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As Devastating Plant Shutdown Looms in West Virginia, National Outrage Is Hard to Find

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Hamilton Nolan - In These Times

A union set to be wiped out by layoffs says politicians are missing in action.

Joe Gouzd is pissed. As the president of United Steelworkers Local 8?–?957 in Morgantown, West Virginia, he represents more than 800 of the 1,500 workers who are set to lose their jobs on July 31, when the Viatris pharmaceuticals plant in Morgantown shuts down for good. And though he is used to fights, he does not like feeling abandoned.

Ask Gouzd what he is hearing from his representatives in the federal government as the plant shutdown looms, and he’ll tell you, ?“Not a god damn thing.” 

“We’ve heard nothing,” he says. ?“We’ve heard all kinds of horse shit from A to Z.” 

This is a remarkable statement, when you consider that the closure of this one plant embodies an entire galaxy of issues that should make it a prime candidate for political intervention. It represents the often-lamented effect of offshoring: a decades-old factory whose jobs are being unceremoniously shipped overseas by the enormous conglomerate Viatris, which was formed in 2019 as the combination of Mylan and Upjohn and immediately set out to slash costs. 

It represents the human and economic toll of America’s industrial decline: Many of the union jobs at the plant pay $80,000 or more, more than twice what any of the workers who are laid off are likely to get if they stay in Morgantown and find a new job. An economic analysis by the Democracy Collaborative finds that the plant’s closure could cost the surrounding county more than 4,600 jobs in total and $400 million in wages in the coming year, in a county where the median income for individuals is less than $25,000 a year.

It represents the loss of America’s pharmaceutical manufacturing capability during a pandemic: Though the coronavirus made many politicians talk about the need for America to strengthen its own supply chain at home to avoid relying on foreign countries for medicines and pharmaceutical supplies, the union’s calls for the Biden administration to invoke the Defense Production Act to take over this plant that makes generic pharmaceuticals seem to have fallen on deaf ears. All indications are that the shutdown that has loomed for seven months will go forward as scheduled next week. 

And, on a raw political level, it would seem like the closure of a major factory in West Virginia?—?a state that has served as a political football for the past five years, and that is now the home to Joe Manchin, the Senate’s single most powerful member?—?would offer a prime opportunity for the Democratic-controlled federal government to score points in a red state, prove that Democrats can in fact deliver for the workers that Donald Trump paid lip service to, and throw a bone to Manchin all at once. 

But none of this has caused any concrete action from the federal government to save the plant. The story of the fate that awaits the hundreds of workers in Morgantown has not become a huge national story. A slow-motion disaster that could be the seed of a great bipartisan effort to save unionized American jobs in West Virginia is instead unfolding just as the company said it would when it announced the closure plans, when most of the country was distracted by the question of whether Donald Trump would actually leave office. Gouzd says that the politicians ?“are running away from us.” He dismisses West Virginia Republican Senator Shelly Moore Capito as an unresponsive ?“blowup doll.” Joe Manchin, he says, gave the union members ?“two minutes of his time” several months ago, and has not done anything meaningful on their behalf. 

“He asked us if we still make penicillin,” Gouz says. ?“We haven’t done that for 20 years.” 

In a statement, Joe Manchin said, ?“For months, I have engaged in conversations with Viatris, Monongalia County, the Morgantown Area Partnership, and local and state leaders to find a solution that protects every single job.” (Since the plant’s 1,500 jobs are set to be eliminated in a week, any conversations he had were apparently fruitless.) 

The perceived lack of help is particularly noticeable because Joe Manchin has a very personal connection to this issue: His daughter, Heather Bresch, was the CEO of Mylan, the company that owned the Morgantown plant prior to the rebranding as Viatris. Bresch came under fire in 2016 for her company’s egregious price increases of EpiPens, which prompted a recent $345 million settlement after several class action lawsuits. Bresch herself retired last year after her company’s merger with Upjohn, earning herself close to $20 million during her last year on the job. The 855 unionized Viatris workers in Morgantown who are losing their jobs will receive two weeks of severance pay for every year that they had on the job. 

Our Revolution, the progressive political group, has been working for the past six weeks to elevate the profile of the workers in Morgantown, and try to win them anything it can. That work has been led by Mike Oles, an organizer who has worked on a string of similar plant closures across the country, beginning with the Carrier factory in Indiana that became a national political issue in 2016. In that case, there was a cell phone video of the company’s brutal layoff announcement that went viral; now, Oles says, companies often send workers home before making the announcements, and work strategically to bury the news. 

“This plant seems more saveable than Carrier was, even,” says Oles. ?“This idea that we’re sending 1,500 jobs to India to produce lifesaving medicines, in areas where we have concerns about supply chains… We can support a state that’s transitioning from fossil fuels. Why wouldn’t we try to keep pharmaceuticals in the state?”

The West Virginia state legislature passed resolutions calling on state leaders to keep the plant open, but Governor Jim Justice’s efforts to find a savior do not seem to have succeeded. In June, the White House issued a report calling a robust domestic pharmaceutical supply chain ?“essential for the national security and economic prosperity of the United States,” but that has not prompted any concrete action to keep the Viatris plant open. 

“It’s heartbreaking,” Oles says. ?“These jobs just don’t come back. Communities don’t bounce back from plant closings like this. I’ve seen it in five different states.” 

Adding to the grim situation is the fact that not only will the factory be shutting down?—?the union will as well. United Steelworkers Local 8?–?957 represents only the Viatris workers. After more than 40 years of existence, Gouzd says, the local will be closing after the plant does. 

Viatris said in a statement that the shutdown in Morgantown is a result of the company’s efforts to ?“optimize its commercial capabilities and enabling functions, and close, downsize or divest manufacturing facilities globally that are deemed to be no longer viable.” They add that the decision ?“in no way reflects upon the company’s appreciation for the commitment, work ethic and valuable contributions of our employees.”

The feelings of appreciation are not mutual. The mood inside the factory is ?“toxic,” says Gouzd. ?“The place is caustic. They’re ready to string somebody up by a tree.”

This blog originally appeared at In These Times on July 22, 2021. Reprinted with Permission.

About the Author: Hamilton Nolan is a labor reporter for In These Times. He has spent the past decade writing about labor and politics for Gawker, Splinter, The Guardian, and elsewhere. 


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Democrats box in Republicans on drug pricing

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Burgess Everett

After months of wrangling, House Democrats finally passed a massive bill aimed at lowering drug prices. And Senate Republicans are flummoxed over how to respond.

The GOP is in a jam that makes action appear somewhere between unlikely and impossible. But if Republicans fail to act, it could easily become a major political liability for the party given the salience of high drug prices in public polling and President Donald Trump’s desire for sweeping reforms.

Yet with an election year cresting and massive divisions among his members, Senate Majority Leader Mitch McConnell is staying put. Associates say the Kentucky Republican is not eager to make a move that splits his caucus and could incur the wrath of the well-financed pharmaceutical industry.

A final decision will wait until after the Senate’s impeachment trial. Many Senate Republicans, however, know they need to do something to satisfy Trump and avoid the awful optics of doing nothing at all.

Senate Finance Chairman Chuck Grassley (R-Iowa) this summer advanced a bill that would fine drugmakers that hike prices above inflation rates, but from the start it had more Democratic support than Republican backing. Even though a significant number of GOP members say it’s a bold stroke with crucial presidential support, many Republicans liken the move to price controls that would kill innovation.

“God, I don’t know. We’re stuck with a price control concept,” said Sen. Lindsey Graham, referring to his opposition to Grassley’s bill. Trump “is nonconventional as a Republican. He would go to price controls … [McConnell] probably wants what I want.”

Summing up the party’s headache, the South Carolina senator said: ‘We’re not divided on if we should do something. We’re divided over what we should do. And I don’t think either of us as a party can walk away and end up doing nothing.”

Fresh off their victorious vote last week on Speaker Nancy Pelosi’s sweeping drug bill allowing the government to negotiate drug costs, House Democrats are trashing Senate inaction — and McConnell specifically. The GOP leader has likened Pelosi’s bill to “socialist price controls” and said in no uncertain terms it has no chance in the Senate. Trump also pledged to veto the measure.

Senate Republicans “keep saying they care about it, but then they do nothing,” said progressive Rep. Pramila Jayapal (D-Wash.), whose battle with House leadership led to last-minute changes that pushed the bill further left.

Republicans across the Capitol have slammed Pelosi’s bill as an even bigger boogeyman to biomedical innovation than the Senate option, and even Grassley has used it as evidence that the GOP needs to get behind his legislation or face a world with fewer new life-saving medicines.

“Thank goodness Republicans control the Senate. That said, we still need something to make medicines affordable,” said Bill Cassidy (R-La.), who voted for Grassley’s effort in committee and still backs it.

Yet without a clear path forward, senators say they feel stuck. And publicly, the White House is waffling on potential compromises. Joe Grogan, the director of the Domestic Policy Council who has worked closely with the senators on their package, first told POLITICO that the controversial inflation cap wasn’t a hill to die on — then later said it was a necessary compromise to keep Democrats on board.

When it comes to the Senate floor, McConnell is not eager to put anything up that doesn’t at a minimum have the support of half his members. He’s warned colleagues that the drug-pricing bill could result in a circular firing squad — exposing his Republicans to tough attacks as they run for reelection.

Take Sen. Thom Tillis of North Carolina, whose state is a hotbed for the pharmaceutical industry. He opposes the Grassley bill — but if he voted against it he’d be sure to take flak from Democrats looking to oust him. He said the need to put caps on drug prices is being “driven by a lot of populist pressure.”

This article was originally published on Politico on December 17, 2019. Reprinted with permission.

About the Author: Sarah Owermohle is a health care reporter for POLITICO Pro covering drug policy and the industry. Before joining POLITICO, she covered the business of health care for S&P Global Market Intelligence and spent five years in Dubai and Beirut reporting on business, finance and development in the Middle East and Africa, including a three-year stint as the editor of Banker Africa. She graduated from the College of William and Mary in Williamsburg, Va.
About the Author: John Burgess Everett is a congressional reporter for POLITICO. He previously was a transportation reporter for POLITICO Pro, Web producer, helping run POLITICO’s Twitter and Facebook accounts, and a contributor to the On Media blog.

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Prescription Drug Spending is Consuming a Bigger Share of Wages

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Prescription drugs are a large and growing share of national income. While it is generally recognized that drugs are expensive, many people are unaware of how large a share of their income goes to paying for drugs because much of it goes through third party payers, specifically insurance companies and the government.

The Centers for Medicare & Medicaid Services (CMS) produce projections of national expenditures on prescription drugs through 2025, along with historical estimates dating back to 1960. As shown below, prescription drug spending from 1960 to 1980 was equivalent to about one percent of total wage and salary income. In the years leading up to the passage of the Bayh-Dole act in 1980, wage income was rising faster than spending on prescription drugs. As a result, the share of wages spent on prescription drugs was actually falling, reaching a low in 1979 of 0.86%.

However, after 1980, prescription drug spending rose rapidly relative to wage income. The ratio of drug spending to wages rose each year from 1980 to 2007. In 2007 wage growth finally outpaced drug expenditures, with the ratio again increasing in the Great Recession. By 2010, prescription drug spending had climbed above four percent of wage income.

The three percent of annual wage income lost to higher drug spending over the past 40 years makes a big difference to working individuals and families. This increase in annual spending averages out to roughly $2,400 per household. CMS projections, combined with projections on wage income growth from the Congressional Budget Office, suggest that spending on prescription drugs will increase further through 2025. This ratio is expected to exceed five percent by 2024.

While an aging population has been a factor increasing spending on drugs, demographics alone cannot explain the sharp increase in prescription drug spending. Inflation-adjusted prescription drug spending per household has increased more than eightfold since 1980, far outpacing any demographic trend surrounding age. The share of people over age 65 in the population has increased from 9.2% in 1960 to 14.8% in 2015. This can at most explain a small part of the increase in spending on drugs over this period.

It is important to recognize that the high cost of drugs is the result of a conscious policy decision to give drug companies monopolies in the form of patents and other forms of exclusive marketing rights. Without these protections drugs would almost invariably be cheap, likely costing on average less than one fifth as much as they do now. Even worse, the perverse incentives resulting from patent monopolies distort the research process and can lead drug companies to misrepresent evidence on the safety and effectiveness of their drugs.

 This blog was originally published at CEPR on June 27, 2017. Reprinted with permission. 
About the Authors: Dean Baker co-founded CEPR in 1999. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich RicherGetting Back to Full Employment: A Better Bargain for Working PeopleThe End of Loser Liberalism: Making Markets ProgressiveThe United States Since 1980Social Security: The Phony Crisis (with Mark Weisbrot), and The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. His blog, “Beat the Press,” provides commentary on economic reporting. He received his B.A. from Swarthmore College and his Ph.D. in Economics from the University of Michigan. Brian Dew holds a B.A. in Psychology and Organizational Sciences from the George Washington University and an M.A. in Economics from American University. His previous research has focused on international trade, network analysis, and open-economy macroeconomics, while his current research interests include domestic trade, employment, and monetary policies. Brian worked previously for the International Monetary Fund.


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