Bogus: Morning File, Saturday, April 4, 2015

News
Views
Government
On campus
Noticed
In the harbour
Footnotes

News

1. Origin BioMed

Halifax-based Origin BioMed is in receivership. Nova Scotia Business, Inc. owns a $7.9 million equity stake in the company.

I began investigating Origin BioMed in December, but life intervened and I had to set that aside. I returned to the project last week, but haven’t been able to publish anything before the latest news came out.

We’ll know more as the courts deal with the company, but I doubt Origin BioMed has anything much of value, in terms of assets. Probably almost the entire NSBI “investment” will be lost.

One of my concerns with NSBI’s involvement with Origin BioMed is that the company is selling a socially worthless product. Neuragen is a homeopathic cream with exactly zero medical value, and the company preys on desperate people looking for pain relief.

In 2013, the US Drug Enforcement Agency sent Origin BioMed a “cyber letter” demanding that it cease online advertising that characterized Neuragen as a drug. The letter detailed the many instances of inappropriate advertising, including:

On Your Website:
• “Neuragen is proven to be effective in relieving nerve pain caused by a variety of conditions.”
• “By recommending safe and clinically proven Neuragen, you will be providing your patients with a non-prescription, effective relief for acute and chronic nerve pain . . ..”
• “Recommended for: Patients with nerve pain (including diabetic nerve pain).”
• “Neuragen is clinically shown to reduce neuropathic (nerve) pains quickly . . ..”
• “Diabetic Nerve Pain? . . . Chronic Nerve Pain? . . . Neuragen – Relief NOW! . . . Nerve Pain Relief . . .”
• “Neuragen works by reducing the spontaneous firing of damaged peripheral nerves.”
• “Instead of masking pain symptoms . . . Neuragen goes deep to where the pain originates.”
• “Neuragen is recommended for all types of neuropathy.”
• “Neuragen and Neuragen Cream are both topical treatments for diabetic peripheral neuropathy.”
• “Neuragen PN and Neuragen Cream are topical products that work directly at the site of nerve pain . . ..”
• “Neuragen can be used daily indefinitely to control painful neuropathy.” o “Neuragen is the first non-prescription topical homeopathic treatment for rapid relief of diabetic and post-shingles nerve pain.”
• “Neuragen is . . . for so many patients with diabetes who suffer from painful diabetic nerve damage.”

Testimonial on Your Website:
• “I just bought and used Neuragen . . . I have diabetes and neuropathy in my feet . . . Neuragen worked within 30 minutes.”

On Your Facebook Account – Wall Postings by Neuragen:
• August 16, 2012 – “A testimonial from a neuropathy patient: ‘I just discovered Neuragen. It is nothing short of a miracle. I have suffered from peripheral neuropathy for years. I’ve taken drugs that put me in a stupor. Nothing has put more than a tiny dent in my pain. Within minutes of putting a few drops of Neuragen on my heel, the pain was gone. Completely gone! At first I thought that it was a placebo effect, but it worked again the next day. After a few days I’m finding I only need it every other day. Not one day has my pain ever been as strong as it was before I applied Neuragen the first time.’”
• September 30, 2011 – “If the pain you experience is stabbing, shooting, tingling or burning, you have nerve pain. Neuragen cream will provide you with fast relief.”

On Your Facebook Account – Wall Postings by Others:
• December 2, 2012 – “[M]y wife has been using Neuragen since I discovered the product . . . and for her it gives relief from almost constant neuropathic pain.”
• June 10, 2012 – “If you have pain, you really need to try this stuff . . . . Because of my chemo treatments, I got neuropathy, that is why I use it.”
• May 1, 2012 – “I just bought the topical solution of this today. I have nerve pain . . . This gave almost immediate relief.”

On YouTube – accessed from your Facebook account posting:
• “[T]ry . . . Neuragen . . . relief from nerve pain”
http://www.youtube.com/watch?v=cYTMrXiOPQI
• “[T]ry . . . Neuragen . . . relief from nerve pain”
http://www.youtube.com/watch?v=0jRDuLuUUwQ

On Your Twitter Account:
• Twitter Account Heading – “Clinically proven, topical, homeopathic analgesic solution for the rapid, temporary relief of the nerve pain in the hands and feet.”

The cyber letter then called out these bogus claims in no uncertain terms:

These claims are supplemented by the common name shared by your products, “neuragen.” The name “neuragen” itself implies an association with “nerve pain,” because of its resemblance to the word “neuralgia” (nerve pain caused by nerve irritation or damage).

Based on the above-mentioned claims for your products “Neuragen PN” and “Neuragen Cream,” they are drugs as defined by section 201(g)(1) of the FD&C Act [21 U.S.C. § 321(g)(1)], because they are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, and/or intended to affect the structure or any function of the body. 

You promote your products to treat or manage neuropathic pain caused by various underlying conditions, especially in people with neuropathic pain associated with diabetic neuropathy. Section 503(b)(1) of the FD&C Act [21 U.S.C. § 353(b)(1)] identifies criteria for determining the prescription status of a product. Your products “Neuragen PN” and “Neuragen Cream” are prescription drugs within the meaning of section 503(b)(1) of the FD&C Act [21 U.S.C. § 353(b)(1)], because they are intended to treat diseases that require diagnosis and treatment by a physician or are intended to provide treatment for symptoms usually caused by an underlying disease process that requires diagnosis and treatment by a physician. Because they are subject to § 503(b)(1) of the FD&C Act, “Neuragen PN” and “Neuragen Cream” are misbranded under section 503(b)(4) of the FD&C Act [21 U.S.C. § 353(b)(4)] in that their labels fail to bear the symbol “Rx only.”1 The introduction or delivery for introduction into interstate commerce of misbranded drugs violates section 301(a) of the FD&C Act [21 U.S.C. § 331(a)].

[…]

The violations cited in this letter are not intended to be an all-inclusive statement of violations that exist in connection with your products. You are responsible for investigating and determining the causes of the violations identified above and for preventing their recurrence or the occurrence of other violations. It is your responsibility to assure that your firm complies with all requirements of federal law and FDA regulations.

I called the DEA and asked for more information. A spokesperson told me the agency could not comment further, but the letter speaks for itself. I don’t know that the DEA letter led to the company’s demise, but I suspect that it did.

So here’s my question: Does it matter what NSBI invests in, or is the only criteria that the company sells something, anything, for export, and that’s the end of it? Export sales, period, seem to be the goal. If a company sells a bogus health cure that takes millions of dollars from people in pain, that’s evidently none of NSBI’s concern.

Leaving aside the issue of whether the government should be investing in particular companies at all, once that decision is made, shouldn’t there be an ethical filter? If a company figures out a way to sell toxic waste-laden baby food for export, would that be a barrier?

As I see it, if the government is going to invest in companies, the companies should at least be producing a socially useful product worthy of taxpayer support. And no, body scans so overweight people don’t have to be embarrassed trying on clothes isn’t a product worthy of government support. (Arguably, LED lighting is socially useful, but that will involve a longer conversation than I have time for here.)

Besides all that, Origin BioMed is just the first of what soon will be a parade of NSBI-supported businesses that fail. I doubt Unique Solutions has much of a future, and we may see a write-down of NSBI’s investment in Unique Solutions as soon as Thursday. And, I have it on good authority that a third company that NSBI has an equity stake in is on very shaky ground and has been the subject of frantic meetings.

2. Examineradio Episode #6

This week: Air Canada Flight 624 crash lands at Halifax airport; we speak to King’s College journalism prof David Swick about the Chronicle Herald’s advertorials promoting Nova Scotia Business, Inc.; and listen in as councillor Gloria McCluskey attacks fire chief Doug Trussler.

Listen to Episode #6 of Examineradio below, or subscribe to the Examineradio podcast via iTunes. Examineradio also broadcasts on CKDU, 88.1 FM, Fridays at 4:30–5pm.

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3. Wild Kingdom

Jess Tudor caught a 17-pound lobster.

Views

1. Film tax credit

Last week, Finance Minister Diana Whalen warned that the upcoming provincial budget, to be released Thursday, will have large cuts and the removal of tax credits. People in the film and TV industry fear this means that the tax credit for that industry will be rolled back. Currently the tax credit is as follows:

We don’t know the specifics of Whalen’s proposal yet, but in 2011 the New Brunswick government killed its 40 percent payroll subsidy, and film companies left that province en masse, many of the companies coming to Nova Scotia.

Let me say upfront that I think big, sudden changes in the tax code are disruptive and unfair, especially in terms of companies involved in multi-year productions.

But there’s nothing wrong with reviewing that tax credit offering. And we should definitely look at the underlying philosophy to the tax code.

The film industry will have no problems on the PR front. The industry is full of talented people who tend to be socially progressive and have lots and lots of friends, or at least fans. The Trailer Park Boys have put out their own “public service announcement” attacking any cut in the tax credit:

The campaign is having its intended effect.

Any discussion of the tax code demands honesty and consistency. We shouldn’t have one set of rules for certain people just because we like those people, and a different set of rules for others. I’ve long been critical of the payroll rebates — typically for about seven percent of payroll costs — dished out by Nova Scotia Business, Inc. In defence of those rebates, NSBI trots out an argument that sounds an awful lot like what were now hearing from the film industry: the company will pay lots more in taxes than the rebate, the company will generate lots of economic activity, etc. For example, here’s the defence in the recent announcement of $22 million in payroll rebates for RBC, which will open a cheque processing centre in Bedford:

RBC will create 150 new positions this year in cheque processing, accounts payable and fixed asset accounting. 

[…]

The agreement signed with RBC estimates potential for up to 500 new jobs within 10 years.

If RBC creates 500 new jobs in the next 10 years, the company would add an estimated $240 million in salaries and benefits to the Nova Scotia economy. The new employees would pay provincial personal income taxes of about $26 million.

[…]

Last year, RBC donated more than $1.8 million to local charities in Nova Scotia and RBC employees volunteer extensively across the region in support of local communities. The bank continues to bring events to the region including the Nova Scotia Open/RBC Canada Cup. 

That’s essentially the same argument put forward by the makers of Haven:

It’s also the same argument put forward by backers of the new convention centre: the cost to the government is tiny compared to all the economic spinoffs and future tax receipts from all the business people coming to Nova Scotia and spending the big money.

So is there a difference between $22 million in payroll rebates for RBC and the film tax credit?

In fact, there is a difference, and an important one. The NSBI payroll rebate program is a dodge around the democratically determined tax code — unelected bureaucrats are picking and choosing select companies that they then give favourable tax deals to. In contrast, the film tax credit was passed by the legislature and is open to all comers — if you qualify you get the credit. There are no back room deals, no wining and dining clients on the public purse, no kickbacks. That’s a categorical difference that matters.

Still, where does the benefits-outweigh-costs logic end?

I’m told that Nova Scotia was the first jurisdiction anywhere in the world to offer a film tax credit, 15 percent initially. Then other jurisdictions followed suit, and then the race began. Manitoba increased its film tax credit to 50 percent, and so Nova Scotia had to match it.

So what if Newfoundland started offering a 75 percent tax credit — should Nova Scotia match that? What if BC said 100 percent? What if Manitoba then looked at all the economic activity generated, the multipliers, the other taxes generated by filming, and decided that it’d be worth it to actually pay film companies directly to film in that province — say, a 150 percent tax credit?

As we’ve seen with RBC and the other NSBI payroll rebates, plenty of industries make claims about the economic activity they generate, the jobs they create, and the future taxes they’ll pay, all of which justify tax subsidies. I could make a case for tax relief for the Halifax Examiner. I’m sure you could make a case for tax relief for your industry.

But again, where does the logic take us? Ultimately, to doing away with all taxes. And that’s precisely the aim of the neoliberal order — starve government of tax revenue in order to make it ineffective. Here’s how Grover Norquist put it:

I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.

But I believe in government. More precisely, I believe in a collective social order where we care for each other through the instruments of government: a progressive tax code, the competent regulation of the economy and the financial regime, a social safety net, responsible stewardship of the environment and our resources for future generations, and so on. For the last 30 years, however, there has been a deliberate dismantling of government, starting with attacks on the tax code, but underpinned with the destructive notion that we are not a collective citizenry but rather atomized individuals, and if we pay anything at all in taxes, we should resent it and society should be grateful.

All of which is to say everyone should pay taxes.

Of course, philosophy aside, we live in the real world. Because governments are racing to the bottom, competing with each other to see who can give the biggest tax breaks, it’s probably true that cutting the film tax credit would cause much of the industry to run away to some other low tax, er, haven.

Also, the Liberals seem to be fudging the particulars around who gets the tax credit, which doesn’t do anyone anyone any good. Above all, we need honesty from government so we can make informed and responsible choices.

As I said at the beginning, sudden changes in the tax code are disruptive and unfair, so there shouldn’t be a drastic change to the film tax credit. But somewhere along the way, we’ve got to bring some sanity to discussions of taxes, and that will mean eventually dropping out of the race to the bottom.

We’ve gotten ourselves in a real pickle, haven’t we?

2. Payday loans

The Utility and Review Board is making small but important changes to the payday loan industry, says Rachel Brighton.

3. Cranky letter of the day

To the Cape Breton Post:

Tire repairs are getting more costly. One of my van’s tires had a leak and went flat. I used my compact air compressor to inflate the tire and keep it inflated long enough to proceed to my local tire shop.

Much to my surprise, the tire shop manager told me that plugs were no longer used to repair tires. For most or all tire shops and garages in Nova Scotia, plugs are no longer allowed to be used.

Instead, a patch is used. That cost me $25 plus taxes.

Inflated costs are always there to deflate the consumer. So, tread lightly on your tire treads.

Clarence Landry, Seaview

In the harbour

Decisive, cable layer, Cove Point, Maryland to anchorage, then sails to sea
CMA CGM Montreal, container ship, Quebec to Pier 42, then sails to sea
AlgoNova, tanker, Corner Brook to anchor

Footnotes

A little late today, sorry.