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  • Italy ties China’s hands at Pirelli over fears about chip technology | CNN Business

    Italy ties China’s hands at Pirelli over fears about chip technology | CNN Business

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    CNN
     — 

    Italy has imposed several curbs on Pirelli’s biggest shareholder, Sinochem, in a move aimed at blocking the Chinese government’s access to sensitive chip technology.

    The Italian government decided last week to make use of its so-called “Golden Power” regulations, designed to protect assets of strategic importance to the country, Pirelli said in a statement Sunday.

    The government order risks inflaming tensions between Europe and Beijing, and follows similar intervention by Germany and the United Kingdom to protect their semiconductor technology.

    Earlier this year, Europe joined a US-led effort to restrict China’s access to the most advanced chipmaking technology when the Netherlands — home to ASML Holding, a key supplier to the global semiconductor industry — said it would introduce export controls.

    Italy’s move comes as US Secretary of State Antony Blinken wraps up a high-stakes visit to China aimed at repairing strained relations between the world’s two biggest economies.

    Sinochem, owned by the Chinese government, is Pirelli’s biggest single shareholder, with a 37% stake, and has 60% of seats on the board of the Italian tire maker. CNN has contacted Sinochem for comment.

    In a statement Friday, the Italian government said Pirelli’s Cyber Tyre, which uses chip technology to collect vehicle data, is “configured as a critical technology of national strategic importance.”

    “Improper use of this technology can pose significant risks not only to the confidentiality of user data, but also to the possible transfer of information relevant to security,” the statement added.

    The order sets a host of limitations on Sinochem’s involvement in Pirelli, including a bar on it devising the company’s strategy and financial plans, or appointing a CEO.

    The government said these curbs would protect the “autonomy” of Pirelli and its management, as well as “information of strategic importance.”

    Europe is heavily reliant on China for trade and investment, but relations have come under strain from ideological differences, including over Russia’s war in Ukraine, and recent moves by European Union regulators and governments to limit China’s access to sensitive technology.

    The order takes a page out of this playbook. It requires that Pirelli refuse any requests from Sinochem’s owner — China’s State-owned Assets Supervision and Administration Commission of the State Council — for information sharing, including any information connected to the “know-how” of proprietary technologies.

    The government said “some” strategic decisions would require approval from at least 80% of board directors, a further limitation on Sinochem’s influence.

    Separately, Rome is also assessing whether to renew its partnership with Beijing on the Belt and Road Initiative — China’s global infrastructure and investment megaproject. Italy is the only Group of Seven nation to have joined the initiative.

    In a further sign of the steps multinational companies are beginning to consider to protect their operations from growing geopolitical friction, drugmaker AstraZeneca

    (AZN)     has drawn up plans to spin off its China business and list it separately in Hong Kong, according to the Financial Times. AstraZeneca

    (AZN)     declined to comment.

    Earlier this month, Sequoia Capital, the Silicon Valley venture capital group, said it would separate its China investments into an independent unit.

    On Tuesday, the European Commission will unveil measures — possibly including screening of outbound investments and export controls — to keep prized EU technology from countries such as China, Reuters reported.

    — Laura He in Hong Kong contributed to this article.

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  • Biden administration moves ahead with Medicare drug price negotiations amid industry lawsuits | CNN Politics

    Biden administration moves ahead with Medicare drug price negotiations amid industry lawsuits | CNN Politics

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    CNN
     — 

    Undeterred by a growing number of lawsuits, the Biden administration on Friday released revised guidance for Medicare’s new drug price negotiation program.

    The latest guidance outlines how the Centers for Medicare and Medicaid Services will negotiate with drugmakers to reach agreement on a maximum fair price for a selected medicine, the agency said. It was informed by public input on the initial guidance the agency released in March, which explained how it will select the drugs and how the negotiations will be conducted.

    The program, which was authorized by the Inflation Reduction Act that congressional Democrats passed last year, has prompted a fierce backlash from the pharmaceutical industry. Two drug manufacturers and two industry groups have filed lawsuits, arguing the measure is unconstitutional.

    But the administration is not backing down from implementing its historic new power. It intends to keep its timeline of announcing the first 10 drugs that will be selected for negotiation by September 1. CMS and the drugmakers will negotiate during 2023 and 2024. The prices will be effective starting in 2026.

    “The Biden-Harris Administration isn’t letting anything get in our way of delivering lower drug costs for Americans,” Secretary of Health and Human Services Xavier Becerra said in a statement. “Pharmaceutical companies have made record profits for decades. Now they’re lining up to block this Administration’s work to negotiate for better drug prices for our families. We won’t be deterred.”

    The initial set of drugs will be chosen from the top 50 Part D drugs that are eligible for negotiation that have the highest total expenditures in Medicare. CMS will consider multiple factors when developing its initial offer, including the drugs’ clinical benefits, the price of alternatives, research and development costs and patent protection, among others.

    If drugmakers don’t comply with the process, they will have to pay an excise tax of up to 95% of the medications’ US sales or pull all their drugs from the Medicare and Medicaid markets. The pharmaceutical industry contends that the true penalty can be as high as 1,900% of sales.

    CMS said it received more than 7,500 comments on its initial guidance from patient groups, drug companies, pharmacies and others.

    The changes it is making are aimed at improving transparency while keeping confidentiality in mind, as well as fostering “an effective negotiation process,” the agency said.

    They include revising the confidentiality process to state that CMS will release information about the negotiations when it publishes the explanations of the prices. Also, drug companies may publicly discuss the negotiations – the prior secrecy requirement had been a point of contention among manufacturers that was mentioned in the lawsuits. And they won’t be required to destroy data relating to the negotiations.

    In addition, CMS will hold patient-focused listening sessions to provide drug companies and the public more opportunities to engage with the agency. The sessions – which will give patients, caregivers and others the chance to share input on how a medication addresses unmet needs, how it impacts specific populations and what therapeutic alternatives exist – will be held in the fall for the first round of drugs.

    Merck, Bristol Myers Squibb, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, and the US Chamber of Commerce have all recently filed lawsuits in federal courts across the US. They each argue the program is unconstitutional in various ways.

    The challengers also say that the negotiation provision will harm innovation and patients’ access to new drugs.

    Among the arguments are that the program violates the Fifth Amendment’s “takings” clause because it allows Medicare to obtain manufacturers’ patented drugs, which are private property, without paying fair market value under the threat of serious penalties.

    Plus, the negotiations process violates the First Amendment, the challengers say, because it coerces manufacturers into saying that they agree to the price that the government has dictated and that it’s fair.

    Another argument is that the process violates the Eighth Amendment by levying an excessive fine if drugmakers refuse to negotiate and continue selling their products to the Medicare market.

    Merck expects its diabetes drug Januvia to be among the drugs named in September and its blockbuster cancer treatment Keytruda and diabetes drug Janumet to be subject to negotiation in the future. Bristol Myers Squibb believes its blood thinning medication, Eliquis, will be subject to negotiations this year, and its cancer medication, Opdivo, will be selected in a subsequent round.

    The changes in the revised guidance did not allay the complaints of the pharmaceutical industry. PhRMA said that transparency remains “severely limited,” patients’ views are not being taken into account and Medicare beneficiaries could have less access to drugs.

    “The very few substantive changes to the final guidance demonstrate CMS saw this as a box checking exercise, not an opportunity to mitigate the negative impacts this price setting policy will have on patients or the broader health care sector,” PhRMA said in a statement.

    “The approach CMS took in this final guidance confirms what we claimed in our lawsuit – Congress’ unconstitutional shortcuts taken in the law have given the administration far too much flexibility to set prices at their whim without any oversight or accountability to anyone,” the group continued.

    The Biden administration will “vigorously defend” the drug price negotiation program, said CMS Administrator Chiquita Brooks-LaSure.

    “We feel the law is on our side,” she said in a call with reporters Friday.

    This story has been updated with additional information.

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  • Putin’s ruthless power play may not preclude a revival of Ukraine grain deal | CNN Politics

    Putin’s ruthless power play may not preclude a revival of Ukraine grain deal | CNN Politics

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    CNN
     — 

    Russian President Vladimir Putin just reminded the world that he has the capacity to apply pain far beyond the excruciating torment he’s inflicting on Ukraine.

    Russia’s suspension of a deal allowing the export of Ukrainian grain from a region fabled as the world’s bread basket threatens to cause severe food shortages in Africa and send prices spiraling in supermarkets in the developed world. In the United States, it represents a political risk for President Joe Biden, who is embarking on a reelection campaign and can hardly afford a rebound of the high inflation that hounded US consumers at its peak last year.

    Russia’s decision looked at first sight like a face-saving reprisal for an attack claimed by Ukraine on a bridge linking the annexed Crimean peninsula to the Russian mainland. The bridge was a vanity project for Putin and the apparent assault represented another humiliation for the Russian leader in a war that has gone badly wrong.

    The Black Sea grain deal, agreed last year and brokered by Turkey and the United Nations, was a rare diplomatic ray of light during a war that has shattered Russia’s relations with the US and its allies and has had global reverberations.

    By refusing to renew it, Putin appears again to be seeking to impose a cost on the West, in return for the sanctions strangling the Russian economy. He may reason that a food inflation crisis might help splinter political support in NATO nations for the prolonged and expensive effort to save Ukraine. And grain shortages afflicting innocent people in the developing world could exacerbate international pressure for a negotiated end to a war that has turned into a disaster for Russia.

    The United States and other Western powers reacted to Russia’s announcement that the deal had been “terminated” with outrage, mirroring Ukrainian President Volodymyr Zelensky’s warning that Putin was trying to “weaponize hunger.”

    Secretary of State Antony Blinken warned that Russia was trying to use food as a tool in its war on Ukraine, adding that the tactic would make “food harder to come by in places that desperately need it and have prices rise … The bottom line is, it’s unconscionable. It should not happen.”

    Singling Russia out as a moral transgressor might be understandable given the horror it has visited on Ukraine and may rally fury over Putin’s move in the West and the developing world. But humanitarian arguments won’t sway a Russian president who launched an unprovoked onslaught on a sovereign neighbor and is accused of presiding over brutal war crimes.

    Still, Russia’s rhetoric after canceling the deal and the reactions from key players elsewhere in Eurasia suggest that the agreement may not be quite as terminated as the Kremlin claims. There’s a chance Putin sees a grain showdown as a way to improve his dire position.

    In a clear sign of diplomatic maneuvering, Russia justified its cancellation of the agreement by saying that it was not getting its share of the benefits. noting that it had faced obstacles with its own food exports. Kremlin spokesman Dmitry Peskov hinted, however, that Moscow might allow the return of exports from Ukraine’s Black Sea ports once its objectives were achieved.

    But UN Secretary General António Guterres underscored how difficult it might be to return to the deal with a categorical repudiation of Russia’s points in a letter to Putin, arguing that under the agreement, the Russian grain trade had reached high export volumes and fertilizer markets were nearing full recovery with the return of Russian produce. Guterres said that he’d sent Russia proposals to keep the grain deal alive but that he was “deeply disappointed” that his efforts went unheeded.

    The UN chief’s comments reinforced a view that, for now, Russia sees a point of leverage in refusing to renew the Black Sea grain deal. The decision comes against a complicated geopolitical backdrop following last week’s NATO summit at which G7, nations pledged to offer Ukraine the means of its self-defense for years to come.

    It may also represent the latest chess move in a shady double game of great power geopolitics being waged by a pair of Machiavellian autocrats — Putin and Turkish President Recep Tayyip Erdogan, who are due to meet in August.

    Erdogan won prestige and the gratitude of his fellow NATO leaders and developing nations for brokering the original grain deal. But he has angered Russia in recent days, despite keeping open channels with Putin during the war. It’s conceivable the Russian leader could be sending a shot across the bows of his Turkish partner by canceling out his achievement.

    Russia was infuriated last week when Turkey sent a group of captured Ukrainian military commanders back to Zelensky despite a previous agreement they would not go home until after the war. Erdogan also risked his relationship with Putin by dropping opposition to Sweden’s entry into NATO, a move that significantly weakened Russia’s strategic position in Europe.

    But it was noticeable that Erdogan, who has a reputation for cannily playing his cards to enhance his own and Turkey’s influence, referred to Putin as his “friend” on Monday and suggested that the Russian leader might want to keep the “humanitarian bridge” of grain exports open.

    If he could somehow engineer a return to the deal, Erdogan could again bolster his place at the hinge of Eurasian great power politics. He’d also boost his goal of emerging as a leader among developing world nations and do a favor for Western leaders fearing an inflationary spike.

    Michael Kimmage, who served on the policy planning staff at the State Department between 2014 and 2016 and is now a professor at Catholic University of America in Washington, argues that Turkey is in a unique position, since it possesses considerable leverage inside NATO but also has robust relationships with both Ukraine and Russia.

    “I think it’s very possible that even before the Putin-Erdogan meeting there could be a resumption of the grain deal because that keeps Russia to a degree in the good graces of the international community,” Kimmage said.

    Reviving the grain deal would show that Russia, in its isolation, retains some Turkish support, Kimmage added, but the episode also demonstrates to the rest of the world that “when Russia wants, it can turn off the grain deal and be an enormous pain in the neck in the Black Sea.”

    First video of damage to Crimean bridge surfaces after reported strike

    While the war in Ukraine has consumed Russia’s foreign policy, Moscow has also made intense efforts to carve out its own influence in Africa and elsewhere in opposition to the United States. So it may risk damaging its own priorities by triggering widespread food shortages, especially since much of Ukraine’s grain is used in World Food Programs to alleviate famine in Africa.

    While the White House is fueling a sense of moral outrage over Russia’s move, it quickly dismissed another potential response – an attempt to bust a Russian blockade in the Black Sea.

    “That’s not an option that’s being actively pursued,” John Kirby, the coordinator for strategic communications at the National Security Council, said Monday in a comment that was in line with Biden’s goal of avoiding any direct NATO clash with Russia, a nuclear superpower.

    While the end of the grain deal would cause significant global hardship, its worst effects may be weeks away – so there could be time for diplomacy to work.

    Nicolay Gorbachov, the President of the Ukrainian Grain Association, told Isa Soares on CNN International on Monday that exports by road, rail and river could mitigate the most damaging effects of the collapse of the deal for two or three weeks, even if such transportation methods lacked the volume of shipborne cargoes.

    But he also warned that ultimately, if Ukraine could not export its grain – “all of us, in developed countries, in developing countries, will face food inflation.”

    “In my opinion, the international community, the developed countries have to find the leverage to move grain from Ukraine to the world market,” he said.

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  • WhatsApp unveils new video messaging feature | CNN Business

    WhatsApp unveils new video messaging feature | CNN Business

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    CNN
     — 

    WhatsApp will now let you record and send video clips directly in the messaging app, the Meta-owned platform announced this week.

    The instant video messages can be up to 60 seconds long, and are similarly protected with the app’s end-to-end encryption service.

    “We think these will be a fun way to share moments with all the emotion that comes from video, whether it’s wishing someone a happy birthday, laughing at a joke, or bringing good news,” the company said Thursday in a blog post.

    The new feature will be similar to sending a voice message on the platform, the company added, and there will also be a way to record the video hands-free.

    The company said the new update has begun rolling out on the app and will be available to everyone in the coming weeks.

    Earlier this year, WhatsApp rolled out an update that lets users edit messages in the app (as long as it’s within 15 minutes after sending).

    The latest product update for WhatsApp comes on the heels of a better-than-expected earnings report from Meta. The company said Wednesday that revenue surged 11% year-over-year to $32 billion for its quarter ending in June, as CEO Mark Zuckerberg’s “year of efficiency” appears to be paying off for the social media giant.

    After a bruising 2022, shares of Meta stock have jumped more than 150% in 2023.

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  • Hot box detectors didn’t stop the East Palestine derailment. Research shows another technology might have | CNN

    Hot box detectors didn’t stop the East Palestine derailment. Research shows another technology might have | CNN

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    CNN
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    A failing, flaming wheel bearing doomed the rail car that derailed and created a catastrophe in East Palestine earlier this month, but researchers have offered a solution to the faulty detectors that experts say could have averted the disaster unfolding in the small Ohio town.

    These wayside hot box detectors, stationed on rail tracks every 20 miles or so, use infrared sensors to record the temperatures of railroad bearings as trains pass by. If they sense an overheated bearing, the detectors trigger an alarm, which notifies the train crew they should stop and inspect the rail car for a potential failure.

    So why did these detectors miss a bearing failure before the catastrophe?

    An investigation into hot box detectors published in 2019 and funded by the Department of Transportation found that one “major shortcoming” of these detectors is that they can’t distinguish between healthy and defective bearings, and temperature alone is not a good indicator of bearing health.

    “Temperature is reactive in nature, meaning by the time you’re sensing a high temperature in a bearing, it’s too late, the bearing is already in its final stages of failure,” Constantine Tarawneh, director of the University Transportation Center for Railways Safety (UTCRS) and lead investigator of the study, told CNN.

    As part of the investigation, the UTCRS researchers developed a new system to better detect a bearing issue long before a catastrophic failure. The key: measuring the bearing’s vibration in addition to its temperature and load.

    The vibration of a failing bearing, Tarawneh says, often begins intensifying thousands of miles before a catastrophic failure. So his team created sensors that can be placed on board each rail car, near the bearing, to continuously monitor its vibration throughout its travels.

    “If you put an accelerometer on a bearing and you’re monitoring the vibration levels, the minute a defect happens in the bearing, the accelerometer will sense an increase in vibration, and that could be, in many cases, up to 100,000 miles before the bearing actually fails,” he said.

    Tarawneh, who argues the technology should be federally mandated, says had it been on board Norfolk Southern’s line it would have prevented the derailment in East Palestine.

    “It would have detected the problem months before this happened,” he said. “There wouldn’t have been a derailment.”

    A preliminary report from the East Palestine derailment, released Thursday by the National Transportation Safety Board, found hot box sensors detected that a wheel bearing was heating up miles before it eventually failed and caused the train to derail. But the detectors didn’t alert the crew until it was too late.

    The bearing, according to the report, was 38 degrees above ambient temperature when it passed through a hot box 30 miles outside East Palestine. No alert went out, the NTSB said.

    Ten miles later, the next hot box detected that the bearing had reached 103 degrees above ambient. Video of the train recorded in that area shows sparks and flames around the rail car. Still, no alert went to the crew.

    It wasn’t until a further 20 miles down the tracks, as the train reached East Palestine, that a hot box detector recorded the bearing’s temperature at 253 degrees above ambient and sent an alarm message instructing the crew to slow and stop the train to inspect a hot axle, the report said.

    The crew slowed the train, the report added, leading to an automatic emergency brake application. After the train stopped, the crew observed the derailment.

    The reason those first two hot box readings didn’t trigger an alert, the report said, is because Norfolk Southern’s policy is to only stop and inspect a bearing after it has reached 170 degrees above ambient temperature. The NTSB is planning to review Norfolk Southern’s use of wayside hot box detectors, including spacing and the temperature threshold that determines when crews are alerted.

    “Had there been a detector earlier, that derailment may not have occurred,” said NTSB Chair Jennifer Homendy at a Thursday press conference.

    In a statement responding to the NTSB report, Norfolk Southern stressed that its hot box detectors were operating as designed, and that those detectors trigger an alarm at a temperature threshold that is “among the lowest in the rail industry.” CNN has reached out to Norfolk Southern for comment on vibration sensor technology.

    Hot box detectors are unregulated, so companies like Norfolk Southern can turn them on and off at their own discretion and choose the temperature threshold at which crews receive an alert.

    There are several causes for overheated roller bearings, including fatigue cracking, water damage, mechanical damaging, a loose bearing or a wheel defect, according to the NTSB, and the agency says they’re investigating what caused the failure in East Palestine.

    “Roller bearings fail, but it is absolutely critical for problems to be identified and addressed early so these aren’t run until failure,” Homendy said. “You cannot wait until they’ve failed. Problems need to be identified early, so something catastrophic like this does not occur again.”

    Hum Industrial Technology, a rail car telematics company, has licensed the vibration sensor technology created by Tarawneh and his team. And it has launched pilot programs with several rail companies. But at this point, those sensors are on very few trains operating in the United States, which Tarawneh largely blames on the cost of retrofitting and monitoring cars and what he sees as companies prioritizing profit.

    It’s not clear exactly what it would cost to retrofit every train car in operation with sensors today, but Hum Industrial Technology stressed that it would cost less to put a sensor on a bearing than to replace a bearing.

    “They see it as, well, why should we do it if it’s not mandated?” Tarawneh said. “It’s like a lot of people are saying, ‘well, I’m willing to take the risk. It’s not that many derailments per year.’”

    But Steve Ditmeyer, a former Federal Railroad Administration official, says equipping every rail car with on board sensors may not be financially feasible.

    “What they’re proposing will work, but it’s very, very expensive,” Ditmeyer told CNN. “And one does have to take cost into consideration.”

    It would take more than 12 million on board sensors, according to Tarawneh, to fully equip the roughly 1.6 million rail cars in service across North America.

    Ditmeyer says railroads should invest more heavily in wayside acoustic bearing detectors, which sit along the tracks – much like hot box detectors – and monitor the sound of passing trains. They listen for noise that indicates a bearing failure well before a potential catastrophe.

    As of 2019, only 39 acoustic bearing detectors were in use across North America compared to more than 6,000 hot box detectors, according to a 2019 DOT report.

    “They are the only way that I can think of that would have prevented the accident by having caught a failing bearing earlier,” Ditmeyer said.

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