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Ohio Consumers are paying big for FirstEnergy’s maneuvers to profit from its failing and outdated business model.

Billion in Bailouts monopoly-money-firstenergy-bailout

Today, the Public Utilities Commission of Ohio will begin hearings on FirstEnergy’s proposal to guarantee profits for its oldest and dirtiest coal and nuclear plants.

Unable to compete in the energy market due to cleaner and more affordable resources like wind and solar, FirstEnergy is asking regulators to force regulated utilities to buy the entire output of FirstEnergy’s troubled nuclear and coal plants – Davis-Besse nuclear plant, Sammis coal plant as well as its share of coal-fired energy produced by the Ohio Valley Electric Corporation – and then sell the power into the marketplace. Customers would be charged for the difference between what the market will pay and the cost to operate the plants, plus profit. The scheme would be a bailout for FirstEnergy, impose a $3 billion dirty energy tax on customers and discourage investment in clean and efficient energy.  

Not only would the bailout proposal raise rates, it also would lock in the subsidy for 15 years. At a time when climate disruption demands that we phase out our old, dirty energy sources, FirstEnergy is asking customers to prop up theirs for years to come.

Further, the scheme would essentially circumvent the state’s deregulation laws – a policy FirstEnergy championed until it was no longer serving its bottom line. Deregulation, which split the distribution of power from the business of generating power so that utilities could sell energy into a competitive market, initially cost customers billions of dollars. FirstEnergy convinced the PUCO that it needed customers to absorb the debt (bail out) on its plants to be competitive in the new market system. FirstEnergy was allowed to charge Ohio electricity consumers $6.9 billion for its nuclear assets alone.

But FirstEnergy self-serving flip-flop on competition doesn’t end there.

Millions in Lost Efficiency Savings

Last year, FirstEnergy led the lobbying effort to freeze Ohio’s renewable and energy efficiency standards, claiming that they inhibited competition and inflated energy costs. The efficiency standard alone saved customers $1 billion since its implementation in 2009 and was on track to save billions more in coming years. In response to the freeze, FirstEnergy was the only utility in the state to take immediate steps to cut its efficiency programs, even though its own PUCO filings have consistently argued that its programs are cost-effective. For example, one document filed in 2012 projected savings of more than $100 million for FirstEnergy’s Ohio Edison customers.

And that still doesn’t complete FirstEnergy’s record on fleecing customers.

Millions in Overcharges

Two years ago, the company was penalized more than $40 million for overcharging its customers for renewable energy credits. The year before that, FirstEnergy gamed the capacity auction for the territory in which it operates to increase their profits through strategic closing of coal plants. Doing so created capacity shortages and prices increased for customers.

More Cost to Come?

Instead of innovating to meet the challenges of climate disruption and embracing the plummeting cost of clean energy, FirstEnergy is doubling down on coal and nuclear. And by doing so and resisting low cost tools like energy efficiency, FirstEnergy could make it harder and more costly for the state to comply with new federal carbon pollution goals.

It’s time to stop letting FirstEnergy call the shots on the Buckeye State’s energy future, a mistake that already has cost Ohio’s families and households and continues to threaten Ohio’s response to climate change.

Take action against FirstEnergy today:

Tell the Public Utilities Commission of Ohio (PUCO) to reject the bailout of FirstEnergy.

 Allison Fisher is the Outreach Director for Public Citizen’s Climate and Energy Program

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"dr wolfe"Statement of Dr. Sidney Wolfe, Founder and Senior Adviser, Public Citizen’s Health Research Group

The U.S. Food and Drug Administration’s (FDA’s) decision to approve flibanserin as a treatment for women with hypoactive sexual desire presents serious dangers to women, with little benefit, and recklessly disregards the worrisome risk information in the agency’s briefing package to the advisory committees that met on June 4 to review the drug.

It would not be surprising that after enough women have been seriously harmed by the “irreversible, or life threatening injuries” about which the FDA is concerned, flibanserin will have to be taken off the market. It is unconscionable that the FDA does not have the courage to prevent such damage from a drug with such a high ratio of risks to benefits.

The FDA’s analysis showed that women using the drug had an average of only half to one more “satisfying sexual encounter” every month compared to those using a placebo.

Meanwhile, the FDA’s list of serious risks includes abnormally low blood pressure and fainting. The agency noted that these could be experienced when flibanserin is taken alone or with alcohol, and that these side effects “can result in serious, irreversible, or life threatening injuries.”

The agency also noted that a study showed taking the drug with alcohol consumed over 10 minutes led to drowsiness, low blood pressure when standing up, and fainting. Although the study subjects were predominantly male (23 of 25 subjects), the FDA stated that “[t]he effect of the combination of flibanserin and ethanol may be more pronounced in females.”

The FDA noted the difficulty of preventing alcohol use in women using the drug, saying that limits on such prevention would exist even with the implementation of a type of risk management plan intended to ensure that the benefits of prescription drugs outweigh their risks.

Unfortunately, we haven’t heard the last of this drug. Expect future news to include stories of women who are harmed needlessly by flibanserin and the eventual agency call for the manufacturer to pull it from pharmacy shelves.

In December 2013, Gilead received FDA approval for the first in a new generation of hepatitis C treatments. By all accounts, these treatments represent a cure for patients living with hepatitis C. Since the December release, Gilead’s pricing of its hepatitis C products as well as insurers’ efforts to hold down costs by restricting access to treatment have ignited a vigorous debate in the U.S. about the price of pharmaceuticals and access to medicines.

In light of the latest announcement of another quarter of astronomical profits for Gilead from its hepatitis C products, I decided to add up previous earnings to see how the company’s $11.2 billion acquisition of Pharmasset, in which Gilead acquired rights to sofosbuvir, has panned out for them so far:

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Cumulative global earnings from both Harvoni and Sovaldi totaled a hair under $22 billion as of June 30. It’s safe to say that after just ~19 months from when Sovaldi first entered the US market, over the first week of July they surpassed the landmark of doubling what the company paid for Pharmasset in 2012.

The vast majority of those earnings have come from the U.S.:

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Much of this burden has been borne by taxpayers and overextended government agencies. At the VA, the combination of the high prices of these products and a limited budget has led to restrictions in access. The VA spent $379 million on new hepatitis C treatments in FY2014. Thus far in 2015, they’ve spent $700 million, which was intended to last through the entire fiscal year but was completely exhausted as of June.

Of the 180,000 veterans enrolled in the VA who have been diagnosed with hepatitis C, 27,000 have been treated.  Counting the estimated 40,000 veterans under the VA’s care with hepatitis C who remain undiagnosed, 193,000 veterans remain to be treated.

At its peak, the VA was newly enrolling ~800 patients per week on HCV treatment. By June 10, that number was down to less than 300. Before the end of the month it fell to zero.

Last week, both houses of Congress approved legislation that will allow the VA to reallocate $500 million from the Veterans Choice Fund toward purchasing hepatitis C treatments. The VA estimates that it will be able to provide treatment to 13,600 veterans with that money, a little over $375 million of which will be spent on Gilead’s Harvoni.

If all goes as planned, by October of this year, the VA will have provided treatment to nearly 41,000 veterans at a cost of approximately $1.58 billion, but approximately 179,000 veterans with hepatitis C will remain to be treated. Assuming their procurement costs remain similar, providing treatment to all of the remaining 179,000 veterans will cost nearly $7 billion. Gilead’s executives will continue to make out like bandits.

However, the VA has the statutory authority under 28 USC 1498 to procure low-cost generics. Gilead’s Sovaldi, for example, is available in India for less than $1000 per course of treatment. Senator Sanders wrote the VA in May urging them to exercise this authority, but thus far they have not complied with the request.

On July 22, Sen. Sanders introduced legislation in committee that would require the VA to procure generics when the price of a medical device is excessive or presents a barrier to care, with compensation to the originating company for making use of its patented invention to be a reasonable and affordable royalty set by the secretary. The Senate Veterans Affairs Committee discussed Sanders’ proposal for 15 minutes, with many senators expressing curiosity or interest. Ultimately Sanders withdrew the proposal after Chairman Isakson and Ranking Member Blumenthal agreed to explore the issue in more depth at a future hearing.

By procuring generics, either through section 1498 authority or the enactment of Sen. Sanders’ legislation, the VA would accrue billions in savings which could be spent on hiring more doctors and providing other much needed services to veterans, while at the same time allowing the VA to accelerate veterans’ access to HCV treatment.

By any metric Gilead’s earnings from its line of hepatitis C treatments has been a windfall. Rather than continuing to pad the pockets of Gilead’s elite at the cost of other VA programs, the VA should move forward with 1498 and policymakers should give Sen. Sanders legislation serious consideration.

Business for DemocracyThe U.S. House of Representatives is in recess until September, but the U.S. Senate is still here, and will remain in town next week. Right now the schedule looks pretty light. One key attack on the public interest will be on Wednesday, when the Senate Environment and Public Works Committee is expected to mark up the signature Senate assault on the Clean Power Plan, S. 1324, introduced by U.S. Sen. Shelley Moore Capito (R-W.Va.).

The Clean Power Plan, which is expected to be released by the Obama administration as soon as Monday, is a rule designed to curb climate change-inducing pollution from existing power plants. This rule will curb asthma and other health problems caused by climate change and save consumers money in the long run by encouraging the use of more energy efficiency measures.

But the fossil fuel industry is a powerful lobbying force, and many in the Corporate Congress are in its thrall. Capito’s bill would let states opt out of the Clean Power Plan altogether. As David Arkush, managing director of Public Citizen’s Climate Program said recently, the bill is “a shameful giveaway to the dying coal industry.”

It is worth noting that in Capito’s home state, the Clean Power Plan will lower consumers’ electricity bills $160 annually by 2030, according to a Public Citizen analysis.

Amelia_PC Gala.med

Andrew Gibson, Amanda Whiting and Even Ottenfeld

By: Amelia Whiting

Hi, Amelia Whiting. Nice to meet you!

                (Hi, I am so and so. What do you do?)

I am an intern at Public Citizen’s Climate and Energy Program. I assisted with the analysis of consumer energy impacts under the Clean Power Plan, researched a variety of environmental and energy issues, and attended hearings on Capitol Hill. What about you?

                (That is so cool/interesting.)

Many meetings and introductions I experienced this summer followed the theme from above. My internship was “cool” and “interesting” because it granted me the opportunity to apply principles from the classroom – framing and economic theories – and to expand my knowledge of different environmental and energy issues – especially on nuclear energy.

This summer, I assisted with Public Citizen’s state-specific reports regarding electricity bill savings for consumers under the U.S. Environmental Protection Agency’s Clean Power Plan. This work emphasized the close link between environmental policy and economics. I found that to truly account for all the costs and benefits of a policy, it is important to look at the long-term impacts of a policy or rule.

For me, the Clean Power Plan is a step in the right direction. Climate change is a complex problem that impacts people around the country and the world differently, and finding a solution to agree on can be difficult. Allowing states to choose how the best ways to implement reductions in emissions and energy uses is necessary as each state has unique constraints that will impact how the reductions are made. Actions made to mitigate the impacts of climate change must include both bottom-up and top-down approaches. It is essential that individuals, companies and the government work toward making changes to leave a healthy planet for people decades from now and future generations – not to mention my generation, which is inheriting this crisis.

While working on the Clean Power Plan helped to combine knowledge across environmental, economic and political disciplines, the research and reading I did taught me about public opinions, facts and current debates around environmental issues. I began each morning by reading news blurbs about energy and the environment. The short bits of news provided me with an awareness of the varying environmental and energy issues that are affecting states, the country and the world. Besides getting a brief overview of the many distinct issues, I often read full articles on the blurbs that I found most interesting. Through these readings, I learned in detail about topics such as the growth in the use of community solar power and the continuing debate over the Clean Power Plan. I enjoyed starting my day this way as I always learned something new every day.

In addition to the research, attending hearings was an informative experience. Listening to the testimony of the witnesses showed the varying perspectives of Congress and the public. It reaffirmed how important framing can be to the legislative process since how people/societies perceive and communicate their reality can be vastly different among political ideologies and regions. Framing explains why congressional members from West Virginia are concerned about the impacts of regulations on coal mining and why Californians are concerned about the drought. I found that although some of the topics from class were relevant, the discussions in class did not fully encapsulate what happens in congressional hearings.

My time at Public Citizen has allowed me to bridge the gap from classroom to workplace. I was able to apply concepts I learned in the classroom – framing and economic concepts – to my work. I also expanded my understanding of environmental issues. The learning and growth did not stop at the end of the work day or during lunch; the conversations I shared with other interns and staff – ranging from why there is an ever-growing population of presidential candidates to the Iran nuclear deal – pushed me to better understand the differing viewpoints on political issues in our country and how attempting to assimilate the ideas will allow for effective solutions to these problems.

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