Audit Notes: WaPo on Avandia, giving away the store, plutocrats

Report shows how drug research is corrupted by corporate money

The Washington Post’s Peter Whoriskey has another outstanding story in his series on the Avandia drug scandal at GlaxoSmithKline and what it says about the corruption of our system for testing the safety and efficacy of drugs.

Years ago, the government funded a larger share of such experiments. But since about the mid-1980s, research funding by pharmaceutical firms has exceeded what the National Institutes of Health spends. Last year, the industry spent $39 billion on research in the United States while NIH spent $31 billion.

The billions that the drug companies invest in such experiments help fund the world’s quest for cures. But their aim is not just public health. That money is also part of a high-risk quest for profits, and over the past decade corporate interference has repeatedly muddled the nation’s drug science, sometimes with potentially lethal consequences…

The odds of coming to a conclusion favorable to the industry are 3.6 times greater in research sponsored by the industry than in research sponsored by government and nonprofit groups, according to a published analysis by Justin Bekelman, a professor at the University of Pennsylvania, and colleagues.

Moreover, at the same time that companies have been funding a larger share of research, they have shifted the job of conducting trials away from nonprofit academic hospitals to for-profit “contract research organizations.” Critics say that with this change, corporate bias is less likely to be challenged.

As you can see from the example of Avandia, which caused some 27,000 heart attacks and deaths. Astonishing. Great work by the Post.

— Here’s a feel-good story for your Audit reading, via the Star Tribune. A grocery store owner in Minnesota is retiring and selling his two stores to his 400 employees, at no cost to them:

On Jan. 1, Lueken’s Village Foods, with two supermarkets in Bemidji and another in Wahpeton, N.D., will begin transferring ownership to its approximately 400 employees through an Employee Stock Ownership Program (ESOP).

Lueken said he had multiple offers to sell to large independent chains and might have gotten more money that way. But he and his family believe that selling to workers will be better for them, the business and this north-central Minnesota city of 13,000 people…

Employees say Lueken’s decision, which won’t require them to pay anything for their shares in the business, multiplied the high esteem they already held for their boss.

— Read this Ezra Klein conversation with Reuters’s Chrystia Freeland, whose new book is called “The Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else.” Freeland:

There’s no one way of seeing the world, and different people are different, but for me, the most vivid statement of the royal jelly view came from Mikhail Khodorkovsky, who said if a man is not an oligarch, something is not right with him. The great thing about the Russians is they’ll say that kind of stuff directly. My suspicion is that’s a view quite a few of these people have…
Having said that, one thing I think is to what extent do you feel that the most important measure of value in society is accumulating a fortune. A lot of Americans think that’s really where it’s at. To get back to Romney, that’s where you get the belief that being successful in business qualifies you to be president. What’s interesting to me is that if you talk to the billionaires in other countries that have different social orders, you heard different views on this.
Yuri Millner, the Russian billionaire, set up a prize in theoretical physics where he gave three million bucks each to what he thought were the nine best theoretical physicists in the world. The reason he did that, he said, is that he thinks that the way our society allocates brainpower against work is not ideal. He thinks the work he does is kind of boring and humdrum and doesn’t make that much of a difference in the world but leads to these huge rewards, while in his view, the most defining and important work, the work that makes us human, is grappling with understanding the universe. George Soros will say that he thinks the most important human endeavor is to be a philosopher. You encounter that sentiment less often among the anglo saxons, because we’ve persuaded ourselves that the heroes of our social narrative our businesspeople.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,