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CNN IN THE MONEY
Building Democracy In Iraq; Massachusets Supreme Court Rules In Favor Of Gay Marriage; How Are Wal-Marts Low Prices Effecting American Economy?
Aired November 23, 2003 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City America's financial capital, this is IN THE MONEY
JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. On today's edition of IN THE MONEY:
Starting from scratch: See what it takes to build a democratic government in a country that hasn't known democracy. We'll look at the U.S. mission in Iraq.
Plus, the politics of the prescription pad: Drug companies want to give your doctors a brush up course. Find out what that means for your prescription payments and for Medicare.
And the right to say I do: As the top court in Massachusetts rules in favor of gay marriage, we'll see how the finances add up.
Joining me today, a couple of IN THE MONEY veterans -- regulars, CNN correspondent Susan Lisovicz and "Fortune" magazine editor-at- large, Andy Serwer. And they're both going to give me a primer on something called portability. I don't own a cell phone, but I understand this is a very important issue.
SUSAN LISOVICZ, CNN CORRESPONDENT: It is. It's huge and if you think...
CAFFERTY: What's going on?
LISOVICZ: ...you're bombarded with cell phone -- or telephone advertising now, just wait until this coming week because from Monday on, consumers will be able to take their cell phone number with them when they switch carriers, which is a reason a huge reason why they haven't switched carriers.
ANDY SERWER, "FORTUNE": Yeah, you used to be a prisoner of these companies, Jack, and also be able to take your land line phone number and put it on your cell phone number, means a lot of people with lower income people, students, will just get rid of their land lines.
CAFFERTY: Now, I don't have a cell phone. Does any of this mean anything to me?
SERWER: No it doesn't.
LISOVICZ: No, it is... CAFFERTY: Just talk among yourselves.
SERWER: But most people have cell phones, Jack. You're in a small minority of people. You know what's going to be a big winner, I think could be Verizon, because they did all those surveys that showed Verizon's service was so much better and everyone's clamoring to get in, but I you really want to take your number, because people memorize your number, put it in their phone book and all the rest, so you want to keep it.
LISOVICZ: It's a big win for consumers, no question about it.
CAFFERTY: So, the FCC, I assume, is the outfit that orchestrated this, actually did something in the public interest for a change.
LISOVICZ: They did.
SERWER: Hooray. Three cheers.
CAFFERTY: All right. Cheers for the FCC.
On to other things. U.S. forces in Iraq have been thinking bigger, hitting harder as they try to persuade insurgents to back off, and it seems to be working. To brief us on how things are going, we're joined now, from Baghdad, by Matthew Chance.
Matthew, I was reading a piece in the paper this morning. One American commander said that attacks against U.S. troops are down by something like 60 percent since this "iron hammer" operation got under way. How's it going?
MATTHEW CHANCE, CNN CORRESPONDENT: Well, that may well be the case, Jack, but the fact is that this week has also seen some very powerful blows being dealt to the coalition authority's image and security ideas, here in the Iraqi capital. Three high-profile buildings, in the Iraqi capital, came under simultaneous attack from a barrage of rocket fire. I'm joining you here from one of those buildings, the Palestine Hotel, in fact, where us, CNN, and other media organizations are based out of the Iraqi capital. You can see some of the damage here that those rockets have caused, punching right through the thick concrete walls of the hotel, blasting out the windows, causing debris to come all across this room. Several holes like this across the hotel. More than seven or eight rockets it seems, launched into this hotel. The Sheraton across the road was also attacked, as was the Iraqi oil ministry. Obviously, a very strategic target there, by the -- targeted by the insurgents. Now, "Operation Iron Hammer" has been going on for a couple of weeks or so. The U.S.'s attempt to crack down on these insurgents and to deprive them of the ability to carry out these kinds of attacks, but in these simultaneous attacks it seems there is some kind of a message, namely, that these insurgents are still able to plan and more importantly, to carry out these high-profile attacks in Baghdad -- Jack.
CAFFERTY: Matthew Chance joining us live from Baghdad. Thanks, Matt. Appreciate it. One of the consequences of the war in Iraq is supposed to be a democratic government, eventually, in the city of Baghdad and throughout the country. But, you can't just reboot democracy in Iraq like you do your computer at home because it's been literally decades since the country of Iraq has had anything approximating a democratic government. For a look at what that means for Baghdad and Iraq and Washington, D.C., we're joined now by Ambassador Edward Peck. He's the former U.S. chief of mission in Iraq.
Ambassador, nice to have you with us.
AMB. EDWARD PECK, FMR. U.S. CHIEF OF MISSION IN IRAQ: Thank you, sir.
CAFFERTY: Is this idea that within six months we're going to turn over control of the Iraqi government to the Iraqis and begin drawing down our troops, is that kind of a timetable reasonable, given the fact that, as I said, it's been a decade since then county's had anything approximating a free country?
PECK: Well, you know, it's interesting how you look at this because quite recently our president in speaking to the general assembly of the United Nations referred to the governing council as the first representative government that the country -- institution that the country has had. But, the governing council doesn't represent anything except the United States, so if you're going to turn it over to that group and have them then try to turn it into a democracy at some time, you're certainly not going to do that in six months. You've got to remember that, I think, it took the Germans, who had had a democracy before, took them something like five years to write their constitution after we occupied them.
LISOVICZ: Right, and you say actually that's not the best example of what may be occurring in Iraq, right now. You say, for instance, the aftermath of Haiti is a better comparison, and that is -- things aren't so good in Haiti, right now.
PECK: No, they're not. And of course, that's the point because if you choose Germany and Japan and how well they've worked out and then you try to draw a parallel with Iraq, you know, I don't think that works. Haiti may be a better one, not that that's something that we're particularly proud of in terms of nation building. But, it seems to me that inherent in that phrase, "nation building," is something that's anathema to a democratic process. If it's a democracy, they're supposed to do it, not us. And they're supposed to do it their way, not ours. That's what democracy is all about.
SERWER: Ambassador Peck, then why don't you lay out for us, what do you think the best case scenario is here, and what do you think the most likely scenario is, if those are two different things, which I suspect they are?
PECK: Well, yeah. The -- you know, the big mistake, I fear, was going in. But that's done. And now, to use a phrase that I guess is applicable in the Middle East, we've let the genie out of the bottle. So, the thing to do now is to find some way to extricate ourselves and leave behind something that resembles a cohesive country that can live in peace and security amongst its neighbors. Whoa! Big job.
CAFFERTY: Yeah, how do you do that?
PECK: That's the tough one, you see because we're out there now, bombs are going off, we're dropping shells, we're firing in hellfire missiles. That doesn't generate affection for us. The problem is that there's a tremendous difference in perception at work here. We say we've gone in to liberate. They say we are invading occupiers.
CAFFERTY: That's not entirely true, though, is it? Aren't there a lot of Iraqis who are damn glad to be rid of the Saddam Hussein regime and all the brutality that went with it?
PECK: Well, you know, if you look -- make a list of the things that our government has told us about Iraq, there are very few of them that come out to be factual on close examination. I don't need to list them for you. Saddam Hussein was not anywhere near as loved and admired as he'd like to think he was, and he certainly wasn't anywhere near as hated and feared as we like to think he was. And a lot of people, I would suggest -- a lot of people who did not like Saddam at all are not happy that we have invaded and occupied their country at a cost of uncounted, in the true sense of the word -- uncounted lives lost and people injured and damaged and mutilated. I mean, look, nobody likes that. We don't like it happening to our people over there, and we're keeping close track of the numbers. But, how many of them are dying -- are killed? We don't know. We're not being told. And it gives the impression, of course, that we don't care. So, to ease out and to leave the country in the hands of some international group lowers our profile, which an awful lot of people who are friends of ours are saying is a smart thing to do, because the way it's going now, I think unfortunately, it is safe to say that we're not winning the war on terrorism, we are generating a lot more than we've faced before.
LISOVICZ: That's a lot of food for thought. Ambassador Edward Peck, the former chief of mission in Iraq. Thank you this so much for joining us.
PECK: My pleasure, ma'am. Thank you.
LISOVICZ: Up ahead on IN THE MONEY:
Bitter pills: Pharmaceutical companies are sending your doctor back to school. Find out what the lessons mean for prescription drug costs and Medicare.
Plus, where spandex meets the suit and tie: Pro wrestling turned sideshow theatrics into big business. We'll check the latest earnings from the WWE.
And aiming for the altar: A ruling in Massachusetts brings gay marriage a step closer. See what the financial impact could be.
In 2001 Michael Dell made "Time" magazine and CNN's list of "Global Business Influentials." Thanks to strong growth in servers and storage systems, Dell Corporation produced record high operating results this year and introduced three new low-cost printers, all signs that the company continues to shoot for dominance beyond the desktop. Michael Dell, a "Global Business Influentials." Watch for the 2003 list of "Global Business Influentials" beginning Monday, November 24th.
LISOVICZ: Pharmaceutical companies may not be in bed with your doctor, but more and more they are in class with your doctor. And that can affect what you pay for drugs, which happens to be one of the hottest issues in the Medicare debate raging this week. For more about that we're joined from Boston by Dr. Jerry Avorn, an associate professor at Harvard Medical School. He's also written a book due out this spring called "Powerful Medicines."
DR. JERRY AVORN, HARVARD MEDICAL SCHOOL: Thank you. Good to be here.
LISOVICZ: You know, I mean -- anybody who's ever been to a doctor's office knows that there is some relationship between the big pharmaceutical companies and practicing physicians. You can see with all the handouts they give you -- you know...
LISOVICZ: The free sunscreen, the tooth brushes, whatever. But, one would have thought that practice has stopped to some degree because so many people are going to Canada, for instance, to get cheaper medicine. What -- can you just lay out the landscape for us right now? Is it still practicing unabated?
AVORN: Sure. There is an enormous amount of what doctors know about medicines comes to us from our friends in the pharmaceutical industry, who are awfully good at getting into our offices and letting us now about their products in the most forceful and effective possible way.
SERWER: Dr. Avorn, I want to follow up on that because I do see those drug salesmen coming into my doctor's offices. Can you talk about that relationship a little bit more? I mean, it seems to me that these doctors are, in fact, prescribing drugs that are foisted upon them by drug salesmen. What do they get in return? How does this all work?
AVORN: Well, nobody actually puts a gun to a doctor's head and forces us to write the prescription, but in fact an awful lot of what we know about drugs we end up finding out from the companies that make them and are selling them. Nobody's really responsible for educating doctors once we finish our initial training. And there's this enormous educational void out there, and the companies are more than happy to come in and fill it with essentially promotional materials. They will send folks to our offices. They will take us out to dinner. They will put on courses just for us. They may even pay us to come to the courses to listen to their message. And in the absence of anybody on the other side promoting the use of generics or the use of less expensive drugs, there is a real imbalance in what we physicians are hearing about medicines. And that translates directly into what we prescribe.
CAFFERTY: What about the idea of when you go to get a prescription filled you simply ask for the generic version of whatever medication is prescribed for you? I mean, is that not a practical idea?
AVORN: That's always a good idea, and that works if there is a generic prescription available. The problem is that for an awful lot of the most expensive drugs, and there's a very large number of them, there simply isn't a generic out there, and the pharmacist cannot make a switch without going back to the doctor and asking for a prescription for a different drug. And so, there's -- while that's a great thing for the consumer to do, there's a limit to how much you can do that for drugs where there are no generics.
CAFFERTY: Let me get your thoughts on this health care bill that may be voted on as early as this coming week, the American association of retired persons, which is I guess the largest lobby in the country for the people who consume the most prescription drugs, likes the bill. Senator Edward Kennedy of Massachusetts says it's a terrible piece of legislation that'll begin the dismantlement of the Medicare problem and put a lot of elderly people into an experimental prescription drug situation where their costs will actually go up. Is this a decent piece of legislation? Is this the answer to rising prescription drug costs in this country?
AVORN: Well, it's kind of embarrassing that here we are in 2003 and we're the only industrialized country that somehow doesn't manage to provide drug coverage for all of its citizens. Essentially, every other advanced nation has figured how to do this, and we're now trying to put together what is, at best, a patchwork with a lot of holes in it. I sympathize with the worry that this could rapidly become an out-of-control program in that there's really nothing in the legislation that is adequately going to make sure the doctors are prescribing smart for their patients, and by that I mean, making sure that it's the right drug, the most cost-effective drug, the most affordable drug. That is really not part of the legislation. It's all about who gets covered for what number of dollars until what point. And I fear that if this does pass we are going to see an even greater increase in these promotional activities that are going to very rapidly break the bank and make all these budget projections for the cost of the bill unrealistic.
LISOVICZ: I'm sure you're familiar with a man by the name of Uwe Rinehart of Princeton University who says -- who put it a lot more harshly. He said, "this has to be pure gravy because all they have to do is push the button and start making new pills." Could it be as bad as that? This whole bill, which is supposed to in fact keep a cap on medical costs, could it in fact spiral out of control?
AVORN: Yes, I do worry. I think he put it very effectively. I do worry that there are so many goodies in it for various players that were needed to be won over, whether it be the rural areas or the insurance companies or the drug companies, that there is so much essential pork in it that instead of just having an affordable drug benefit for the elderly with some way of making sure that our older patients get what they need, there are all these extra things on it that are rapidly going to rack up the costs without necessarily delivering the care to the people who need it the most.
SERWER: Dr. Avorn, I work for a magazine company, and we've been delighted over the past decade at all the advertising pharmaceutical companies have been putting in our magazines. It's just been a goldmine for magazine companies. How has that changed, though, consumer patterns when it comes to healthcare and prescription drugs?
AVORN: This direct to consumer advertising of drugs has been a boon to the media. It's been a boon to the drug companies. I'm not sure it's been such a boon to patients. It's now costing about $3 billion a year that companies are spending just on direct to consumer ads, not counting the other $20 billion that are spent on promotions directed to doctors. And frankly, that's money that I'd rather see us spending on providing drug benefits to people who need them. When people have looked at this direct to consumer advertising what they've found is that it does cause patients to go into their doctor demanding drugs. but it's not clear that they're always demanding drugs that they necessarily need. And it's really boosted sales. There's very good figures on that. But not sales in the direction that a clinician or a public health person or a patient would want. More directing sales toward the most expensive drugs that are worth marketing that expensively.
CAFFERTY: I've actually had this conversation with my doctor, and it drives him crazy. People come in the office saying I want this or I want that, they have no idea what the hell they're talking about, it's based on some TV commercial that they saw and their request is no more in line with what he perceives their medical needs to be than the guy across the street painting the house.
Doc, we've got to leave it there. I thank you for joining us.
AVORN: Thanks for having me.
CAFFERTY: All right, Dr. Jerry Avorn, Harvard Medical School associate professor.
Coming up on IN THE MONEY, as we continue, find out whether pro wrestling is flexing its muscles or flat on the mat. We'll have earnings news from World Wrestling Entertainment.
Also ahead, you save and America pays: We'll look at how those low prices at Wal-mart are affecting the rest of the U.S. economy.
And whoever's getting hitched, money is always part of marriage. I know. I've done it twice. We'll look at the financial side of the gay wedding debate.
LISOVICZ: Tiime to get you caught up on some of the week's top business stories. Senate investigators say one of the world's largest accounting firms helped clients cheat on tax returns. They say KPMG promoted dubious charitable deductions and complicated transactions to generate phone paper losses for their clients. The year-long investigation examined four tax plans KPMG sold to more than 350 high- income people. The firm says it "no longer offers those tax strategies." Their words, not ours.
The bloodletting in the U.S. tech sector may be coming to an end. A new industry report says tech companies are on pace to lay off less than half the number of workers this year than they did last year.
But, don't tell that to the folks working at AT&T Wireless, that company plans to lay off more than 10 percent of its 30,000 workers in the next year and may outsource their jobs. Where? To India and elsewhere.
SERWER: Smackdown. This week World Wrestling Entertainment reported a profit for its second quarter, reversing a loss from last year. The company says it's all thanks to bigger money from pay-per- view events and cost-cutting measures. WWE shares are near their year high, but they're trading at about half the value they were when the company went public in 2000. You probably remember WWE was once known as WWF, but thanks to a lawsuit filed by of course those little bunny rabbit people, the World Wildlife Fund, WWF had to change its name. Regardless of that conundrum, it is our stock of the week.
LISOVICZ: I think it's the World Wildlife Federation, by the way.
SERWER: Well, federation or fund, they -- it is fund, as a matter of fact. Anyway, Vince McMahon and company had a nice little run for a while. They took the company public, and then splat!
CAFFERTY: Well, isn't this whole wrestling thing getting a little long in the tooth? I mean, aren't some of these guys like in the home, now?
LISOVICZ: No, you're looking at a whole new generation of stars like Goldberg and Stone Cold...
CAFFERTY: Goldberg is a wrestling star?
SERWER: He is and he's huge.
CAFFERTY: Wow, I missed him.