Comments on News

A couple of news articles caught my attention recently. First, I just read an article on the confusing situation with Southwest Airlines. As one might suspect, the federal government created this mess and there is now a move to correct it. When the Dallas/Fort Worth International Airport was built in 1979, Southwest determined that it wanted to stay at Love Field since it is close to downtown. In an effort to protect the new airport, Jim Wright who was the Speaker of the House of Representatives passed the Wright Amendment which limited the Southwest flights from Love Field to such an extent that if a flight left there, it could only land in Texas or a state which bordered Texas. This created the situation where if you want to fly between Nashville and Dallas, you have to fly American at a cost of $1,200 for a round-trip unrestricted ticket, but if you want to fly to Houston, you can fly on Southwest for no more than $356. Until now, Southwest hasn't complained much becase it has made a lot of money shuttling between Dallas and Houston. Furthermore, there was no competition for Southwest in the area they served. American Airlines was and still is happy since they could charge more for flights into Dallas from places like Nashville. Now, Delta is leaving Dallas as a hub and Southwest is seeing the possibility to expand by using DFW to other cities. For those of us who have family in Texas and a strong aversion to idiotic laws, it is time to drop the Wright Amendment.

Another commercial situation which still interests me is the Merck situation with Vioxx. I noticed in the Wall Street Journal today that the company has given the top echelon of the company golden parachutes that open lucratively when and if the company is taken over or some other situation arises which leads to them losing their jobs. Now that is a bad sign for the prognosis of the company as it faces the lawyers. Who would have thought that this bluest of the blue chip stocks would ever come face to face with virtual oblivion?

That leads to another thought about how drugs come to market. Most all drug studies prior to FDA approval now require studies that show the new drug is better than a placebo in clinical trials which could well be the wrong question. Maybe we should also require that the new drug also be better than an existing drug with known toxicity. In this case, Vioxx would probably not be shown to be better than naproxen which is often sold as Aleve and Merck would still be a viable company.