In a letter yesterday to GAO, Reps. Henry Waxman (D-Calif.), Charlie Rangel (D-N.Y.), Pete Stark (D-Calif.) and John Lewis (D-Ga.) voiced concerns that the companies are “artificially raising prices for certain pharmaceutical products in expectation of new reforms that could otherwise reduce prescription drug prices or price growth by encouraging patients and the government to be more efficient purchasers.”

Any price gouging is unacceptable, but anticipatory price gouging is especially offensive. We request that the GAO prepare on an expedited basis a report that analyzes recent trends in prescription drug pricing. In addition, we request that you prepare a proposal to ensure ongoing monitoring of pharmaceutical manufacturer pricing practices, and periodically report to the Congress on your findings.

Not that the pharmaceutical industry is taking the Times’ report sitting down. In a statement released Monday, Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said the price increases represent “the natural result of market forces.”

At no cost to the public, the heavyweights of the industry are putting on the Friends of America Rally, a one-day country music extravaganza in Southern West Virginia featuring the talents of Hank Williams Jr. and John Rich, among others.

Just good, wholesome, blue-jeans-and-Copenhagen fun, right? Wrong. This is America in 2009. There will be a political agenda.

So Fox News’ Sean Hannity will also be attending; Ted Nugent is the emcee; and the event is taking place on what once was an Appalachian peak, since flattened by a mountaintop mining operation. Oh, and folks are also invited to sign onto a petition, sponsored by the National Mining Association, against the House climate change bill.

“Support America,” the invite implores. “Wear Red, White or Blue to the Rally!”

Blackwater Security contractors protect U.S. State Department employees in Baghdad. (Flickr: jamesdale10)

Even as a wrongful-death lawsuit moves forward against the controversial private security company formerly known as Blackwater, the firm seeks to renew its contract with the State Department to guard diplomats when the deal expires next year. And the State Department shows no signs of ruling the company out of competition, despite a high-profile incident in 2007 that left 17 Iraqi civilians dead.

“We welcome the chance to bid on any program,” said Stacy DeLuke, a spokeswoman for the private security company Xe, which changed its name from Blackwater earlier this year, using an acronym for the Worldwide Personal Protective Services contract. Asked if the company was under any restrictions from the State Department following its September 2007 shootout in Baghdad’s Nisour Square — in which its employees shot a family in a car approaching their guards and then opened fire on other cars attempting to flee the scene — DeLuke replied, “I don’t think there have been any restrictions.”

Illustration by: Matt Mahurin

In 2005, the State Department issued a four-year contract, valued at $560 million per year, to provide on-the-ground security for its diplomats in dangerous areas around the world with three leading private security companies: Blackwater, Triple Canopy and DynCorp. The U.S. military does not consider the provision of security for diplomats in war zones to be its job. The State Department’s Bureau of Diplomatic Security, which controls the WPPS contract, possesses a workforce of about 1450 special agents, leading it to rely on contractors for security, according to a 2007 investigation by Rep. Henry Waxman (D-Calif.).

Spokespeople for the other private security firms holding the WPPS contract would not comment on whether they would also seek to retain their stakes in the contract. A DynCorp spokesman, Douglas Ebner, indicated that his company would, saying that DynCorp has “a strong focus on winning re-competes in our core business areas, including contracts with the U.S. Department of State.” Triple Canopy’s marketing director, Jayanti Menches, said simply that Triple Canopy does not “normally discuss our strategy with regard to future business opportunities.”

The WPPS contract formally expires in the summer of 2010, but the State Department anticipates releasing a request for bids on the work as early as November, according to a spokesman.

Xe has had a controversial history in Iraq. In March of 2004, the Moyock, N.C.-based company, which maintains close ties to the Republican Party, lost four contractors to an angry mob in the city of Fallujah. After the 2007 shooting incident in Nisour Square attracted a fresh wave of criticism, a congressional investigation led by Waxman in his role as chairman of the House Oversight and Government Reform Committee discovered a series of prior incidents foretelling the killings. In December 2006, a security guard employed by the company drunkenly shot a bodyguard for one of Iraq’s vice presidents, and the company colluded with the State Department to ferry the guard out of Iraq. A few months later, company employees killed an Iraqi driver near the Interior Ministry.

Between 2005 and 2007, company guards were involved in an average of “1.4. shooting incidents per week,” according to a committee report issued in October 2007. Waxman’s report estimated that the company stood to gain $1.2 billion from the WPPS contract.

A 2007 official report by Amb. Patrick Kennedy, now the State Department’s undersecretary for management, on the State Department’s ties with private security firms in Iraq recommended that the secretary of state, among other measures, “tighten the ground rules for the use of deadly force” and “work towards greater parallelism with the [U.S. Central Command] rules on the use of force by contracted security personnel in Iraq.” Earlier this year, at Iraqi behest, the State Department evicted Xe from Iraq, although some Xe guards remain in the country.

The company’s troubles have persisted. Family members of the victims of the Nisour Square shootings filed a wrongful death lawsuit against the company in a U.S. federal court in 2007. In a surprising development, as part of the suit, two former Blackwater guards signed affidavits last week implicating founder Erik Prince in the killings of employees who cooperated with federal investigators and further alleging that the company is involved in weapons smuggling in Iraq, according to The Nation’s Jeremy Scahill — charges the company called “anonymous, unsubstantiated and offensive” in a statement. Prince stepped down from the company earlier this year when it renamed itself Xe, a move intended to “define the company as what it is today and not what it used to be,” spokeswoman Anne Tyrell told The Washington Post in February.

While Xe may no longer be operating in Iraq, it is the only private security company guarding State Department employees in Afghanistan, according to a department official who would not speak for attribution. “Right now in Afghanistan, it is simply U.S. Training Center,” the official said, referring to a company owned by Xe.

Already, Xe has come under criticism for aggressive actions in Afghanistan reminiscent of its Iraq behavior. In May, off-duty security guards employed by a company subsidiary drunkenly fired upon a car in Kabul, injuring two civilians. Last month, McClatchy reporter Nancy Youssef observed State Department officials in Kabul riding in “security details outfitted with huge SUVs and pointed weapons,” alarming the city’s residents. Those details would have been operated by Xe.

The need for increased diplomatic security in Afghanistan is expected to rise as the State Department increases its presence in the war-plagued country. A recent report prepared by the Congressional Research Service found that the Obama administration plans to double its U.S. civilian personnel in Afghanistan to 900 officials, a substantial portion of which will be provided by the State Department.

A spokesman for the State Department’s Bureau of Diplomatic Security, which manages the WPPS contract, said he could not answer TWI’s questions about the department’s relationship with private security companies in Afghanistan by press time, although he said he hoped to provide responses later this week. Representatives of U.S. Central Command, which controls U.S. forces in the Middle East and South Asia, referred questions about the military’s coordination with private security companies in Afghanistan to the State Department. Spokespeople for the U.S. military command in Afghanistan did not reply to requests for comment about its relationship with private security companies.

On Friday, CNN obtained a letter penned by Rep. Jan Schakowsky (D-Ill.) to Secretary of State Hillary Rodham Clinton urging the secretary “not to enter into further contracts with Xe and to immediately review any existing contracts.” As a senator and candidate for president, Clinton pledged to ban private security firms from contracting with the government, but reversed herself at her confirmation hearing to become secretary of state in January.

Gen. Stanley McChrystal, the commander of U.S. troops in Afghanistan, testified in June to the Senate Armed Services Committee that the loyalties of the Afghan people would be “strategically decisive” for the war.

“Running civilians off the road is contrary to [the] mission goals,” said P.W. Singer, a Brookings Institution scholar and author of a well-regarded book about the private security industry. “That has to stop. But what are the consequences?” Singer noted that the laws under which security contractors operate overseas are far from clear, a problem that has long vexed both the industry, U.S. officials and members of Congress, contributing to an atmosphere of impunity.

As Singer put it, “We have a tough enough time figuring out the consequences [to the companies] when they kill someone.”

In exchange for putting off a floor vote until after Labor Day, the Energy and Commerce Committee may be allowed to continue its markup of the healthcare bill this week even if an agreement has not been reached between Committee Chairman Henry Waxman (D-Calif.) and seven Energy and Commerce Committee Blue Dogs over the content of the bill.

Of note, the deal worked out doesn’t include agreement on the policy controversies that have been the sticking points between the Blue Dogs and Democratic leaders, including how to approach the thorny public-plan issue. But at this point — after marathon negotiations that have included White House Chief of Staff Rahm Emanuel — Democrats will be happy with anything even resembling progress.

In a letter to Rep. Henry Waxman (D-Calif.), one of the bill sponsors, American Medical Association CEO Michael Maves said the proposal will both expand coverage and allow consumers to retain their choice of health insurance plans.

We pledge to work with the House committees and leadership to build support for passage of health reform legislation to expand access to high quality, affordable health care for all Americans.

Critics of the bill have said that the inclusion of a government-backed health insurance option would be the death of the private insurance market, and consumer choice — something the AMA doesn’t find to be the case. Of course doctors and private insurers have a long history of doing battle over what services should be paid, so AMA here shouldn’t be confused for an objective voice. Still, the group is among the most powerful lobbies in town, and this endorsement will make it that much tougher for lawmakers to oppose the bill.

One industry down. Only about 10,000 to go.

Here’s the letter (click to enlarge):

The vote was largely along party lines, with 44 Democrats crossing the aisle to vote against it and 8 Republicans supporting passage.

The bill, officially known as the American Clean Energy and Security Act of 2009 (ACES), was first introduced by Energy and Commerce Chairman Henry Waxman (D-Calif.) and Energy and Environment Subcommittee Chairman Edward Markey (D-Mass.) as a discussion draft on March 31, and it passed out of Waxman’s committee on May 25. In the past few days, the Democratic leadership scrambled to whip up the necessary votes for passage by the full House, and even today, the bill’s prospects remained murky, with a large number of moderate Democrats still uncommitted.

A vote was expected around 5 p.m., but Minority Leader John Boehner (R-Ohio) conducted his version of a filibuster by giving an hour-plus-long closing speech, reading excerpts from practically every page of the 309-page manager’s amendment to the bill. When Waxman objected, Rep. Ellen Tauscher (D-Calif.), who presided over the hearing, said that House tradition allowed each party’s leadership to deliver closing arguments without time constraints. “The gentleman’s had his thirty years to put this bill together,” Boehner said, addressing Waxman.

The bill now moves to the Senate, where it is not expected to receive a vote until after the resolution of the health care debate.

Observers of this debate might recall that Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), both ardent environmentalists, have already diluted their bill considerably in order to win the support of House Democrats from states with powerful gas, coal and auto industries. In the latest episode, it was the Democrats representing the farm states who threw the fuss, threatening to kill the bill if two key provisions weren’t changed.

The first involved a program allowing polluting farmers and agricultural companies to offset their emissions by planting trees or investing in green technologies. The Waxman-Markey bill proposed that the Environmental Protection Agency would oversee the program, arguing that the agency would be the most reliable monitor of an initiative designed to protect the environment.

But farm-state Democrats, rallying behind Rep. Collin Peterson (D-Minn.), who chairs the House Agriculture Committee, insisted that the U.S. Department of Agriculture be given that responsibility — a scenario opposed by environmentalists, who fear the USDA will prioritize farm industry concerns above the effectiveness of the offset program.

Indeed, The New York Times reports today of USDA’s shoddy record when it comes to overseeing environmental programs under its jurisdiction.

In particular, the department’s conservation agency “routinely ignored” compliance standards when giving out wetlands and wildlife grants, an investigator for the House Agriculture Committee found. The Government Accountability Office said there is potential for duplicative payments with the conservation programs, allowing the agency to release billions of dollars in payments to landowners who do not deserve them.

Another assessment from the USDA inspector general found shoddy accounting at the Natural Resources Conservation Service. The agency was unable to provide sufficient information on transactions and account balances.

No matter. The result of the Waxman-Peterson negotiations was to give USDA the job.

The second sticking point revolved around a controversial EPA initiative — mandated by Congress — designed to ensure that the country’s shift to biofuels like ethanol doesn’t lead to a spike in greenhouse gas emissions elsewhere around the globe. This happened in Indonesia, for example, where there was a widespread clearing of rain forest a few years ago to make way for palm plantations to feed Europe’s emerging biofuels market. The EPA proposed to take such global events into account as it pertains to the U.S. shift to food-based fuels.

No matter. For Peterson and the other agriculture-friendly Democrats, the so-called indirect land-use plan was a non-starter. The result? Under the compromise, EPA won’t be allowed to account for indirect land-use when calculating ethanol-production emissions until the USDA has signed off of the methodology.

“We have reached an agreement that works for agriculture and contributes to the reduction of greenhouse gas emissions in the United States,” Peterson said in a statement last night.

The House is planning to vote on the Waxman-Markey bill Friday.

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The Washington Post describes the bill as lending the FDA “broad new enforcement tools, including the authority to recall tainted food, the ability to ‘quarantine’ suspect food, and the power to impose civil penalties and increased criminal sanctions on violators.”

Among other things, the proposal would put greater responsibility on growers, manufacturers and food handlers by requiring them to identify contamination risks, document the steps they take to prevent them and provide those records to federal regulators. The legislation also would allow the FDA to require private laboratories used by food manufacturers to report the detection of pathogens in food products directly to the government.

Just one question: Why doesn’t FDA have these powers already?

For instance, a coalition including veterans advocates, labor unions and an environmental group has begun running television ads blasting several House lawmakers for voting last week against controversial climate change legislation. That bill, sponsored by House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.), passed the committee Thursday by a count of 33 to 25, but Reps. John Barrow (D-Ga.), Roy Blunt (R-Mo.) and Mike Ross (D-Ark.) all voted against it.

Now, VoteVets.org, the League of Conservation Voters and America’s Building Trades Unions are hoping to make the three pay for their opposition. In 30-second television spots running in each lawmaker’s district, the groups are urging voters to pressure Barrow, Blunt and Ross to support the bill when it reaches the House floor, as expected sometime this summer.

Each member of the odd coalition is approaching the climate change legislation from a different angle. VoteVets.org, for example, wants to wean the country from foreign oil in the name of national security.

Billions in Middle East oil profits have gone to the same terrorists we’re fighting, and it makes no sense from a military or national security standpoint,” said Jon Soltz, an Iraq War veteran and Chairman of VoteVets.org.

For America’s Building Trades Unions — a branch of the AFL-CIO — the issue is green jobs. And of course, LCV is concerned about the effects of domestic emissions on the warming planet. So it makes sense that they’ve teamed up in support of Waxman’s bill.

Yet their campaign is also oddly targeted. Nevermind for a minute that many environmentalists would be happy to see the Waxman bill fail, arguing that it doesn’t go nearly far enough to eliminate the greenhouse gases blamed for climate change. No, the odd part is that Waxman’s bill is expected to pass the House, particularly after it was diluted to win the support of many Democrats friendly to the coal, gas and auto industries. The real fight will likely take place in the Senate, where there remains a good deal of doubt that a cap-and-trade emissions system like that pushed by Waxman has any legs at all.

It’s a little early, but supporters of climate change reform might get a better return on their lobbying dollars if they targeted lawmakers in the upper chamber instead.

President Barack Obama and EPA Administrator Lisa Jackson (WDCpix)

Even as some House Democrats moved closer last week to installing first-of-a-kind limits on the carbon emissions blamed for global warming, others are in a full-court press to kill a separate White House effort to curb those same greenhouse gasses.

The episode is just the latest in a series of confrontations between liberal Democrats who favor strict emission-cutting reforms and a number of moderates who have sided with the various industries that would be affected by the changes. Unfortunately for environmentalists, the moderates, thus far, are winning the fight.

Illustration by: Matt Mahurin

On Thursday, for example, the Energy and Commerce Committee passed sweeping climate change legislation sponsored by Chairman Henry Waxman (D-Calif.) — but not before the proposal was diluted to satisfy panel Democrats representing the coal, oil and automobile industries. As a result of the changes, many environmental groups are opposing the Waxman bill outright.

In the latest episode, most members of the House Agricultural Committee contend that newly proposed White House emission rules for biofuel producers would hobble the industry and increase the nation’s reliance on imported fossil fuels. Similar to the earlier E&C debate — where key Democrats leveraged their votes in order to water down Waxman’s bill — many of the Democrats on the Agriculture panel are poised to join Chairman Collin Peterson (D-Minn.) in opposing the Waxman bill unless something is done to eliminate the biofuel rules being proposed by the White House.

The saga is emblematic of the difficulty facing environmentally minded lawmakers as they push reforms opposed by enormously influential industries like those found in the energy and agriculture sectors. It also highlights the difficulty of moving such reforms in the middle of a recession when any actions imposing additional costs on industry — even if they’re done in the name of public and global health — are quickly labeled job-killers. In what is quickly becoming a common theme in Washington, the Obama administration’s plans to cut emissions are running smack into an industry buzz saw that they just might not escape.

The new White House proposal, unveiled by the Environmental Protection Agency this month, aims to shift the country away from foreign oil by mandating an increase in renewable fuel usage — to 36 billion gallons by 2022, up from 9 billion gallons in 2008. In a controversial move, EPA has also outlined a plan — mandated by Congress in 2007 — for ensuring that the shift to biofuels won’t unintentionally hike carbon emissions elsewhere. For example, there are fears that increasing the U.S. production of corn for ethanol — once the darling in the renewable fuels debate — would lower food supplies on the global market. In that case, EPA’s model is designed to account for deforestation by overseas farmers who might be forced to expand cropland in response to higher food costs. Those fuels failing to reduce greenhouse gas emissions by certain amounts relative to the gas and diesel they would replace would no longer be eligible for federal subsidies.

Appearing last week before the House Appropriations environmental subpanel, EPA Administrator Lisa Jackson told lawmakers that the agency “did propose to take into account indirect land use because that’s what the law required us to do.”

Although the proposal exempts most corn ethanol from the so-called “indirect land use” requirements, the biofuels industry and its congressional champions are up in arms. Peterson, who voted for the 2007 energy bill that mandated the EPA’s new rules, said Thursday that the proposed limits “are short on science and long on obstructive and excessive restrictions for domestically produced biofuels.” Tom Buis, who heads Growth Energy, a biofuels lobbying firm, told House lawmakers Thursday that “it’s about the most bizarre concept I’ve ever heard.” Bob Dinneen, president and CEO of the Renewable Fuels Association, said the EPA is preparing to penalize ethanol producers for overseas decisions “over which our industry has absolutely no control.” And Carlos Riva, president and CEO of Verenium Corporation, a cellulosic ethanol company, said the EPA is “putting stumbling blocks in front of the infant before it’s learned to walk.”

The concerns are timely. Following the passage of the Waxman bill through Energy and Commerce, Democratic leaders must decide how to bring it to the floor without diluting it even further. On Wednesday, they dodged a bullet when the panel killed an amendment, sponsored by Nebraska Rep. Lee Terry (R), that would have prevented the EPA’s indirect land use proposal from ever taking effect.

Peterson, for his part, is pressing for the entire bill to pass first through his Agriculture Committee, where members would surely be more successful than Terry in killing the land use provision. Indeed, Peterson and Rep. Frank Lucus (Okla.), the senior Republican on the Agriculture panel, have already introduced legislation to do just that.

Waxman’s office said Friday that it will be Democratic leaders who decide how the bill will reach the floor. Peterson’s office did not return calls for comment.

If opponents of the indirect land use proposal are successful in stripping it out, environmentalists argue, it would spell bad news for the fight against climate change.

Kate McMahon, an energy policy expert at Friends of the Earth, was quick to point out that the EPA’s proposal is intended to reduce greenhouse gas emissions, not prop up biofuel industries that might be contributing to the problem more than they’re solving it. “If we’re going to call these advanced biofuels,” McMahon said, “then they should be better than what’s already out there.”

The EPA’s proposal is similar to new emissions standards adopted by California in April. The California framework rates the “carbon intensity” of the various fuels imported into the state — everything from oil squeezed from the tar sands of Canada to corn ethanol produced by coal-fed refineries in the mid-West. The state is currently gathering data from the industries that will reveal baseline carbon intensity figures by 2010. Those baselines will then have to be reduced by 10 percent by 2020.

Like the EPA proposal, the California strategy also takes into consideration the use of food crops to create fuel — an international land use standard designed to see to it that the cumulative effect of using the renewable isn’t to add to global emissions. That international approach, said Dimitri Stanich, spokesman for the California Air Resources Board, “accounts for emissions that would overwhelm our effort to reduce climate change.”

Stanich said the pushback from the corn ethanol industry is probably an indication that those companies recognize that corn-based fuels could be phased out in coming years in favor of more advanced recipes that emit fewer greenhouse gasses.

“They’re feeling bullied,” he said, “but [California’s rule] doesn’t single anyone out … The regulation is designed to gravitate toward any of the cleanest fuels.”

Even some farm state Republicans are beginning to doubt the powers of corn-based ethanol to solve the world’s energy and climate change problems. At last week’s Appropriations hearing with Lisa Jackson, Rep. Tom Cole (R-Okla.) conceded that the popular fuel is beginning to lose its luster.

“I’m not sure ethanol, in retrospect, will have turned out to have been as wise a choice as we thought when we started down this road,” Cole said. “But it’s got quite a political constituency behind it now.”