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This large church off the main square in Harlan, Kentucky, holds weekly recovery meetings attended by hundreds addicted to OxyContin.
The last full week of the year in the stock markets was a dull one, with the Yonder 40 losing one and a quarter points. So instead of recounting a dismal week for the stocks that represent the rural economy, we will today look first at the intersection of rural America, business and presidential politics — particularly the presidential campaign of former New York Mayor Rudy Giuliani.
In the mid-1990s, the Connecticut drug-maker Purdue Pharma began marketing a painkiller under the name of OxyContin. The company aimed its sales force at Appalachian doctors. Purdue’s plan was to target doctors who were already prescribing large amounts of painkillers. By 1998, Purdue was shipping more Oxycontin to Southern West Virginia and Eastern Kentucky per capita than to any other region of the country.
Oxycontin was easily abused, and soon the coalfields of the Eastern Mountains were awash in addiction. Entire communities were devastated as the OxyContin pills that filled doctors’ offices were given out in large numbers to those living in Appalachian communities. FedEx and UPS halted mail orders of any medication in some counties, fearful that drugged-out residents would storm delivery trucks looking for medications. One medical specialist said, “This may be the first epidemic — if it is an epidemic — that started in rural areas.”
The company promoted OxyContin as being less prone to abuse than other drugs. It wasn’t. OxyContin was determined to be the cause of hundreds of deaths and thousands of broken families. Prosecutors (both federal and state) eventually filed suit against Purdue, claiming the company had been misleading in how it promoted the drug.
Purdue hired Rudy Giuliani as part of its defense team in 2002.
The New York Times has a good account of the Republican presidential candidate’s relationship with Purdue. It was the first large client signed by Giuliani’s company, Giuliani Partners, which he formed after stepping down as New York City mayor. Ultimately, Giuliani was unsuccessful in protecting Purdue. The company agreed to pay fines totaling $650 million to settle a suit brought by the U.S. Attorney for the Western District of Virginia.
But, as the Times story shows, it wasn’t for a lack of trying on Giuliani’s part. That Giuliani — a former prosecutor and a presidential candidate who promoted his anti-crime credentials as mayor — would represent Purdue at all shocked some.
“Dennis Lee, the Virginia state prosecutor for Tazewell County, an area hard hit by OxyContin abuse, said he was stunned several years ago to learn that Mr. Giuliani was working for Purdue,” the Times reported. “He had a favorable impression of Mr. Giuliani, he said, and a poor opinion of the company, which he said had played down and dissembled about its drug’s problem. ‘I was shocked,’ Mr. Lee said, ‘that he would basically become a mouthpiece for Purdue.'”
The prosecutor in the OxyContin case initially asked that Purdue officials serve time in jail for misleading users of their drug. Giuliani’s one success in this case may have been the decision by prosecutors to drop the call for prison sentences. In July, relatives of those who died abusing OxyContin filled a courtroom in Abingdon, Virginia, arguing that the federal court should reinstate the prison terms. The relatives specifically argued that the prison sentences were dropped because of Giuliani’s lobbying.
The Federal judge overseeing the case rejected this argument. “It has been implied that because Mr. Giuliani is a prominent national politician, Purdue may have received a favorable deal from the government solely because of politics,” said the judge, James P. Jones of United States District Court. “I completely reject this claim.”
Meanwhile, back at the Yonder 40 — 40 publicly traded stocks that represent the rural economy — the year was ending badly. Since July, the index is down by about 5 percent. The Dow Industrials are off about a third of a percent during that same period; the NASDAQ is by nearly three percent; and the S&P 500 is down by about one and a half percent.
Twenty-seven of the Yonder 40 stocks lost ground last week, led by Fleetwood Enterprises. Berkshire Hathaway and Bassett Furniture both had the largest gains for the week, rising almost five percent.
(Mid-week, the Daily Yonder will give full results for the Yonder 40 for the last two quarters of 2007.)
Here is how the individual stocks in the 40 fared in the week ending December 28, 2007:
|Companies||Ticker||Price December 28||Price Change for Week||Percent Change for Week|
|Burlington Northern Santa Fe Corp.||BNI||$83.30||-$0.36||-0.4%|
|Peabody Energy Corp.||BTU||$61.37||$0.98||1.6%|
|ConAgra Foods Inc.||CAG||$23.97||-$0.17||-0.7%|
|Cato Corp. Cl A||CTR||$16.30||$0.15||0.9%|
|Deere & Co.||DE||$92.28||$2.45||2.7%|
|Dean Foods Co.||DF||$26.01||-$0.54||-2.0%|
|Family Dollar Stores Inc.||FDO||$18.99||-$0.49||-2.5%|
|Fleetwood Enterprises Inc.||FLE||$5.80||-$0.94||-13.9%|
|Gaylord Entertainment Co.||GET||$40.94||-$1.17||-2.8%|
|International Speedway Corp.||ISCA||$41.22||-$0.51||-1.2%|
|Mohawk Industries Inc.||MHK||$74.75||-$0.51||-0.7%|
|Mine Safety Appliances Co.||MSA||$52.01||-$2.87||-5.2%|
|Plum Creek Timber REIT||PCL||$46.22||-$0.88||-1.9%|
|Penn Virginia Corp.||PVA||$43.64||-$1.05||-2.3%|
|Regions Financial Corp.||RF||$23.59||-$0.81||-3.3%|
|Sturm Ruger & Co.||RGR||$8.43||-$0.48||-5.4%|
|Stage Stores Inc.||SSI||$14.65||-$0.90||-5.8%|
|Tractor Supply Co.||TSCO||$35.36||-$2.25||-6.0%|
|Waddell & Reed Financial Inc.||WDR||$36.71||$0.20||0.5%|