Chile From Within

Chilean pharmaceutical companies busted for price-fixing

Posted in Chile culture, Corruption, mierda, US by tomasdinges on December 12, 2008
Chilean pharmaceutical companies SalcoBrand, Ahumada and Cruz Verde, which account for 92% of pharmacy sales in Chile, have been charged with collusion to fix prices of at least 222 pharmaceutical products, including medicines for diabetes, epilepsy and anti-conceptives.
The investigation by the Tribunal de Defensa de Libre Comercio was described in a 51-page document found here. Follow the story at El Mostrador. Soon, you will be able to follow the story at CNN Chile, which i think will change the Chilean mediascape.
Anyone who has spent time in Chile will understand the importance of this to Chileans. First of all, Chileans love their pills. Common cold, take a pill. Depressed, take a harmonyl. Pills cure what ails Chileans, without a doubt, part of a synthetic culture that surely took hold once the Chileans abandoned the British ideals and went with the Ford Foundation and Milton Friedman, lets say, of America the beautiful. Within the last ten years antibiotics could be purchased without a prescription. Secondly, consumers are bombarded with advertisements for discounts throughout the cityscape.
Now, three companies aimed to guarantee their profits on drugs including prescription drugs, for which, alas, there was no other substitute.
A “Guerra de Precios” waged in 2007  decimated profit margins among the pharmacies. Consumers were highly elastic and responded immediately to discounts or rebates on common drugs. Competition was ugly, according to the Tribunal investigation:
Ahora bien, los efectos de esta guerra se tornaban en extremo preocupantes
para sus tres actores, pues los márgenes seguían reduciéndose e incluso
comenzaban a ser negativos respecto de muchos productos, poniendo en
duda los reales beneficios de esta situación para un eventual vencedor, en
comparación, claro está, con los beneficios de la colaboración.
In the meantime, Salcobrand undergoes a corporate reorganization, newly purchased by Empresas Juan Yarur SAC, and a repositioning of their brand name. They recruit executives from other companies, including Cruz Verde.
Salcobrand then set up a distribution deal with a company owned by Cruz Verde for distribution of generic pharmaceuticals as of October 1 2007. In November the three companies hold a meeting and declare the price war to be over, and make a truce, recognizing that the battle has cut too deep and profits are suffering across the board.
They decide to raise prices again in unison. Why coordinate their price increase? Because any difference in prices would send Chileans running to the cheaper pharmacy.

Para ello, sería necesario alzar los precios significativamente, desde luego,
en los productos que más bajaron durante la guerra. Pero había que
coordinarse muy bien, porque esos productos eran los denominados notorios
y éticos, como se señaló, de modo que si una de las Cadenas de Farmacias
alzaba su precio y no lo hacían al unísono las otras, la demanda se desviaría
hacia éstas.
According to the complaint, the three companies listed the pharmaceuticals they were losing money on and coordinated a schedule of coordinated price increases.
In December 2007, the price increases began on 62 pharmaceuticals, including among them 15 anti-conceptives. I do not know whether this is a reflection of the fact that anti-conceptives were previously very cheap as a result of price competition, or some sort of cynical religious conservative agenda to deny anticonceptives to all but the rich.
One anticonceptive, “Marvelon-20”, a pack of 21, went up on average 94%, in all three chains, on the same day, December 28th, 2007
And with that the chains raised prices on groups of pharmaceutical products together in a systematic stages, 72 in January, 31 in February, and 40 in March.
The groups of products with the greatest frequency of increases:
A mayor abundamiento, las categorías de medicamentos más afectadas por
el acuerdo, en términos de número de productos, fueron: “G3. Hormonas
sexuales y productos con efectos deseados similares, solo acción sistémica6”
(25 productos), “N3. Antiepilépticos” (20 productos), “N6. Psicoanalépticos
excluyendo preparados antiobesidad” (18 productos), “N5. Psicolépticos” (16
productos) y “C9. Agentes activos en el sistema en angiotensinas y renina
(15 productos)”.
Diabetes and antianemic drugs were those which increased most drastically in price, on average, according to the complaint, rising by 100% and 88%.
The costs of these actions? Fines of $12 million dollars on each company.
Chances that the pharmaceuticals will wrangle a better deal? We shall wait and see.

Spitzer heart Pinochet heart US Treasury department

Posted in Corruption, Pinochet, US by tomasdinges on March 12, 2008

NewYorkers are crazy and incredulous after news broke yesterday that their maverick, do-gooder, ivy-leaguer, father of three, former Attorney General, likes prostitutes.

Funnily, Eliot Spitzer, governor of New York state (will he resign wednesday?), was tripped up by the same laws that snagged our dear friend and money-launderer, dictator-in- —, Augusto Pinochet. Politically-exposed-persons is their official designation. Read the Wall Street Journal in Wednesday’s coverage. I thought of it before them, for the record.

A well-known example of a PEP was the late Chilean dictator Augusto Pinochet, who allegedly used accounts at Riggs Bank to siphon illicit funds from Chile. The failure of Riggs to monitor Mr. Pinochet and a former Saudi ambassador led to a Justice Department settlement, a $25 million fine and ultimately the sale of the bank.

Unlike Pinochet, I think, Spitzer loved to pay thousands of dollars for sex, up to 80,000 dollars according to federal investigators cited in the Associated Press. In order to do that, and not have his wife, his three daughters, the Democratic party battling for control over the NY State legislature, or the good citizens of New York State, find out…he had to transfer money in sketchy ways to sketchy places.

Reporting from the Treasury Department and IRS beat in D.C., NY Times reporters (David Johnston and Stephen Labaton) explain, here. On March 13th, the NY Times did another back-story story on How this all happened.

Last summer, employees at a large New York bank detected something suspicious: Gov. Eliot Spitzer was moving around thousands of dollars in what they thought was an effort to conceal the fact that the money was his own, federal officials said on Tuesday.

One of the New York banks which filed the SAR was Capital One’s North Fork, according to the article. The other bank was HSBC. This time the SAR filing triggered the FINCEN (Treasury Department) to alert the IRS to look into the accounts of the shell company receiving Spitzer’s money.

They said the apparent sleight of hand kept the transactions small and removed his name from deposits. The governor’s actions prompted the bank to file alerts known as Suspicious Activity Reports with the Treasury Department, which were reviewed by I.R.S. agents on Long Island, the federal officials said.

This is what bank officials in the Banco de Chile in New York, Citibank in Miami and Riggs Bank in Washington DC (and a host of others) did not do in 2004 when Senate investigators found Pinochet’s name on bank accounts as he moved big chunks of cash around in funny ways. This was what stimulated the Senate Investigative Committee to look into Pinochet. That was the beginning of the end for Pinocho.

A few months later, another New York bank sent its own reports of suspicious activity to the Treasury. They showed that Mr. Spitzer and others, including people overseas, collectively deposited hundreds of thousands of dollars into an account of a company called QAT International Inc., whose business involved foreign accounts and shell companies and appeared to be vaguely related to pornography Web sites.

A law generated in reaction to 9/11 and possible terrorist usage of US banking system to launder money, the Bank Secrecy Act says that banks should clamp down on suspicious activity and generate Suspicious Activity Reports or SAR’s to the Financial Crimes Enforcement Network, part of the Treasury Department. See Troutman Sanders AML for a VERY detailed breakdown of the Act.

Last July, suspecting that Mr. Spitzer might be involved in some kind of public corruption, the Treasury Department referred the banks’ reports to a section of the Manhattan federal prosecutor’s office that usually handles cases involving official wrongdoing. The case was not turned over to the criminal unit, which would usually investigate major prostitution rings.

Stay tuned by reading the NY Times, Ny Observer and the blog by Liz Benjamin and the Albany Times-Union for more info and breaking news. I guess the Wall Street Journal would have intense coverage, but their print edition is going to be stronger than their web edition. Not sure if WSJ.com will offer archive material.

Gringos En Chile, by Cinco Metros

Posted in Andes Mountains, Chile culture, Chile film, People and Places, Santiago, US, Viva Chile by tomasdinges on December 12, 2007

Picking up on the what-its-like-to-live-and-survive-in-Chile-as-a-foreigner conversation over at Don Güill’s Chile blog C.hileno this is an incredible opportunity to feature the excellent short “docu-fiction” by up and coming documentary filmmaker and editor Anthony Rauld about life and love in Chile. Anthony’s newest documentary, created by Lauren Rosenfeld, is about life and water and a big gold mine called Pascua Lama in the Atacama Desert, “Watershed.”

Part II can be found on YouTube here.