Roundtable: Edison-Mitsubishi Fight; Stadium Financing; Formidable Drug Prices

Welcome to our discussion of the week's top stories. I am Mark Sauer and joining me at the Roundtable today are KPBS investigate reported, Amita Sharma, good to have you back. Report your to teaching of the voice of San Diego, and KPBS science and technology reporter, David Wagner, good to see you today. A legal showdown with billions at stake is being played out in a closed proceeding over the field San Onofre no caps ours. Southern California Edison claims were to be she having industries is to blame for the flawed steam generators that close the plant but documents and e-mails may tell another story. Amita, start by reminding us what went wrong specifically and cost breakdown of this plant? Are, though steam generators that should be pointed out was post to last 40 years but instead after one year of operation because of excessive -- inside one of the steam generators in early January 2012 there was a radioactive leak. That ultimately forced the permanent closure of the plant. So the. Part of the story is when Edison and Mitsubishi engineers the first raised questions over possible vibrations in these tubes you are talking about, so tell us when this first came up. What was the concern? I cannot say definitively if this was the first time it came up, but back in 2004, two months into the project then Edison Vice President Dwight Nunn wrote a letter to Mitsubishi and which he said quotes, I'm concerned that there is the potential that design flaws can be inadvertently introduced into the steam generator design that will lead to unacceptable consequences and then he cited tube wear, he went on to say this would be a disastrous outcome for both of us and his words turned out to be prophetic. Absolutely. That's exactly how it played out. Another important part of the story is that SoCal Edison aborted a review of federal regulators of this project, the new generators, how did they manage -- Before begin to that there were other documents that came up that follow that letter so right after that letter was written baby number months later, but to be she engineers in Japan with Edison engineers and that tube wear issue came up again and though Edison engineers then proclaimed that mister be she's prior experience pulling the steam generators was basically in valid. But the most important document that's been out there so far as what's called the root cause analysis report in which Mitsubishi says that we had potential access to the design flaw that led to the excessive tube wear but we were hamstrung because Edison did not want to make draft -- drastic changes because it wanted to avoid going through a license amendment process with federal regulators. That would have been that federal process would have been costly, played the play the project, might have taken a long time ago you can see why they wouldn't want to go through that but if they have gone through that, Mike that process the regulation process have got these design flaws? Former NOCs Deford has come out and said that if they had gone through that evaluation that the steam generators would have never been approved so they did it so what happened and if you go back to that 2004 letter, there some foreshadowing of that as well because that Edison vice President describes this replacement steam generators at some of the largest built ever in the United States that would require a new design beyond what is currently available and yet Edison was able to put in those new steam generators without going through prior approval under a will come, under an NRC rule without our approval if they could show that no major changes were made to that equipment. Are but boxer has said that is approved, center Barbara Boxer said that's proof that Edison misled federal regulators but an inspector general said last year that basically the NRC is the one that should be knocked because not because they approved these steam generators without doing a comprehensive review. A lot of blame to go around. The question is why Edison wanted to install these untried risky generators and Mike Carey, he's filed suit against Edison, we have a bite from him, let's hear what he says about that. Edison's attitude was the worst that can happen is to plant will shut down but we will still get paid, we just might not get as big of return on our money as we otherwise would so Edison was flying high based on the idea that if there was a problem it would just be pushed off to the ratepayers and -- that's exactly what happened. There's a sense of outrage here to go Liam, do fill that? This is all playing out now. I think it would interesting is I don't -- in the salt all process when the company for asking for ratepayers to pony up, I think the question is -- this with the company's posted you. They have an obligation to their shareholders to the mustard to the possibly can, the question for me as the ratepayers actually going to protect us from other these claims are exuberant are not and that the outrages whether there are people who are there we choose and representative choose to protect us racks he doing their jobs. Is the PUC going to step in and protect us? We have the still As you can well imagine this still, the $3.3 billion that repairs are being asked to cover for the closure of San Onofre has prompted a lots of outrage among customers, among lawmakers and basically that outrage stems from how this deal was reached. We talked about this on the show before, stay regulator met in secret with a former Edison executive a couple years ago implement and that was the genesis of this settlement so a lot of people believe that with Edison now increasing the amount of money it is asking for Mitsubishi for these large steam generators that come from $4 billion to seven -- for $7.6 billion, it is actually an attempt to -- say yes, we understand you've got to pay for this $3.3 billion here for the settlement but don't worry, because down the road you might just get a windfall because they are obligated to share 50% of what ever they might receive from Mitsubishi with customers we might get half of $7.6 billion but customers or Consumer Group sourcing that's a bunch of rubbish because you is that your cases so then for all the reasons we've outlined that you whenever going to get that money and therefore we are never going to get that money. We do have another bite from Gerry is suing Edison over this about the chances of ratepayers actually cashing in at all, let's hear that one. It is a phantom. It is another barrage, it is another sleight-of-hand by Edison to create the impression that the public should support the settlement agreement because of their some gold at the end of the rainbow. It justdoesn't add up. Edison's claiming its Mitsubishi's fault, was their response? But to be she calls Edison's allegations, they factually incorrect, legally unsound and inappropriate and they point out that our contract with Edison them and Charlotte ability to $138 million Which is the cost of the steam generators. They say that's all we're going to be on the hook for and they are pretty confident in their position. It sounds like your review was wearing them as well. You also interviewed the ratepayer advocate Charles Langley for years is roughly your story, what did he say about the likelihood Edison would prevail? He echoes what Gerry says, he says this is smoke and mirrors and it is designed to distract -- distract attention away from the true cost of San Onofre's closure for ratepayers to some kind of deal that may or may not pan out for customers and utilities. So a PR employee perhaps is what they are saying in all of this. Liam you bought of the PUC, the folks who are supposed to be protecting us ratepayers here. Are they going to weigh in and unravel distill and go back and start from scratch, is the public would get a better shake? That's obviously the big question but I think there's really been a number of pretty compelling questions raised about the propriety of the deal and how it went down. I think the -- with call for the bill to be a unwound and restarted again. S-1 was a ratepayer is really seems like something that should not be my fault, but I have not studied it extensively. [Indiscernible] refused to reopen the settlement discussion. Westward on this arbitration, what's the timeline? When might we hear from a judge because again it is closed. We do not know because the process is so closed. We don't even know when a result make him. We will be watching for the reporting when that comes. For years study in the books have concluded that public financing of sports stadiums is a lousy deal for taxpayers. Is any financing scheme for new charger Stadium this week San Diego Mayor Kevin Faulconer boasted that SAN Diego's plan is less lousy that might've been. Is what he had to say. No new taxes on San Diegans. Two dollars of private money for every dollar in public funds and it will require voter approval. All right, Liam, is this a good deal? If the point is to make money off of football then no. We should not spend a penny off of a public money on this peak it doesn't pencil out. If the point is to keep the Chargers and cap because we like football then it could be worse than it is but still want the important to keep in mind is we are actually under the Mayor's plan would be spending more money than we do now subsidizing football, we spend currently roughly $14 million a year to keep Qualcomm active, the operations and maintenance and passed on that in order for the new plan to go through we would be spending all these were the first 10 years-based OPEC we stopped to pay off the old repairs at Qualcomm Stadium, $18 million a year from Citi funds was an additional $150 million a year rather total from the counter that a lot of public money or more so then we are spending now. To be fair, there are some protections that the Mayor will have built into this plan for instance the Chargers are going to look have for operations and maintenance which is believing us -- bleeding us dry right now so there are some protections and it is a hard cap which is great, we nor going to spend 18 not be more than that. But it still more money than we are spinning right now. They are Faulkner appears to make the biggest issue between public money and new taxes -- is that a distinction that resonates with voters, with the San Diegans? It may resonate with voters but I think from a financial perspective it is actually worse. I think the better deal for taxpayers is a tax increase that would be dedicated to the stadium Stadium because that's been portrayed right now with the plan is right now, this is literally taking money from wire, police, library, road repairs. This money that would otherwise go there that would be going for it the new Stadium. There are tax increases than that pile of money we have now to go to the things without any interruption. The same situation with companies, who spun with the city would come out, what about the counties? There's no bond or special tax there? All to me back by the general fund. The bottom line is is this going to cost San Diego's or less we are paying for welcome that because that seems where the rub this on the political. Of all this presentation. More than we are paying now but it will be capped so that's good thing. Part of the problem with Qualcomm is we do not know how much every year we are going to be spending on it and additionally all, has roughly $80 million in deferred maintenance that -- And new Stadium would not have. Not only would a tab if something big broke it would be the Chargers response ability to repair it. Right now the scroll Board fell off all,, that would be on us to make that big Dicks. We are the Chargers, they love this plan, they said that way, They said the exact opposite. They are not even around. We do not like it, would we do not like anything you are doing and Los Angeles is fantastic and that's where our minds are. How much of this is going through the motions with the city doing what it needs to do to send the NFL the message that we are showing good faith, but we are not getting good faith on the part of the Chargers, get them back to the negotiation table. I think that's the city's argument and I think that's a decent enough argument in the sense that the NFL owners had a meeting last week rather this week, relatively recently and in that meeting San Diego was invited to participate along with St. Louis Oakland which is a no progress and putting together Stadium was not invited. Certainly everyone seems to think that far and away the least likely Asian market right now travel plan is open. They do not have anything so San Diego and St. Louis are much further along. Let's talk about this environmental impact report because the site we are talking about the same Stadium site where Qualcomm is now, their Mission Valley along the rally -- River, we sold will -- we also have the report and it was -- 6000 pages, is that going to fly? We will see. I think the city hopes that we will get is a very quick decision on whether it will fly or not. Someone is going to follow -- file a lawsuit, we don't know who it is going to become we have some ideas but we don't know exactly but no matter what is going to be a lawsuit filed. So with the city hopes that the state will do under the auspices of the summary speaker is passed legislation or through other means allow for a spider process to allow SQL lawsuit -- environment a lot to be heard very big okay. We will know much sooner than we otherwise would have if environmental -- would fly or not at that methodology work. What about the idea of burning bridges here? The charges are not at the table, they are not even commenting on the still as far, in other words that 1 foot up in Carson, they are headed towards LA. Have a bird bridges? If all of this blowup and for whatever reason Carson did not go to the NFL did it though the holy water on it, the Chargers are back here, is it too much? Joe Delorenzo not going to accept the back what's where are we with that? I think that we will because we like football, we like having a team to call our own in town, it is interesting to me Missy pants get outraged at the Chargers Stadium point man Mark Fabiani, see fans get outraged act, with the guy who's leading the effort in Carson, but you do not see the same outraged geared towards [Indiscernible] which is interesting because he's telling them what to do. They are working for him. Why not? I think Spano's has the these guys up front to take the bullet it was funny that was this what we saw there was a piñata of Mark Fabiani, photo -- Aren't people sophisticated enough that they are taking orders from him? To a certain extent yes, but I think in order -- people want to like the Chargers. People want to like having a team here and it is easier to blame the messengers that perhaps the person who is paying them. Betsy role whole point, root for your own hometown team, Peter City Park. Question is how much is that worth? So what's our timetable? We had the presentations to the NFL of all the Stadium plans were two major Stadium plans and Los Angeles this week as well. Didn't get a lot of reaction on with the owners or representatives might think on all of this but at some point there's got to be a timetable. NFL is going to save his what we want to happen which will have great weight. Carsonhas to move forward. One is all this going to be decided? Is going to be another meeting in October and I think we will know but the end-of-the-year or very soon after but it is going to be team Los Angeles and 2016 and I think that is the time horizon that I and I think probably the best bet for the city of San Diego is assuming that folks want to keep the Chargers around if the NFL to postpone the decision for your. Because not having a team go to LA for 2016 or decide we are far enough along in San Diego that REMS you can go and start all over again with the Chargers for another year. Still a lot of stuff up in the air. Odyssey theywill play this season here into 2016 and maybe a second lame-duck season as it were. If that deal goes through up there. The NFL is trying hard to minimize all sorts of things. They do not want a situation where it team is playing for an entire season in a city where they are not going to be the next -- they've already said they are not going to be the next season. They also don't want three teams to apply formally applied to move to Los Angeles and a lean two get selected. Because you are guaranteed that their team would have to go with the tail between his legs back to the hotel when they are lit -- already formally said we want to leave you. So that the process the NFL is trying to massage right now to make sure that doesn't happen. We will see how a plays out in the coming months. We will shift gears cystic fibrosis is an awful disease that affects the lungs and causes repeated infections, hospital stays and shorten lives. When a new drug was discovered in San Diego to treat cystic fibrosis that should be good news but David, it is not good news to everybody. Tell us what this drug is and where importantly, what a cost this drug is called were candy, made by a company called Vertex pharmaceuticals. They are based in Boston but I do succumb research on the drug dates back to the 90s who intend to go and the drug was discovered here. The cost is about a quarter million dollars per patient per year like you said. That is stunning. We will get in a moment to other very costly drugs and the ethical and other considerations this is causing within the medical community and among patients. The first reaction from a lot of people I think is how can any from suitable company charge so much for one drug? The Vertex spokesperson I talked with said the cost is based on nearly two decades of drug development. Theyhave to recoup the cost, drug development is very expensive and they said they have to pour revenue into work on new cystic I process drugs. A lot of patient still don't have any treatment for their specific form of the disease. Critics say Vertex is pretty too much on executive pay at and they want them to be would little bit more transparent about how much they really are spending on drug development separated from other cost. The drug is not a cure, Vertex isn't claiming it secure. However it is the first drug that does treat cystic fibrosis itself, patients with this form of the disease, the first drug of its kind that treat the disease and not just the symptoms. You can say it is the only effective drug of its kind on the market, however it is not a cure, FDA advisers have reported that reproduces statistically significant but only modest improvement in lung function Whispering this round on a personal level. Which view the woman for your story, tell us who she is. She had remarkable story and the impact on her life. She's a 27-year-old woman living in San Diego. She told me about really have an haven't hard time with the disease in previous years she spent a lot a lot of time in a wheelchair just had a really rough time with this disease. In the hospital constantly. Right. She turned her life around to some degree though by just point resolve into fitness. She is now is in but instructor, personal trainer so she looks like she's in great shape, just to see her you would not guess she might be struggling with this chronic disease. To her what she is looking for in this drug is not a cure, but she thinks it could help her spend more for life outside the hospital. It could help her fight off these frequent infections. So it could improve her quality of life even if it does not eradicate the disease. On the cost of the grant, what is the reaction from cystic fibrosis experts to the cost? Many of them are very upset about the price. The person I talked to in San Diego I think is really criticizing the grant price from an interesting position. It is both professional and personal for him. His name is pulchritude poll question, at UC San Diego. He has been set -- stepping cystic our brokers since the second 70s and early work that he has been really allow for Vertex to develop drug in the first place so he is saying his life's work culminate in the development of this drug and he is feeling very conflicted about what it is costing. It is personal for him because he has cystic fibrosis and he is on another Vertex drug they cannot couple years ago called POLITICO that treat a less common form of the drug -- disease and that drug cost over $3000 per year. He would be the first to tell you that it has improved his quality of life but he does not Inc. it should be costing his health plan $300,000 We do have his own words. Let's or a bite from him. This is the drug. Each of these little pills cost over $400. This is about 5000 $600 in this little tablet. How can we sustain paying these kind of costs for drugs if we are trying to develop a healthcare medical system that is efficient and takes care of us well? I don't think we can do that. All right, this isn't the only very costly drug here for this particular disease to go there's others that actually offer tours and are very effective but they are very expensive, and thousands sometimes. What are a couple of examples of those? I think you were referring to hepatitis C drug from Gilead which cost about $85,000 for a course of treatment. The economics with that drug I think are a little different and interesting way. Patients take this drug for a couple months and for most people it is an effective cure. It cures them of hepatitis C. So some experts have argued maybe it is worth $5000 to prevent people from having to get other kinds of treatment -- And over the years and years. That this is my the calculation is different or patients have to take it every year, every day for years for the rest of their lives. The insurance companies pay for this? Mention only be super wealthy can pay for something like this if it weren't for insurance companies, how are they with all of this? Nobody is going to pay for the struck out-of-pocket especially people with these very difficult diseases. So they will get the back of their insurance plan covers it. Some plans already covering -- already on the drug. Others to gradually been approved for about a month now so others are in a limbo right now where they are seeing waiting to see if their plan will cover the drug or not. No insurance companies have a strong it was to make these companies justify their cost to be more transparent about what it cost over these many years to develop these drugs? I think yes, but I think the time being they also have a strong interest not getting sued so we saw whole episode with clinical, the other Vertex drug recently where Arkansas state plan decided not to cover the drug, patient sued the state and eventually did get Akasaka cover the drug for them. Teenine drugs to sick people carries a lot of risk in our healthcare system. A few seconds left, there's a movement including among many top cancer doctors at these drugs are too expensive. We have todo something bout the cost. A. There's been a couple bills introduced in state legislature, one in Massachusetts seems to be making headway that would basically force Pro comp is to open up the books a bit more in detail exactly what the spending on drug development separated from other cost. Focusing, it is only been introduced in the couple still legislatures though pick one introduced in California earlier this year has not gone anywhere. We will have to see all the plays out. We are out of time. That wraps up another week of stories at the KPBS Roundtable go I like to thank my guest Amita Sharma of KPBS news, Liam Dillon a voice of San Diego and KPBS reporter, David Wagner. Remind all the stories we discussed today are on our website to my KPBS.org. I am Mark Sauer, thanks for joining us today on the Roundtable.