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THIS WEEK'S ARTICLES
The Fracking Fight's New Front Line
GlaxoSmithKline to Pay $105 Million in Multistate Settlement
U.S. Goes Back to Publishers on Prices
Next UAW Chief to Confront Wage Dispute

The Fracking Fight's New Front Line
by: Russell Gold
Jun 04, 2014
Click here to view the full article on WSJ.com

TOPICS: ban, Business Ethics, Environmental Responsibility, Fracking

SUMMARY: As the U.S. oil-and-gas boom rolls into its second decade, a new idea is starting to resonate with regulators and communities: Certain places should simply be off-limits to drilling. That is not how it has worked up till now. Over the past decade, oil and gas wells have been drilled for hydraulic fracturing in suburban subdivisions, airports, public parks and golf courses. As long as energy companies leased the mineral rights, they could drill almost anywhere. Now this all-or-nothing approach is starting to weaken as the fracking juggernaut, which has created jobs and lowered the U.S. trade deficit, has left some communities feeling trampled. Some cities have used their zoning authority to keep fracking far from schools and set back from homes. Fort Worth, Texas, has a drilling ordinance that runs more than fifty pages. North Dakota, which has rolled out the red carpet for rigs, is reconsidering whether it should issue drilling permits near some historical sites, parks and areas of particular beauty. The state last month said that any requests to drill near designated areas would require additional scrutiny and public comment. The new approach reflects "growing momentum from the public to make sure the state is protecting some of the most scenic and historic places," said Alison Ritter, a spokeswoman for the state's Department of Mineral Resources. There are valid reasons to ban industrial activity, said Mark Zoback, a Stanford University professor who served on a shale-development advisory board for the U.S. Energy Department. "You wouldn't allow a large-scale food-distribution warehouse to be built just anywhere, with hundreds of semis coming and going 24/7." Fracking involves injecting millions of gallons of water and chemicals into a well to crack open dense rock and allow oil and gas to flow out. More than 15 million Americans live within a mile of a well that has been drilled since 2000. "We are not advocating that we should drill everywhere," said Eric Wohlschlegel, the spokesman for the American Petroleum Institute, the oil industry's Washington-based lobbying group. "The best folks to determine whether an area is safe and appropriate to frack are the state and state regulators."

CLASSROOM APPLICATION: Hydraulic fracking has become very controversial because in a number of instances, there have been serious environmental and health concerns. Up to this point, it has been allowed almost anywhere, including even at least one university campus. Some cities and local municipalities have tried to prevent fracking close to homes, schools, and other populated areas. Some countries have banned fracking, and it is possible that fracking could be controlled by municipal or county bans as well. The oil industry wants to leave regulation for fracking to states to avoid fights with municipalities.

QUESTIONS: 
1. (Introductory) Should there be federal laws to prevent fracking in close proximity to populated areas?

2. (Advanced) Should the oil and gas industry take a leadership role in preventing fracking in areas dangerous to the public?

3. (Advanced) What are the tradeoffs between the many jobs and economic benefits from fracking activities versus the social costs of potential harm to people and the environment?

Reviewed By: OC Ferrell, University of New Mexico


GlaxoSmithKline to Pay $105 Million in Multistate Settlement
by: Michael Calia
Jun 04, 2014
Click here to view the full article on WSJ.com

TOPICS: Business Ethics, GlaxoSmithKline, Off-label marketing

SUMMARY: GlaxoSmithKline reached a $105 million settlement with several U.S. states over allegedly unlawful marketing of asthma and antidepressant drugs, several states said Wednesday. The pharmaceutical company confirmed it had reached an agreement with 44 states and the District of Columbia, resolving claims relating to violations of state trade-practice laws. "This settlement requires GSK to pay a significant penalty and imposes strong new rules designed to prevent future misrepresentations of GSK products," California Attorney General Kamala D. Harris said in a news release. California is getting the largest portion of the settlement payout, about $7.1 million, Ms. Harris's office said. The company didn't admit any wrongdoing or liability under the settlement and said the agreement is similar to a settlement it reached with the federal government in 2012. At the time, Glaxo agreed to a $3 billion criminal and civil settlement with the U.S. after federal authorities claimed the company used illegal marketing strategies to promote its Advair asthma inhaler. The settlement with the states centers on allegations dating back 14 years. The states said Glaxo illegally promoted Advair, as well as its Paxil and Wellbutrin antidepressants. Under the agreement, Glaxo "is prohibited from providing incentive payments to its salespeople, which serve to encourage off-label promotion of drugs, and from using paid doctors to promote its products," the California attorney general's office said.

CLASSROOM APPLICATION: GlaxoSmithKline has finally reached an agreement with 44 states relating to state laws. The company does not have to admit wrongdoing but is prohibited from paying incentive payments to salespeople to encourage off-label promotion of some of its drugs and from using doctors to promote the products. Off-label promotion of drugs relates to encouraging the prescription of drugs for unapproved uses. This practice could endanger patients since the FDA needs to have research and other evidence that the drug is appropriate for its intended uses.

QUESTIONS: 
1. (Introductory) If GlaxoSmithKline intentionally encouraged doctors and other health providers to engage in off-label promotion of its drugs, do you think it was fair to settle for $105 million without admitting wrongdoing?

2. (Advanced) What are the ethical issues associated with prescribing off-label drugs for medical practitioners?

3. (Advanced) Since salespersons receive commissions for prescribing off-label drugs, is it possible that the company failed to provide appropriate oversight in compliance with approved uses of its drugs?

Reviewed By: OC Ferrell, University of New Mexico


U.S. Goes Back to Publishers on Prices
by: Jeffrey A. Trachtenberg
Jun 03, 2014
Click here to view the full article on WSJ.com

TOPICS: Business Ethics, Justice Department, Price Fixing, Publishing Industry

SUMMARY: Two years after three major book publishers settled a major civil antitrust lawsuit with the federal government, the Justice Department has gone back to the publishers asking about any recent pricing discussions they may have had with others in the industry, say people familiar with the situation. The inquiries, made in recent weeks by letter to Lagardere SCA's Hachette Book Group, CBS Corp.'s Simon & Schuster and News Corp's HarperCollins Publishers, have created anxiety in the publishing industry. The inquiries reopened a sensitive and costly issue that publishers thought they had resolved, and raised the possibility of additional constraints on how they do business. The department's latest move comes as Amazon.com Inc. is dominating sales of both print books online and e-books in large part through its discounting strategy. In the 2012 antitrust lawsuit, the Justice Department alleged that five publishing companies conspired with Apple Inc. to raise e-book prices in response to discounting by Amazon. Three publishers settled the lawsuit in April 2012 in part by agreeing to let Amazon discount their e-books, with a U.S. District Court judge handing down a final judgment that September. The agreements, for two years, expire later this year. The first of the publishers to renegotiate contract terms is Hachette, which is currently caught up in a bitter dispute with Amazon.com Inc. over e-book terms. As a result of the dispute, Amazon has delayed shipments of Hachette books and blocked preorders of new titles. Precise terms being discussed aren't known, although Amazon is seeking a higher split of e-book prices, people familiar with the situation said. The significance of the Justice Department's latest move isn't clear. The inquiries don't necessarily mean any legal action is imminent or even likely, a person familiar with the situation said.

CLASSROOM APPLICATION: The Justice Department is very concerned about any recent pricing discussions that may have occurred in the book publishing industry. A previous lawsuit alleged that five publisher companies had conspired with Apple Inc. to raise e-book prices in response to discounting by Amazon. Price fixing occurs when two or more businesses in the same industry agree to sell a product at a fixed price. This type of an agreement has the potential to harm consumers because it could result in higher book prices. The Justice Department is concerned that more discussions among various publishers will result in higher prices for consumers.

QUESTIONS: 
1. (Introductory) Because the Justice Department is asking questions about recent pricing discussions among publishers, does this mean that there has actually been wrongdoing?

2. (Advanced) If publishers share information about their pricing, is it possible that this can result in elusive activities to create higher prices for consumers?

3. (Advanced) Do you think alleged price fixing in the book publishing industry is a serious economic and social issue?

Reviewed By: OC Ferrell, University of New Mexico


Next UAW Chief to Confront Wage Dispute
by: Christina Rogers
Jun 02, 2014
Click here to view the full article on WSJ.com

TOPICS: Automotive Industry, Business Ethics, Unions, worker's compensation

SUMMARY: The likely next president of the United Auto Workers plans to attack the two-tier wage system that divides workers at Detroit car makers, setting the union up for a confrontation with companies intent on keeping labor costs down. A two-tier wage structure was negotiated by the three Detroit auto makers in 2007 as a way to make their labor costs more competitive with foreign car makers' U.S. plants. Under the structure, newer hires' pay is capped at about $19 an hour while veterans make $28 an hour-a split that rankles many younger workers. Chrysler Chief Executive Sergio Marchionne last month said he wanted to do away with the higher tier, phasing it out as veterans retire. Mr. Williams, a 61-year-old former Marine and salvage welder from Rock Island, Ill., made his mark in the UAW as a regional director in Chicago, negotiating with companies such as heavy-equipment maker Caterpillar Inc. and farm-equipment manufacturer Deere & Co. In the late 1980s, he was part of a successful effort to organize workers at a Mitsubishi Motors Corp. factory in Normal, Ill., currently the only Japanese-owned auto assembly plant in the U.S. represented by the UAW. The UAW's next president will inherit an organization that is undergoing profound change. Despite the name, only about half the UAW's members work in the automotive sector today.

CLASSROOM APPLICATION: The new president of the United Auto Workers is trying to do away with a two tier pay system where newer employees receive $9 an hour less than veteran workers. The auto industry experienced extreme financial difficulties during the financial crisis, but now they have returned to being highly profitable. Unions have always been advocates for providing fair worker compensation, but there is a serious issue to be debated about fair compensation in today's employment environment.

QUESTIONS: 
1. (Introductory) Do auto workers that are mainly young should have their hourly salaries capped significantly below veteran workers' pay?

2. (Advanced) As long as people apply for jobs and want to work at the lower wage rate, why should the union to do away with the two tier pay system?

3. (Advanced) Is there an ethical issue associated with the right for collective bargaining and unions to represent workers for a fair living wage?

Reviewed By: OC Ferrell, University of New Mexico


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