Consumer Law & Policy Blog

Drug Industry Influence on Medical Journals and Medical Research

Nearly a year and a half ago, we covered the topic of drug industry influence on medical journals and research. The lead story in yesterday's Washington Post treats the topic in detail, noting that even the most prestigious medical journals have trouble avoiding bias in favor of the industry. The Post piece focuses on a major article that trumpeted the anti-diabetes drug Avandia, which later became associated with heart attacks. I strongly recommend the entire article. Here's a short excerpt:

The odds of coming to a conclusion favorable to the [drug] 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.

Alan White on the Mortgage Loan Transfer System

CL&B blogger Alan M. White of CUNY has written Losing the Paper – Mortgage Assignments, Note Transfers and Consumer Protection, 24 Loyola Consumer Law Review 468 (2012). Here's the abstract:

In this article, I survey the state of the mortgage loan transfer system, the legal rules that govern it, and the widening gap between those rules and the practices in the secondary mortgage market just prior to the 2008 crisis. The review includes some empirical assessment of the extent of errors and execution problems; the damage done by “robo-signing;” the Mortgage Electronic Registration System (MERS) and note delivery practices; and the extent to which courts will prevent or reverse foreclosure sales based on those errors and problems. I then examine why existing legal structures, for both paper-based and electronic transfers, are not working, and the extent to which they have failed, I also identify the key consumer and investor protection values and interests (finality, transparency, fraud protection, and so forth) that must be addressed by the law governing secondary market transfers of home loans. I conclude by outlining options for reforming the mortgage loan transfer system, including the use of a single document merging the note and mortgage, and a structure for the registration of a single authoritative electronic version of the mortgage/note and of all changes in parties to, and terms of, the transaction.

Massive New England Journal Study of Mammagrophy Sure to Provoke Controversy

This three-decade study of the effectiveness of mammography to screen for breast cancer is sure to provoke controversy. Mammography has detected many breast cancers and saved lives, but, the study says, mammography over-diagnoses -- that is, in many circumstances, it purports to find problems that never would have progressed to clinical breast cancer. Here is a summary of the study's results:

The introduction of screening mammography in the United States has been associated with a doubling in the number of cases of early-stage breast cancer that are detected each year, from 112 to 234 cases per 100,000 women — an absolute increase of 122 cases per 100,000 women. Concomitantly, the rate at which women present with late-stage cancer has decreased by 8%, from 102 to 94 cases per 100,000 women — an absolute decrease of 8 cases per 100,000 women. With the assumption of a constant underlying disease burden, only 8 of the 122 additional early-stage cancers diagnosed were expected to progress to advanced disease. After excluding the transient excess incidence associated with hormone-replacement therapy and adjusting for trends in the incidence of breast cancer among women younger than 40 years of age, we estimated that breast cancer was overdiagnosed (i.e., tumors were detected on screening that would never have led to clinical symptoms) in 1.3 million U.S. women in the past 30 years. We estimated that in 2008, breast cancer was overdiagnosed in more than 70,000 women; this accounted for 31% of all breast cancers diagnosed.

This Washington Post story is worth reading because it previews the emerging controversy. Here's an excerpt:

The routine use of mammograms has led to more than 1 million women being unnecessarily treated for breast cancer over the past three decades, according to the latest scientific report to cast skepticism on the effectiveness of the test. The study, published Wednesday in the New England Journal of Medicine, concluded that nearly one-third of women diagnosed with breast cancer would never have developed the full-blown disease if left untreated. Nevertheless, in such cases patients typically undergo invasive procedures such as surgery, radiation therapy, hormonal therapy and chemotherapy, said H. Gilbert Welch, a coauthor of the study and a professor at the Geisel School of Medicine at Dartmouth College. “These are major medical interventions and they’re certainly not something you would want to undergo if you didn’t need to,” he said.

Feds Seek Dismissal of Suit Challenging Dodd-Frank and the CFPB

Last June, we told you about a federal-court suit filed by a Texas Bank, the Competitive Enterprise Institute, and the 60 Plus Association challenging various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the constitutionality of the Consumer Financial Protection Bureau. Here is the complaint. The federal government has now moved to dismiss the case, arguing that the plaintiffs have suffered no injury and, therefore, lack Article III standing. Read about it here.

Our other coverage of the suit can be found here and here.

More From Creola Johnson on Payday Lending

Creola Johnson of Ohio State has written Congress Protected the Troops: Can the New CFPB Protect Civilians from Payday Lending? 69 Washington & Lee Law Review 649 (2012). Here's the abstract:

In 2007, Congress enacted a law, commonly referred to as the Military Lending Act (MLA), which placed a 36% interest rate cap on several consumer loans, including payday loans, and prohibits lenders from engaging in several practices considered predatory. However, the MLA grants these protections only to active-duty military members and their dependent family members.

In the wake of the mortgage foreclosure crisis, Congress passed and President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd–Frank Act), which creates a new federal agency, the Bureau of Consumer Financial Protection (CFPB), to focus on protecting consumers in the credit market place. In this Article, I assert that the newly-created CFPB should use its authority to afford to ordinary Americans protections similar to those now enjoyed exclusively by military families. To support my assertion, I describe how payday loans entrap civilian Americans in a cycle of indebtedness just like they once ensnared military families and yet both groups are equally lacking in financial sophistication. I further describe how regular payday lenders and now major banks, such as Wells Fargo, are engaged in reckless lending because when issuing a payday loan, they fail to do any assessment of a borrower’s ability to repay, charge triple-digit-interest rates, issue loans frequently in excess of the borrower’s next paycheck, and require loans to be repaid in a single balloon payment usually in fourteen days or less.

The CFPB needs to act to protect civilians because, despite attempts by several states to curb payday lending, payday lenders exploit loopholes in state laws or use scams to skirt consumer protection laws. The CFPB also needs to protect civilians because they are more vulnerable to ensnarement by payday loans than the active-duty military members. Military families enjoy a strong social safety net, which is comprised of numerous benefits, including complete health care coverage, educational assistance and subsidized housing. In contrast, average low-to-moderate-income civilian families face financial difficulties due to high unemployment rates and ever-shrinking compensation and benefits packages. If military families, who enjoy strong social safety nets, need protection from payday loans, then unquestionably civilian Americans, who are largely left to fend for themselves, deserve protection from payday loans.

Under Title X of the Dodd–Frank Act, the CFPB has the authority to issue rules as well as guidelines to prevent a covered financial institution from committing an unlawful practice in connection with any consumer financial product or service. Because the rulemaking process could take as long as ten years, I propose that the CFPB issue immediately guidelines and a policy statement to get lenders to voluntarily cease predatory lending practices. The guidelines would give notice to all lenders about which common payday lending practices the CFPB considers unfair, abusive and deceptive and, therefore, unlawful. The CFPB’s policy statement would identify responsible lending practices, such as applying reasonable criteria to assess a consumer’s ability to pay and avoiding any practice that extends the loan’s due date for the primary purpose of generating fees for the lender. While the guidelines would warn lenders that they may be subject to enforcement actions for committing unlawful practices, the policy statement would provide a safe harbor, exempting from enforcement actions lenders who follow practices that comport with responsible lending standards. In addition to using the guidelines and policy statement to decrease the supply of payday loans, the CFPB should use its educational mandate to increase the demand for safe affordable loans. To accomplish this mandate, the CFPB needs to employ a multi-faceted strategy that harnesses the power of social media and uses a national public service announcement campaign to make it easy for consumers to access safe affordable loans from lenders with a demonstrated commitment to responsible lending practices.

 

 

More on George Will's Criticism of the CFPB, and a Defense of the CFPB's Use of Its Anti-Abuse Authority

Recently, on this blog, Jeff Sovern went after George Will's attack on the Consumer Financial Protection Bureau, rightly noting that the CFPB's exercise of its regulatory and enforcement powers generally are not terribly different from what regulatory agencies have been doing for decades. Now, Jean Braucher has posted this extensive response to Will's piece. In doing so, she discusses the CFPB's power to go after not only practices that are "deceptive" and "unfair," but those that are "abusive" as well. She notes that

we shouldn't oppose new, smarter regulation because “developed law” does not define it.  But to get real, the CFPB's anti-abuse authority is actually well defined in a data-driven way, the signature method of the CFPB. The abuse concept is based on a wealth of social science literature documenting the credit industry’s science of exploiting consumer error stemming from standard human cognitive biases.

Ingorance About Obamacare Could Jeopardize Its Effectiveness

Keeping health care costs down under the Affordable Care Act depends significantly on increasing particiption in private health care plans (which, if the Act works as contemplated, would be spurred in part by subsidies provided under the law). As explained in this article by Sarah Kliff, because many people do not know about the law's provisions (and, importantly, do not know about their eligibility for subsidized insurance), they may not obtain insurance.

Trouble in Toyland -- 2012

Just in time for the holidays, U.S. PIRG warns us about all the toys that will choke, cut, and otherwise harm our kids in its "Trouble in Toyland" report. And read PIRG's tips for avoiding the purchase of hazardous toys in the first place.

Here's the report's executive summary:

The 2012 Trouble in Toyland report is the 27^th annual U.S. Public Interest Research Group (PIRG) survey of toy safety. In this report, U.S. PIRG provides safety guidelines for consumers when purchasing toys for small children and provides examples of toys currently on store shelves that may pose potential safety hazards. Over the past twenty-seven years, the U.S. PIRG report has identified hazards in toys and children’s products that could cause acute injuries, from small parts that pose a choking hazard, to strangulation hazards from cords on pull toys, to laceration hazards from edges that are too sharp, to toxic hazards posed by chemicals in toys.  Our report has led to at least 150 recalls and other regulatory actions over the years, and has helped us educate the public and policymakers on the need for stronger public health and consumer safety standards and for stronger federal laws to protect children from unsafe products. This report continues to be an important endeavor in keeping children - particularly babies and toddlers - safe, as the majority of all injuries happen to children in the 0-2 age range. The enactment of the Consumer Product Safety Improvement Act (CPSIA) of 2008 made great strides in toy safety and strengthened the ability of the Consumer Product Safety Commission (CPSC) to protect consumers, including the littlest consumers—children. Although policymakers delayed implementation of its most stringent lead standard rules and enacted some narrow exceptions in 2011, on the whole the law has been protected from attempts to undermine it. However, we remain vigilant as a variety of regulatory threats to the CPSC’s tools and authority remain under consideration by policymakers.

Read PIRG's press release as well.

What Proportion of Consumers With Material Errors in Their Credit Reports Complain to Credit Bureaus?

by Jeff Sovern

For the credit reporting section of our casebook, I've been looking into studies of credit report errors.  The FTC is in the process of conducting a long-term study of that subject, and along the way has conducted some pilot studies.  One such pilot study subjected the credit reports of 128 people to in-depth review.  Though 88 reports did not contain errors, 40 consumers found alleged mistakes they wanted to dispute, of which 15 were material.  The researchers assisted the consumers claiming material errors to complain to credit bureaus, and 12 did so. Of those, the requested changes were made in seven cases, and partly made in three others.  In two cases, no changes were made.  The pilot study is probably too small to draw conclusions about how common credit report errors are, though the final FTC study should not suffer from that weakness, and other studies have also been larger.  The thing that caught my eye about this study was that not all the consumers with material errors were willing to complain about them to credit bureaus, even when they had assistance in doing so. Again, 15 consumers is too small a sample size to conclude much, but the study does make me wonder how many consumers don't bother complaining about errors, especially when they don't have assistance.  An ample literature on consumer complaining behavior makes clear that many consumers don't complain about issues (the classic article is Best & Andreason, Consumer Response to Unsatisfactory Purchases: A Survey of Perceiving Defects, Voicing Complaints, and Obtaining Redress, 11 Law & Soc. Rev. 701 (1977)), and it seems entirely plausible that it is no different for credit reports for at least some consumers.   

Paper on Defending Foreclosure Actions

Marcia Johnson of Texas Southern and Luckett Anthony Johnson have written Defending Foreclosure Actions, 49 Real Estate Law Journal 516 (2012). Here's the abstract:

With the rising incidences of residential foreclosures, many homeowners are overwhelmed by the foreclosure process and anticipated costs and often opt to vacate the premises without offering any defense. The American justice system rests on the premise that no person will be deprived of their liberty or property without due process. Procedural due process requires that a person have notice of the charges against them as well as a reasonable opportunity to defend against them. Reasonable opportunity is circumvented when the defendant is effectively without the means to defend. This is especially offensive to our notions of justice when the defendant has legitimate bases for defense but is effectively denied the opportunity to urge such defenses because of finances. This article is written to examine the defenses available to homeowners facing foreclosure and to provide a practical approach to defending against foreclosure.