most work within, and respond to, existing knowledge—reading the same medical literature, and reacting to new technological breakthroughs at the same time. It is not hard to imagine, therefore, that many different companies would be working on similar drugs. In fact, it is often the case that the only reason why one drug is called novel and another a Me-too analogue is the speed at which each moves through the regulatory process.

Like other technological and value-added industries, the pharmaceutical industry depends on small steps for the creation of blockbuster drugs, which often result from a long series of small innovations. It also depends on these steps for the creation of drugs that provide slight, incremental improvements on existing drugs—thereby adding to a drug class, increasing competition among drugs, and incentivizing further innovation. As the National Research Council has observed, “the cumulative effect of numerous minor incremental innovations can sometimes be more transforming and have more economic impact than a few radical innovations or ‘technological breakthroughs’.” The net effect of increasing the number of drugs through innovation leads to advances in safety, efficacy, selectivity, and utility of drugs within a specific class.

Importantly, providing physicians with a variety of prescription options within a given therapeutic class is paramount to the provision of optimal health care. This is especially true for some drug classes, such as those relating to the central nervous system, for which overall response rates can be as low as 50 percent. For unknown reasons, certain patients respond differently to different drugs within a single class. If physicians have many options at their disposal, they can calibrate their prescribing patterns to better address the needs of specific patients. The existence of multiple similar molecular agents also provides backup in situations where the novel drug in a class is found to have unacceptable side effects and is thus removed from the market. As patients come to depend on a particular class of drugs, it is essential to make sure that they do not lose access to needed medication as a result of regulatory action.

One of the most vehement criticisms made against Me-too drugs is that they siphon money away from research that could be devoted to the creation of novel breakthrough drugs. This assumption is incorrect for a host of reasons, the most important of which is the fact that the pharmaceutical industry depends on selling the products of incremental innovations to provide the revenue for research and development of breakthrough drugs. Additionally, while it is unrealistic to presume that every incremental innovation leads to cost savings, the sum of all drug innovations can result in cost savings by reducing overall treatment costs, shortening or obviating hospital stays, increasing worker productivity and reducing absenteeism, and lowering drug costs through increased competition among manufacturers.

Ideally, every new drug would represent an unprecedented breakthrough and lead to the creation of a completely novel treatment. This, however, is not the reality of the pharmaceutical industry, or of any other development-based industry. Creating drugs based on incremental innovations provides pharmaceutical companies with a secure stream of revenue, which can be directed to higher-risk, potential blockbuster-yielding research. Policies aimed at reducing the industry’s ability to obtain revenues from incremental innovations could be self-defeating, as those industries will then have less revenue to reinvest in R&D for new drugs. Put simply, limiting incremental drug innovation is analogous to limiting competition. The ultimate result could have devastating consequences for the future of the pharmaceutical industry and for the millions of patients who depend on it.

The authors and CEI would like to thank the International Policy Network in London, which published an earlier version of this paper.

Full paper: Wertheimer and Santella - Pharmaceutical Evolution.pdf

Getting drugs to market is much harder than the media lets on.

It's Time to Fight the 'PharmaScolds'. By David A Shaywitz and Thomas P Stossel
Getting drugs to market is much harder than the media lets on.
WSJ, Apr 08, 2009

Relationships between university researchers and medical product companies are under relentless attack by critics who portray these associations as a morality play in which noble academics struggle to resist the dark, corrupting influence of industry. So why are leading disease-research foundations increasingly choosing to partner with industry rather than condemn it?

The answer is that by prioritizing the needs of patients, these medical philanthropies remain keenly aware of something academic critics of industry may have forgotten as they've scaled the university ladder. The goal of medical research is not to publish papers, but to develop new treatments for people suffering from disease. And translating laboratory research into new therapies, in the words of Robert Beall, president of the Cystic Fibrosis Foundation, is something "academics are really not good at."

After years of extensive public investment of billions of dollars in medical research, we have generated thousands of scientific papers, but few important new treatments for dreadful conditions such as pancreatic cancer and Alzheimer's disease.
To be sure, we have won some important battles. Statins and blood pressure medications have dramatically improved the prognosis of patients at risk for heart attacks, while powerful antiviral medicines mean HIV is no longer a death sentence.

But behind these spectacular achievements is an arduous, expensive and underappreciated journey, occurring largely in industry, from an original scientific concept to an effective drug or device. Most promising ideas either never pan out or result in modest, incremental advances. Human biology is maddeningly complex, laboratory models are necessarily simplistic, and scientific understanding remains painfully limited.

Discerning which ideas have value and capturing this value is extraordinarily challenging and has a depressingly high failure rate. The complexity of product development as well as the scientific sophistication, regulatory oversight, and manufacturing consistency required to pull this off are astounding. That any new useful medical products emerge at all is nearly miraculous.

Given the vital role of medical products companies and the magnitude of their challenges, one might imagine that this industry would be admired. To some extent, it is. Leading research organizations such as the Michael J. Fox Foundation for Parkinson's disease proactively build bridges with industry leaders, solicit advice from industry scientists, and fund projects in industry labs.

But this enlightened view of industry is not widespread. This is largely because of the disproportionate influence of a coterie of prominent critics we have previously dubbed "pharmascolds," who routinely vilify the medical products industry and portray academics working with it as traitors and sellouts. These critics are pious academics, self-righteous medical journal editors, and opportunistic politicians and journalists. Their condemnation of anyone's legitimate profit -- it's all "corruption" in their book -- has in fact materially enhanced their own careers. They extrapolate from occasional behavioral lapses in industry -- which is equally, if not more prevalent, in universities -- to demonize the market and portray scientific medicine as an ascetic religion, which it is not.

The pharmascolds systematically discount the difficulties of product development. Meanwhile, each new barrier -- such as the National Institutes of Health's ban on paid consulting for industry -- erected between publicly funded researchers and companies, especially cash-strapped start-ups where many of the breakthroughs occur, slows the progress of potential treatments.

In response to these attacks, drug company spokespeople seem content to offer up measly press releases. When challenged by reporters, most academic consultants to industry refuse to comment or offer a meek explanation, instead of retorting that industry pays them because they add critically important value. This evasion has only emboldened industry critics, disheartened company employees, and caused even allies to wonder if there really is something to hide.

For the sake of the many patients whose diseases require innovative treatments -- and for the medical philanthropists determined to make it happen -- it's time for the leaders of the medical products industry to take pride in their purpose and start fighting back.

And discovering a few important new medicines wouldn't hurt either.

Dr. Shaywitz is a management consultant in New Jersey. Dr. Stossel is a professor of medicine at Harvard and a fellow at the Manhattan Institute.

Japan warns against U.N. inaction on N Korea rocket launch

Japan warns against U.N. inaction on N Korea rocket launch
Japan Today, Wednesday 08th April, 06:30 AM JST

TOKYO — Japan’s foreign minister warned Tuesday that the U.N. Security Council must give a strong response to North Korea’s recent rocket launch or risk losing its authority.

Foreign Minister Hirofumi Nakasone said a failure to respond to the North’s Sunday launch could hurt multilateral talks aimed at getting the communist nation to halt its nuclear programs.

“If violations are allowed, the U.N. Security Council’s authority would be threatened and trust placed upon it would be impaired,” Nakasone told a news conference. “The U.N. Security Council should respond properly and teach North Korea a lesson that it has to pay for the act of provocation.”

He said the lack of a strong response to the rocket launch—seen by many as a cover for testing long-range missile technology—would send the wrong message to the North.

Security Council diplomats were mired in squabbles over how, or even whether, to punish North Korea for Sunday’s launch. World leaders, including President Barack Obama, called it a provocative act and a violation of previous sanctions, imposed after the North’s underground nuclear test in 2006.

Japan said Monday that while it was trying to lobby China and Russia, which are reluctant to punish the North, it would extend sanctions against North Korea for another year in response to the launch.

Japan imposed tight trade sanctions against the North in 2006 following Pyongyang’s missile and atomic tests that year. The ongoing sanctions, which ban North Korean ships from entering Japan and prohibit imports of North Korean goods, have been renewed every six months since and were to expire on April 13.

Pyongyang continued to claim it put a communications satellite into orbit and is now transmitting data and patriotic songs. But Japan joined the rest of the world in saying that it appeared to be a failure.

Nakasone said Japan has yet to determine whether North Korea launched a satellite or a missile, but either way the launch violated the Security Council ban because it used missile technology.

The international community will allow North Korea to engage in space development “only if the North fulfilled its obligation to abandon all nuclear programs and no longer poses a threat to Japan and the rest of the world,” he said.

Salazar Announces that East Coast Windmills Could Provide 100 Percent of Nation’s Electricity

Fantasy Land: Salazar Announces that East Coast Windmills Could Provide 100 Percent of Nation’s Electricity
The Institute for Energy Research, Apr 07, 2009

WASHINGTON, D.C. - IER President Thomas J. Pyle today issued the following statement in response to Secretary Salazar’s assertion that windmills off the East Coast, “could generate 1 million megawatts of power, roughly the equivalent of 3,000 medium coal-fired power plants, or nearly five times the number of coal plants now in the United States.”

“We were pleasantly surprised to hear Secretary Salazar announce today that East Coast windmills could not only replace the electricity we get from coal, but double it. According to his estimate, these windmills could completely replace the 1 million megawatt hours of power that coal, natural gas, nuclear, biomass, onshore wind, and other renewable sources provide.

“Unfortunately, upon closer inspection, key elements of the secretary’s claim fail to hold up to scrutiny. For starters, America doesn’t even have 3,000 coal plants in service right now—we don’t have even half of that. But even if we did, the secretary appears to be suggesting that East Coast windmills could meet well over 100 percent of our electricity needs all by themselves. Never mind that wind accounts for only 1.3 percent of our nation’s electricity today. To make the secretary’s claim accurate, we would need to install 309,587 giant 3.25 mw turbines spread over 1,800 miles of coastline (which is the entire East Coast)—or about 172 turbines per mile of coastline—and hope the wind blows 24 hours a day, seven days a week.

“Assuming the wind never stops, and assuming Americans could do without a recreational coastline, we might have a shot at meeting the secretary’s goal. But it won’t be cheap. According to the Energy Information Administration, offshore wind power—21 cents per kilowatt hour—is more than twice as costly as just about every other conventional alternative available.”

NOTE: The Cape Wind Project calls for the installation of 130 wind turbines, which have a rated capacity of 420 megawatts of energy.

More from IER:

Blog Posting: Will Renewables Become Competitive Anytime Soon?
Press Release: Hundreds Turn Out in Support of Offshore Energy Development
Fact Sheet: Offshore Energy Exploration: Myths vs. Facts