STLR Link Round – September 25, 2015

Xi Jinping Seeks to Reassure American Business and Tech Community

As part of a busy week-long U.S. Tour, President Xi Jinping of China has reached an agreement with President Barack Obama of the U.S. that neither country’s government will conduct or support cyber-theft of intellectual property or trade secrets for commercial advantage. The deal establishes a law-enforcement dialogue between specific senior officials in both countries, who will be responsible for analyzing incoming requests for legal cooperation. This will remove the ability of either side to stall upon being presented with evidence of commercial hacking. Many observers are hailing the accord as a victory for the U.S., which has been pushing China for years to acknowledge the difference between traditional cyber espionage and theft of trade secrets, and has recently threatened China with sanctions for past commercial hacking. However, other observers have noted that the deal is unlikely to result in a slowdown in theft of commercial intellectual property, given the massive monetary incentives for Chinese companies. Earlier in the week, Xi delivered the keynote address at a conference of over 650 business executives on Microsoft’s campus outside Seattle, during which he sought to allay their fears over the chilling business climate in China for American companies. The list of attendees included Bill Gates and Satya Nadella of Microsoft, Tim Cook of Apple, and Mark Zuckerburg of Facebook, which is banned in China.

Volkswagen Threatened with Massive Global Deluge of Legal Action

Following the revelation by the U.S. Environmental Protection Agency last Friday that Volkswagen cheated on emissions tests for its diesel cars in the U.S., consumers and government agencies around the world have launched a plethora of lawsuits and inquiries into the company’s practices in their own markets. U.S. and California regulators discovered that almost 500,000 VWs sold in the U.S. since 2009 were outfitted with the company’s 2.0-liter turbodiesel and incorporated software that allowed the cars to emit over 40 times the legally allowed level of nitrogen oxide during ordinary driving, while staying within the limit during emissions tests. Several lawsuits have already been filed in the U.S. and Canada, while government agencies are considering enforcement action in several other countries. The company already faces fines of up to $18 billion in the U.S. alone and has lost tens of billions of dollars of market capitalization in the last week.

Turing Pharmaceuticals Reverses Course on Daraprim Price Hike

On Sunday, The New York Times broke a story that Turing Pharmaceuticals planned to increase the price of Daraprim, a 62-year-old drug used to treat a parasitic infection in those with compromised immune systems—such as patients with AIDS and some forms of cancer—from $13.50 per tablet to $750 per tablet. The story thrust the issue of drug prices into the political spotlight. Presidential hopeful Hillary Clinton was quick to condemn the company and promised to cap prescription drug costs for patients with chronic or serious medical conditions at $250 per month, if elected. Turing has since backed down from the price hike, but the incident highlights the inability of generic copies of costly off-patent orphan drugs to emerge in situations where distribution channels are tightly controlled, and patient populations are relatively small.

 

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