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How the F.D.A. Stood Up to the President

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On Sept. 23, Dr. Stephen M. Hahn left a virtual meeting of the White House’s coronavirus task force to take a call from the president’s chief of staff, Mark Meadows.

Mr. Meadows was angry with Dr. Hahn, the head of the Food and Drug Administration, for pushing new guidelines for vaccine developers, according to two senior administration officials familiar with the call who requested anonymity because they were not authorized to discuss it. The F.D.A. wanted to require two months of follow-up data to make sure a vaccine was safe and effective, all but ensuring one would not be ready by Election Day as President Trump had promised.

Mr. Meadows told the commissioner the White House would not sign off on the guidance because it was unnecessary and would delay vaccine approval, so he should drop it, the officials said.

Dr. Hahn had been overruled by the White House before, most notably when the agency caved to the president’s desire to authorize the malaria drug hydroxychloroquine to treat Covid-19 despite a lack of evidence. This time, stung by embarrassing scientific misstatements he made at a news conference in late August and concerned about the imperiled scientific credibility of the agency, Dr. Hahn would not be as obedient.

Mr. Meadows, Jared Kushner, the president’s son-in-law and senior adviser, and the president himself have called Dr. Hahn directly to urge him to speed up emergency authorization of vaccines and treatments, according to the two senior administration officials.

But despite the White House refusal to approve the new vaccine guidance document, the F.D.A. published the guidelines in briefing materials to an advisory committee that will discuss them on Thursday, effectively making them official. And nearly two weeks after Mr. Trump called the antibody treatment he received when sick with Covid-19 a miraculous “cure” and said that he had authorized it, the F.D.A. has not yet approved it.

Internally, Dr. Hahn has tried to erect a shield between his staff and White House officials, asking that all calls be routed directly to him and not to his staff. His situation is especially fraught because Mr. Trump has openly accused the F.D.A. of engaging in political ploys to harm his re-election chances. Alex M. Azar II, the secretary of health and human services and Dr. Hahn’s direct superior, has also questioned Dr. Hahn’s motives in some conversations with the White House, according to multiple officials.

ImageMark Meadows, the White House chief of staff, left, and Jared Kushner, a senior adviser have called on Dr. Hahn to speed up emergency authorization of vaccines and treatments.
Credit…Doug Mills/The New York Times

A senior administration official, who spoke on condition of anonymity, denied that Dr. Hahn and Mr. Meadows were deeply at odds over the vaccine guidance, saying “the two have a good relationship.” Mr. Meadows’s only concern was that changing the guidance in the middle of ongoing clinical trials could confuse vaccine makers, said the official, who noted that the White House eventually approved it.

Alyssa Farah, the White House communications director, said, “The White House has always encouraged the F.D.A. to follow the science and their expert medical viewpoints while also encouraging the F.D.A. to work around the clock to help advance therapeutics and ultimately a vaccine that will save American lives.” An F.D.A. spokesman also said that the White House and the Department of Health and Human Services “continue to support the science-based decisions of the agency’s career professionals.”

In what might be the final months of the Trump administration, and close enough to the election to make his firing unlikely, Dr. Hahn seems to be trying to save the F.D.A. from the fate of its sister agency, the Centers for Disease Control and Prevention, whose scientists have been stripped of much of their authority and independence in responding to the pandemic.

“It’s better late than never, but I do think we can see a lot of damage has been done,” said Dr. Jesse L. Goodman, the F.D.A.’s chief scientist from 2009 to 2014. “And I don’t think they are out of the woods yet.”

It has been a bleak year for the F.D.A. and morale is low, according to interviews with high- and midlevel employees over the past six months. F.D.A. scientists and policymakers have questioned whether Dr. Hahn could preserve their scientific integrity in the face of a president who openly calls them untrustworthy actors of the deep state.

Over the past few tumultuous months, Dr. Hahn has commiserated with Dr. Robert R. Redfield, the director of the C.D.C., who has also been widely criticized for failing to stand up to the White House. At a late September birthday party for Seema Verma, the Centers for Medicare and Medicaid Services administrator, Drs. Redfield and Hahn joked about quitting together to open a restaurant, according to several people who were there.

To many F.D.A. scientists, Dr. Hahn, an oncologist and former hospital administrator with no experience in Washington, has been a disappointing leader for much of his 10-month tenure. Under his leadership, the F.D.A. authorized hydroxychloroquine for hospitalized Covid-19 patients despite a lack of evidence, only to reverse the decision once the drug was tied to severe side effects.

In late August, on the eve of the Republican convention, Dr. Hahn made a significant error at a news conference with the president announcing the approval of plasma treatments for Covid-19. The commissioner greatly exaggerated the benefits of the treatment, angering the scientific community. He publicly corrected the record.

“I think that was really a wake-up call about the legacy of his leadership,” said Dr. Goodman, now a professor of medicine and infectious diseases at Georgetown University.

Credit…Doug Mills/The New York Times

Indeed, the plasma debacle seems to have been a turning point for Dr. Hahn and agency scientists dismayed by the White House’s efforts to influence the F.D.A.’s actions. Within days, Dr. Hahn demoted the new F.D.A. spokeswoman, Emily Miller, who had arranged the White House appearance, and also ousted John E. (Wolf) Wagner, who had been installed by White House appointees to run the agency’s communications shop.

Soon after the plasma announcement, Dr. Hahn told top scientists at the F.D.A. that he would handle White House calls in an effort to create what he called a “cocoon” around the agency, according to multiple agency officials who asked not to be identified.

Many polls have shown a growing public distrust of the first coronavirus vaccines, and F.D.A. scientists worried that the perception of political meddling in the vetting process would jeopardize their widespread uptake.

On Sept. 10, eight high-level directors at the F.D.A. took the unusual step of writing a joint statement, published in USA Today, warning that real or perceived political interference could destroy the agency’s credibility with the public. Dr. Hahn tweeted his support of the statement, and later that day noted that new vaccine guidelines were coming.

Some regulators at the F.D.A. were worried about companies rushing early trial data to the agency before enough had been collected to make sound judgments about safety and efficacy. Pfizer’s chief executive, Dr. Albert Bourla, had repeatedly dangled the prospect of an early readout of Pfizer’s trial data by late October.

A growing number of pharmaceutical companies and medical groups were also privately appealing to F.D.A. regulators to give more clarity about what it would take to earn an emergency authorization. The criteria for such authorizations are vague, essentially just calling for potential benefits to outweigh the risks.

Credit…Erin Schaff/The New York Times

In early September, a small team of experts in the F.D.A.’s Office of Vaccines Research and Review drafted new guidelines, to make its standards unmistakable to drugmakers and reassure jittery Americans that the agency would not cut corners when assessing a vaccine’s safety and effectiveness, including after granting an emergency authorization.

Within days of submitting the guidelines to the White House, F.D.A. scientists began to fear they would never be made public — Mr. Trump attacked them himself in a news briefing — and began discussing how to get them out. They settled on an idea that would most likely draw less attention: including them in the briefing materials for an outside group of vaccine experts scheduled to meet on Oct. 22.

The maneuver was unusual: Briefing materials for outside advisory groups are typically posted just a few days ahead of the meeting. F.D.A. regulators had expected to provide the guidelines there well after they had been cleared by the White House. But as West Wing officials stalled, agency scientists began to discuss using the upcoming meeting to their advantage.

They slipped a condensed version of the guidelines into the appendix of the committee’s briefing materials, with reordered paragraphs and a new title, describing it as a summary of advice already given to companies. Dr. Peter Marks, the agency’s top regulator for vaccines, has called the recommendations “aspirational” in what some saw as a deliberate effort to downplay their importance to those officials who might obstruct them.

Privately, some White House officials argued that the pharmaceutical industry was not in favor of the guidelines. But in fact, executives from Johnson & Johnson and Merck, each with vaccine candidates, called for their release. The biotech industry’s trade organization wrote a public letter to the Department of Health and Human Services asking Mr. Azar to quickly publish the guidelines and make them available to the public, and on Oct. 6, Dr. Bourla, Pfizer’s top executive, wrote on Twitter that he had faith in the F.D.A.’s ability to set standards.

Credit…Andrew Kelly/Reuters

The same morning, the F.D.A.’s briefing materials were quietly posted online. The White House was given only about an hour’s notice, according to a senior administration official. Later that day, the White House surprised top F.D.A. officials and abruptly cleared the guidelines, which were then posted to the F.D.A. website.

Scientists at the Food and Drug Administration celebrated on video calls. It was a win for career civil servants — and for the pharmaceutical industry, which played an important part in helping the agency get the guidelines cleared, some experts said.

“We think of the coalition of careerists of Dr. Hahn’s that struck back, but there were also scientists in industry,” said Daniel Carpenter, a professor at Harvard University. “Very few people in industry are going to want to appear as if they were pushing for a product on the president’s timeline.”

The agency’s buoyant mood was quickly tempered with trepidation. New disputes continue to emerge: The F.D.A. and the health department have recently tangled, for instance, over whether it is possible to characterize an emergency use authorization for a vaccine as a form of provisional licensure so that Medicare would cover recipients.

The commissioner’s office has been rampant with rumors that Dr. Hahn will be fired, according to three senior administration officials. Although some consider it highly unlikely the president would risk the negative press from such a move, others aren’t so sure.

“The usual rules don’t apply to this administration,” said Coleen Klasmeier, a former F.D.A. lawyer who is now a partner at Sidley Austin. “My conclusion is nobody is particularly safe, even now.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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