This is a rush transcript from "The Journal Editorial Report," November 24, 2007.
PAUL GIGOT, FOX HOST: This week on "The Journal Editorial Report": An attack of the super bug. The season's most sensational story. How serious a public health threat are infections like MRSA.
Spending Thanksgiving weekend at the airport? You are not alone. Why are there so many delays and can't anything be done.
Legendary rock group the Eagles offend some with too their new album but it is not the songs. We tell you about their very un-P.C. pairing, after the headlines.
GIGOT: Welcome to "The Journal Editorial Report." I'm Paul Gigot.
It is this season's equivalent of shark attacks. Daily reports of new cases of a virulent and drug-resistant bacteria known as MRSA. A practicing physician, Dr. Scott Gottlieb, left the number two spot at the Food and Drug Administration. I asked him how serious this public health threat this so-called super bug really is.
DR. SCOTT GOTTLIEB, FORMER FDA DEPUTY COMMISSIONER: Well, it is a serious problem. It is not a new problem. This has been a problem ongoing for years now where we have seen more resistant infections particularly in the hospital. Doctors have been confronting hospitalized patient that have these very complicated infections resistant to traditional drugs.
What's changing is we are seeing more and more patients come in from the community with seemingly ordinary infections, urinary tract infections, pneumonia, bronchitis, even skin infections, that complicated or caused by these very resistant pathogens. That's a big concern to patients and a big concern to doctors because the first instinct is to use the ordinary antibiotic to treat the patients. And then you find out three or four days later when the infection progresses and becomes, in some cases, life threatening it is complicated.
GIGOT: We have read some of these high profile cases, scary cases, of young kids brought in off the street with a seemingly mild malady and somehow they get this terribly virulent fatal infection. But in terms of mortality, overall, across the United States, compared to heart disease and cancer, the big killers, how serious is this? Where does it at this fit in?
GOTTLIEB: It is unclear. The statistics are hard to ascertain. A study by the CDC tried to constituent the prevalence of MRSA by calculating an estimate off of data they collected from about six hospitals. I'm sure how reliable that it. It is fairly significant. People in the hospitals and even the community who succumb to illnesses succumb because of infections.
GIGOT: We're talking tens of thousands fatalities?
GOTTLIEB: We're talking at least ten of thousands, absolutely, from hospital-acquired infections and serious infections. But the "New England Journal" reported about four or five years ago about the rising incidences of community acquired infections being with resistant pathogens. That's really what is new. That's the scary part.
GIGOT: You wrote in our newspaper, the "Wall Street Journal," the following: "As we make progress in fields like cancer, we are taking a U- turn on bacteria." How so?
GOTTLIEB: That's right. Because a lot of the drugs that we have gotten used to using, the mainstay drugs, are not effective against these resistant pathogens. The bugs have learned how to outsmart the drugs.
And when you look at the pipeline of new drugs in development, we don't have a lot of new antibiotics coming along that are fundamentally different enough to attack these very resistant pathogens. And that's because a lot of the companies that invested in this space 15, 20 years ago have gotten out of it. Abbot and Lilly, which were some of the pioneers in antibiotic drug development, got out entirely.
GIGOT: Why have they gotten out? The figures you cited, only 13 new antibiotics under development in the big drug companies compared to 60 10 years ago. That's a startling statistics. What is the problem for these drug companies?
GOTTLIEB: There is a lot of innovation going on in biotech companies so that....
GIGOT: The smaller entrepreneurs?
GOTTLIEB: The smaller -- which sometimes have more obstacles bringing drugs to market. It is a complicated problem. Part of it is that the market for these drugs is not attractive. It's not lucrative. So the incentives aren't there. Part of it is, if you do develop an effective antibiotic, hospitals, doctors, public health agencies will try to restrict the use of it, hold it in reserve.
GIGOT: But that's smart. You need to do that, right?
GOTTLIEB: Right. But it also reduces the potential market and makes the compensation structure complicated. Part of it is regulatory. It's not so much the FDA set a high bar in the approval of these drugs, although in some cases it has. But the FDA have been changing the regulatory requirements. And companies hate regulatory uncertainty. The fact that there have been two companies recently that did what the FDA told them to do three years ago, got their drugs to the point of submitting it to the agency and the agency said, "It works according to what we told you to do but we changed the requirements."
GIGOT: I could see some of our viewers saying, look, there we go again. Big drug companies, big pharma, all they care about is profits. They don't care about small drugs and that's why we don't have antibiotics. Is that really a problem? They are so profit driven, that is all they care about?
GOTTLIEB: It is a problem that these take significant investments. If you are not going to get a return on the investment, it makes it hard to justify putting money in.
GIGOT: How do you change the incentive?
GOTTLIEB: The drug companies have to risk themselves. A lot of the risk taking now is in smaller biotech companies. No question about that. But from a policy standpoint, there are things you can do to create incentives around developing the drugs that treat the super infections, like the Orphan Drug Act, which try to...
GIGOT: 1983, which tried to give special patent protections and other things to drugs that treat rare diseases.
GIGOT: Should antibiotics be treated under this act?
GOTTLIEB: I think when you talk about developing a drug to treat the super infections, where you know, from a policy standpoint, if the company is successful you will restrict use of the drug, because you want to hold it in reserve, we should offer policy incentives to do that. The policy environment is intruding upon the potential market for the drug and the policy environment needs to come up with a solution to incentivize that kind of development.
GIGOT: You worked at the FDA. You have been around Washington. Before Congress and the bureaucracy change these incentives, will we have some really widespread mortality and a bigger problem with this kinds of infection?
GOTTLIEB: Good question. Hard to say. I think the attention around MRSA has woken up some policy makers. They compare this to shark attacks. This is a problem that's been going for four or five years. Suddenly, Matt Lauer discovered it on it is on TV. So...
GIGOT: Shark attacks. There are only two or three fatalities a year. This is big.
GOTTLIEB: There is actually activity on the Hill right now, looking at legislation to try to incentivize this development. I think what's been proposed so far isn't on target. They are trying to incentives the wrong drug development. But lawmakers do get it. Whether or not they can do it near term or will take another round of media to push them in the direction, I am not sure. It is bipartisan, which is interesting. And Democrats talk about incentives for drug conditions that do this kind of development.
GIGOT: Well, thanks for watching it and pushing it. We will be watching. Thanks.
GIGOT: When we come back, holiday travel woes. What's behind the airport delays and what can be done about them? Our panel has answers after the break.
GIGOT: Spending Thanksgiving weekend in the airport? You are not alone. 2007 is on track to become one of the worst years on record for delays and cancellations, fueled by and antiquated air traffic control system and political gridlock over fixing it.
Joining me, "Wall Street Journal" columnist and deputy editor Dan Henninger, opinionjournal.com columnist John Fund, and Washington columnist Kim Strassel.
John, everybody agrees things are worse in the air partly because we have a lot more people flying. More Americans want to fly. But why can't the air traffic system keep up with this demand?
JOHN FUND, OPINIONJOURNAL.COM COLUMNIST: Well, one reason is we didn't build enough runways. We've replaced NIMBY, not in my backyard, with BANANY, build absolutely nothing anywhere for anybody...
GIGOT: When was the last time we had a big new airport? Denver, maybe 10, 12 years ago.
FUND: A dozen years ago.
GIGOT: A dozen years ago?
FUND: So combined fewer runways with an air traffic control system, which is so antiquated, it runs on software so old there are only six programmers in the country who can update.
GIGOT: Six programmers in the country.
FUND: It is from the 1970's.
GIGOT: Kim, I remember Al Gore in 1994 standing, upholding a vacuum tube which he used to symbolize the antiquated air control system. Newt Gingrich, a Republican, a couple of years later, making the same use of the vacuum tube to say we have to change this. They both tried. What has happened that they haven't been able to do that?
KIM STRASSEL, WASHINGTON COLUMNIST: Congress is part of the problem. You know there have been a million blue ribbon panels and other investigations saying one thing can you do to actually fix this is to what other countries around the word have done, which is to commercialize the air traffic control system, maybe even privatize it entirely. In doing so, allow the new organization to have a different cost and funding structure that will allow it to put the infrastructure in place that it needs to do stuff. Right now, the FAA is so dysfunctional and it is run on congressional politics.
GIGOT: So unions have a sway in the political system as opposed to being a public-private partnership where you go out into the capital marks and raise money, not through congressional appropriation, but raise it from wall street and therefore have more money to modernize faster, because people are saying this system now, on the current pace, will take a generation to modernize.
STRASSEL: 2025 is when they think the next generation satellite system will be in. Right now the FAA is funded through a percentage of every ticket as well as money from the treasury. As ticket prices declined, that's less money at a time when the FAA needs to make huge capital investments.
GIGOT: What are some of the other countries that have modernized? Canada? Our next door neighbor, Canada.
FUND: Our next door neighbor has NAV Canada, it's an independent user-owned corporation that can cut through the gridlock when it comes to procurement. Canada has kept airline safety high, cut delays, it is easier to travel in Canada. Other countries that have done it include Switzerland, South Africa, Fiji a whole range of countries. We are the word laggard when it comes to update willing our air traffic control system.
DAN HENNINGER, COLUMNIST AND DEPUTY EDITOR: We should do everything to modernizes, but it won't solve the problem of congestion. It will increase demand. You have an odd situation where demand is the reason the people go nuts sitting on airplanes for hours on the runway. In the old days, if you cancelled, you could get out the next day or later in the day. Now can you not get out for two days because all flights for the next two days are booked?
GIGOT: If you can narrow the difference between airplanes in the terms of landing and taking off instead of -- what is it five or six minutes? If you have a better system, more efficient system, you could speed that up and it would help.
FUNDS: Weather delays. A lot of reasons you are delayed because of weather is because the system isn't modern enough to handle the traffic that it could handle.
GIGOT: Dan, are you saying the airlines are to blame? They bear blame? You hear the horror stories, locked up on a plane for 12 hours, people going crazy.
HENNINGER: All parties mentioned here are to blame. The primary cause of this is the thing John mentioned at the outset. There is not enough runway airport capacity. It is the NIMBY problem. We have the NIMBY problem with airports, power plants. We have it with electrical transmission lines. All the things you need to be a modern society, you can't build in people's back yards. That's the fundamental problem.
GIGOT: That's like saying the problem is us.
HENNINGER: It is.
STRASSEL: There is no market function in this industry at the movement. Right now, at JFK, they are trying to decide how to reduce operations. All of the airlines and governments are sitting down in a back room too divvy it up. We're not having innovative things like congestion pricing, which would make a difference in the congestion.
GIGOT: Kim, explain how that would work, congestion pricing.
STRASSEL: The idea is you actually charge people more if they want to take off and land at peak hours of the day. At that point, you inject a market element to this. You make it a more valuable good and people are actually paying for this product.
GIGOT: You pay more to fly at 5 p.m. in the evening after your day, busy day but if you fly Saturday at 2 a.m., you are not going to pay as much. Kim, I guess I will be flying at 2 a.m. on Saturday. Can you fly at 5:00?
STRASSEL: Ha-ha. I think it is the other way around.
FUND: All I can say is if we don't do something about this the system will crash. Airline demand is growing 6 percent a year. Either we do something or shut it all down.
STRASSEL: And taking a toll on the economy.
Fund: The new Airbus 380 flies more than 500 passengers a plane. This is the future, just more and more capacity.
GIGOT: Kim, what's the main political obstacle in Washington to get something done? We have had interest on Democrats and Republicans to do something. What is stopping them?
STRASSEL: Couple things. One, Congress likes being in control of this huge sprawling thing. It gives them power. In particular over stuff, like you mentioned earlier, like union politics. Unions don't want privatization because they will probably lose jobs. But the other problem is that the FDA has a trust fund and government likes the idea of having that in reserve to raid if they need money.
GIGOT: This is funded by the airline ticket tax and airport tax.
GIGOT: Congress loves the money. In fact, they may steal it this year to fund AMT relief. That's what they are talking about. So that's our Congress at work.
All right. Thanks to all of you.
Still ahead, rock super group the Eagles managed to offend a whole bunch of people with their new album and not because of the songs. We have details when "the Journal Editorial Report" continues.
GIGOT: The Eagles are making a come back. They just released their first studio album in 2 years. "Long Road out of Eden" has already sold more than a million copies, hitting Billboard's number one in its first week. Here is the catch. It is available exclusively at Wal-mart in a deal raising eyebrows in the music world and beyond.
We're back with Dan Henninger, and joining us, editorial board member Jason Riley, and in Washington, senior editorial writer Colin Levy.
Colin, this sounds like an awfully odd pairing. The strangest one I can recall since Lyle Lovett married Julia Roberts. What was Lyle thinking with that?
COLIN LEVY, SENIOR EDITORIAL WRITER: Ha-ha.
GIGOT: What is behind this pairing?
LEVY: Well, I think there are several things behind the pairing but the ultimate one obviously is the business of it. I think the Eagles really stepped right into the middle of it here, going to a store that is completely out of favor with elite opinion, and it was, in a way, a real renegade move of theirs. If you look at the way the deal worked for Wal- mart as well, they have shown why they are the retail colossus they are. They are now in this partnership with the Eagles that's sold over a million copies the first two weeks. I think it is a great deal for both ends.
GIGOT: This is one of the oldest commercial moves in the books, cutting out the middleman, the record companies, who used to dominate record production. The Eagles released this themselves. Is that what they are doing here, getting a bigger cut for themselves negotiating the terms of distribution?
LEVY: They are clearly getting a bigger cut for themselves. The record companies are the only real losers in this deal. They are still trying to figure out how to get around the changing distribution models. You have a situation where music is moved online obviously.
GIGOT: Through iTunes.
LEVY: And iTunes -- everyone said Napster and these file-stealing methods would just absolutely decimate the record industry but iTunes has shown people are willing to pay for music through the distribution model. You have sales over a billion a year on iTunes. So that's something that...
JASON RILEY, EDITORIAL BOARD MEMBER: There is a pattern here of the record industry being resistant to technology.
GIGOT: Like the news industry?
RILEY: The recording industry has been horrible about this. I mean, first they wanted to go after customers. Sue them. Federal agents arresting clean students and kids for down loading music illegally. They have the right to do that. But whether it is a smart business decision is another thing. There is a pattern here. The Internet's brilliance is finding efficiencies that cut out middlemen. It isn't in the recording industry. If you are a travel agent, a car dealer.
GIGOT: If you are a journalist?
I have to bring this up. It is affecting us all.
RILEY: And you need to adapt. The recording industry is reluctant to do that. This is one of the consequences.
GIGOT: Jason, what is the nature of the objection to the Eagles? They're adapting to the technology. They are looking for commercial opportunities. But is the objection that people are raising to this deal with Wal-mart about the business model or is it really about Wal-mart.
HENNINGER: I think it is about the holiday. I looked at the blogs on this and basically Wal-mart is the George W. Bush of retail outlets. It is a neurotic hatred of this store. They literally say, why did they do it? Wal-mart is not cool. That's the biggest problem.
GIGOT: Is this good for consumers here? Obviously, Wal-mart is not available around the country. For example, in New York City where politicians made it impossible for Wal-mart to open a store here.
STRASSEL: This gets you right back to the online point though too because we can go online and buy it through Wal-mart or Eagles' own web site. So the distribution model works right here through the Wal-mart store too.
HENNINGER: Let's talk about the other interesting example and that's the modern rock group, Radio Head -- if you don't know who they are, you grew up playing 45's or something like that.
But Radiohead took its new album-- a huge group -- they put it on the web. They said to people, pay us what you want to for this. People didn't pay them anything to download it. But the average price they got was about $8. They got $2, $4, $6, $8. That fell to their bottom line. This is called open pricing. It's a new way of distributing music. Because this is the issue. No one quite knows how to price products that can be digitized because they can fundamentally be stolen. The price can be zero. Radiohead is trying an interesting experiment, seeing if people will...
GIGOT: How have they done?
HENNINGER: They've done well. Sold over a million records, all of that falling to the bottom line. None is going to the middle man, to the record conditions.
GIGOT: Let me say -- not everybody likes this. I want to quote Gene Simmons of Kiss, which was your favorite rock group.
HENNINGER: I love Gene Simmons.
GIGOT: I know that. He said the following: "Every little college kid, every freshly-scrubbed little kid's face should have been sued off the face of the earth. They should have taken their houses and cars and nipped it right there," unquote.
Clearly, he doesn't like the new model.
RILEY: He sounds like an old curmudgeon longing for the old days but this is technological change. This is the future. Power record industry is gone.
GIGOT: Doesn't he have a point about that this is, in fact, theft and the protection of property rights.
RILEY: Like I said, the recording industry has every right to do this. The question is whether it is a smart business model going forward. Their worst nightmare is what the Eagles are doing and what Radio Head is doing will work and be successful because others will opt for that as well.
GIGOT: You are saying talent will be compensated, just in a different way?
RILEY: This is creative destruction. That's all this is.
GIGOT: One more breaks. When we come back, our "Hits and Misses" of the week.
GIGOT: Winners and losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.
Item one, the death of reading. Sounds ominous -- Dan?
HENNINGER: It is grim. The National Arts Endowment released a survey on American reading habits and, yikes. They found people aged 15-25 spend about 7 minutes a day in voluntary reading. Goes up to ten minutes on weekends though. 35 percent -- 35 percent of 12th graders can read at the 12 the grade level, which is know doubt lower today than it use to be.
There is a criticism of the study and that is it didn't capture the new ways people read such as text messaging. No doubt, if you included, the time spent reading would go from ten minutes a day to ten hours a day.
GIGOT: Complete sentences.
HENNINGER: I think we are running an experiment. We will find how dumb the human brain can get. Once we have dumb it had down as far as it will go, I think homosapiens will rediscover the thing it found on the walls of caves a long time ago, the pleasures of reading.
GIGOT: All right, Dan, thanks.
Next, a miss to Motown -- Jason?
RILEY: When I heard the news Detroit replaced St. Louis as the nation's top crime spot, I thought about Detroit's mayor, a man named Kwame Kilpatrick. A couple years ago in 2005, "Time" magazine called him one of three worst mayors in America. He has been accused of fleecing taxpayers, using city-issued credit card to run up bills on transportation and meals and so forth. And you know, the voters of Detroit responded by electing him to a second term. This is amazing. So they deserve it in some sense.
Now, two years later, we find out Detroit is the most crime ridden city in America. And it is a shame. But it is no surprise. I mean, they have a guy leading the city who I guess leads by example.
GIGOT: Jason, thanks.
Derek Jeter, New York Yankee tax cheat or victim -- Kim?
STRASSEL: Well New York is home of the Yankees. The question is, is it home of Derek Jeter. Years ago, he made the sensible financial decision to move to Florida. Why? The reason everyone moves to Florida, to avoid paying New York taxes , which if he had been in New York City to have been more than 12 percent but in Florida there is no personal income tax.
This sent New York state authorities over the bend. They are on a mission, as they go against thousands of people every year who live in nearby states to prove that, in fact, Mr. Jeter does live in New York and should have to pay them a boatload of money.
You know, this is a miss for New York, but also a little advice. Lower your taxes. Maybe people will move to your state willingly and pay their bills.
GIGOT: Kim, thanks.
Thanks to our panelist.
I'm Paul Gigot. Thank you for watching. We hope to see you here next week.
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