Monday, December 8, 2014

A $50 Drug or a $2,000 Drug - Which Would You Prescribe?

Imagine this situation: You are an eye doctor, treating older patients with an all-too-common problem, wet macular degeneration, which, untreated, can lead to severe vision loss. A cancer drug has been used to treat the condition successfully, at a cost of about $50 a pop.

Now, the same pharmaceutical company that makes the cancer drug you've been using introduces a new drug specifically designed to treat macular degeneration. Great! Except it's going to cost $2,000 per dose.

Oh, and remember that the condition arises most often in patients 60-plus, so Medicare is going to have to pay for much of the cost.

Are you going to switch your patients from Drug A to Drug B?

According to an article by Katie Thomas and Rachel Abrams in today's New York Times, you're significantly more likely to do so if you're being paid "consultant" fees by the pharmaceutical manufacturer.

Raise your hand if you're surprised.

I'm not seeing many raised hands, and I'm not surprised.

Since I started this blog back in 2009, I've argued against "gimme caps" and their like (see here or here) because there's abundant research that we are all way more influenced by even small gifts than we want to admit we are. Thomas and Abrams note that

Specialists who study conflicts of interest between physicians and the drug industry say even modest payments have been shown to influence behavior.

"That’s why a sandwich is so effective — no one wants to feel like they were being bought off for $5," said Dr. Adriane Fugh-Berman, an associate professor at Georgetown University Medical Center in Washington and director of PharmedOut, a project that educates doctors about drug marketing claims. "That’s why they convince themselves that the drug is better."
And of course, the ophthalmologists who are prescribing Genentech's Lucentis (the $2,000 drug) instead of Genentech's Avastin (the $50 drug) do insist that it's because Lucentis is a better drug. 

But here's the kicker. While not every doctor who prescribed Lucentis frequently received consulting fees from Genentech, a suspiciously high percentage of them did:
Half of the 20 doctors who received the most money from Genentech to promote Lucentis in 2013 were among the highest users of the drug in 2012, billing for higher amounts of Lucentis than 75 percent of their peers. The figures were compiled from two federal databases that covered different periods, and it is not known whether or how much Genentech paid the doctors in 2012.

The 20 doctors earned $8,500 to $37,000 over five months in 2013, payments that included consulting and speaking fees as well as travel expenses and meals. Genentech says it has an annual cap of $50,000 a doctor for speaking fees.
That's not a smoking gun, but it does raise eyebrows, and questions. 
Eric Campbell, a professor of health care policy at Harvard Medical School, said doctors frequently denied that relationships with drug companies could change their behavior, despite many studies to the contrary. "They are suggesting that the drug companies that are spending this money, that these companies are dumb enough to be wasting their money," he said.
I don't think the companies are that dumb. Do you?

Tuesday, November 25, 2014

Chicken, Egg? Or: Egg, Chicken?

We had seen plenty of examples since the near-implosion of the financial sector in 2008 of bankers behaving badly (you can find an oldie-but-goodie here).

I've even wondered whether the problem was more with the individual bankers or with the banking organization (here), and came to the conclusion that it was some of each.

Today's New York Times carried a brief article by Douglas Quenqua on some fascinating research by University of Zurich economists, reported by Kerri Smith in the journal Nature (here) that "bankers were about as honest as anyone else — until they were reminded that they were bankers." So it's not just the individual, or the organization: it's the overall culture of banking.

The economists asked more than 100 employees of a major bank to participate in their study. As Smith reports, 
...[Half of] the participants were quizzed about their jobs and their company, to prompt them to think of their identity as bank employees. The other half answered questions about their hobbies.
The participants were then asked to toss a coin ten times, unwatched by the researchers, and to report the outcome. They could earn money if they reported flipping more heads than tails — and up to US$200 if they reported flipping all heads or all trails.
The first group reported flipping heads 58.2% of the time — significantly higher than would be expected by chance alone. The control group reported tossing 51.6% heads.
And in case you're wondering whether people in other professions would show a similar pattern, the answer is: No.

The study authors suggest some possible measures to combat bad banker behavior, "such as having bankers swear a professional oath to consider the impact of their work on society — akin to the Hippocratic oath taken by physicians — or stopping companies from rewarding employees who behave dishonestly."

Good luck with those.

Tuesday, November 18, 2014

Who's Trustier than TRUSTe?

Lots of folks, it seems.

I've thought well of TRUSTe, a company that is (to quote their website) "the leading global Data Privacy Management (DPM) company and powers trust in the data economy by enabling businesses to safely collect and use customer data across their customer, employee, and vendor channels."

Moreover, "All TRUSTe solutions are engineered to enable businesses to continuously develop new and innovative products and marketing programs while adhering to best practices for providing customers with transparency, choice and accountability regarding the collection and use of personal information."

OK, that's a little heavy on the marketing-speak, but you'd think I'd like something that promised consumers "transparency, choice and accountability", right? The little TRUSTe symbol on a website seemed like a Good Housekeeping seal of approval.

I'd even assumed -- without really thinking about it -- that a company that certified websites for adhering to privacy standards was probably a not-for-profit.

Turns out I was wrong on several counts. (Sigh. Not for the first time, of course, and surely not the last.) Well, I was half-right about the final assumption: TRUSTe was founded as a nonprofit in 1997, but converted to for-profit in 2008. Let's just think about that for a moment, shall we?

In today's New York Times, Edward Wyatt reports that the Federal Trade Commission has penalized TRUSTe "$200,000 in profits... as part of a settlement for failing to annually recertify the privacy practices of companies in more than 1,000 instances while claiming on its website that it did so each year." (Full article, here)
The commission said that from 2006 to January 2013 TRUSTe failed to conduct annual privacy checks on some of the companies it certified. The company also failed to require companies using its seal to indicate after 2008 that the company was no longer a nonprofit corporation. 

In a blog response (here), TRUSTe CEO Chris Babel wrote that companies that were not reviewed annually were those that had multi-year contracts, which "represents less than 10% of the total number of annual reviews we were scheduled to conduct" and that "over 90% of multi-year clients" had two-year contracts, which meant that "the vast majority were reviewed every other year."

Babel also promised, "We have taken swift action to address the process issues covered by the agreement [with the FTC]."

Remember what your mother taught you? "Fool me once..."

We'll be watching.
This represents less than 10% of the total number of annual reviews we were scheduled to conduct during that time.
Multi-year clients that did not undergo the annual review step of their certification were reviewed when their agreements were up for renewal. Because over 90% of multi-year clients signed two-year contracts, the vast majority were reviewed every other year.
- See more at:
his represents less than 10% of the total number of annual reviews we were scheduled to conduct during that time.
Multi-year clients that did not undergo the annual review step of their certification were reviewed when their agreements were up for renewal. Because over 90% of multi-year clients signed two-year contracts, the vast majority were reviewed every other year.
- See more at:

Friday, November 7, 2014

At the Risk of Repeating Myself:

If people are dying because of your product, you should really really do something to fix the problem.

Trust me on this: Sweeping research under the rug is not going to make the problem go away.

Less than a year ago, I asked how many people had to die before a company would wake up and start recalling their product (full post, in re GM's ignition switch defects, here).

I'm asking the question again today, as more information comes out about airbag defects at Takata.

According to an article by Hiroko Tabuchi in today's New York Times, the Japanese airbag manufacturer, "alarmed by a report a decade ago that one of its airbags had ruptured and spewed metal debris at a driver in Alabama", conducted secret tests, using airbags retrieved from junked vehicles. The results? According to former employees (anonymous "because of continuing ties to Takata"):
The steel inflaters in two of the airbags cracked during the tests, a condition that can lead to rupture, the former employees said. The result was so startling that engineers began designing possible fixes in preparation for a recall.....

But instead of alerting federal safety regulators to the possible danger, Takata executives discounted the results and ordered the lab technicians to delete the testing data from their computers and dispose of the airbag inflaters in the trash, they said.
Those secret tests were conducted a decade ago, "after normal work hours and on weekends and holidays during [the] summer". 
That was four years before Takata, in regulatory filings, says that it first tested the problematic airbags. The results from the later tests led to the first recall over airbag rupture risks in November 2008.
The current recall has grown to involve ten automakers (BMW, Chrysler, Ford, Honda, Mazda, Mitsubishi, Nissan, Pontiac, Subaru, and Toyota) and 14 million vehicles. A more complete list of years and models affected, compiled by the National Highway Traffic Safety Administration, can be found here.

I understand the pressures that automakers and their suppliers face - to keep costs down, to meet brutal "just-in-time" manufacturing schedules, not risking penalties for late deliveries. But:
“That put a lot of pressure and incentive on us to never miss a shipment,” said one of the former managers. “I’d argue, ‘what if my daughter bought the car with the bad airbag?’ But the plant would tell us, ‘Just ship it.' ”
"Just ship it"? Really?

Tuesday, October 28, 2014

What's the Difference Between a $5.60 Big Mac and a $4.80 Big Mac?

One of them comes with a living wage for the server, and the other doesn't.

In today's New York Times, Liz Alderman and Steven Greenhouse explore the difference between a Big Mac purchased in Denmark and one bought in the United States (full article, here). For the consumer, the difference is 80 cents (16.67%), which was actually a lot less than I had expected, given how loudly U.S. franchises have been prophesying the end-of-the-world should living wages become the norm here.

Cross-cultural comparisons are always risky. Denmark has a much higher cost of living than most of the U.S., higher taxes, high levels of unionization, etc.

But... the Danish example proves that it is possible to have that Big Mac and not penalize the McDonald's worker for the sin of being poor.

I've written before about the appalling way that U.S. capitalism concentrates on going lower and lower (example here). A living wage is a moral issue, not an economic one, but it's nice to know that the economics work too. 

The base wage for a McDonald's employee in Denmark is $20 an hour, "two and a half times what many fast-food workers earn in the United States," and much higher than the $15 an hour for which  many U.S. workers have been campaigning. Note that:
Denmark has no minimum-wage law. But ... [a Danish worker's] $20 an hour is the lowest the fast-food industry can pay under an agreement between Denmark’s 3F union, the nation’s largest, and the Danish employers group Horesta, which includes Burger King, McDonald’s, Starbucks and other restaurant and hotel companies.

By contrast, fast-food wages in the United States are so low that half of the nation’s fast-food workers rely on some form of public assistance, a study from the University of California, Berkeley found. American fast-food workers earn an average of $8.90 an hour.

Most corporate fast-food companies won't discuss employee wages because "those decisions [are] made by its franchise operators", which is disingenuous at best, since corporate will train franchisees on how best to keep down labor costs.

But it's not just the wages that are different:
In Denmark, fast-food workers are guaranteed benefits their American counterparts could only dream of. Under the industry’s collective agreement, there are five weeks’ paid vacation, paid maternity and paternity leave and a pension plan. Workers must be paid overtime for working after 6 p.m. and on Sundays.

Unlike most American fast-food workers, the Danes often get their work schedules four weeks in advance, and employees cannot be sent home early without pay just because business slows.

In other words, Danish workers are treated like valuable human beings, not simply as "costs". Not surprisingly, fast-food worker turnover is low and front-line employees even think about their jobs as potential careers, not something to move on from as quickly as possible. Turnover is expensive, but you don't see U.S. fast-food companies looking for good ways to reduce that, do you?

True, Danish fast-food franchises appear to be less profitable than American ones (by how much is not clear, but they're certainly not unprofitable, or they wouldn't be around for long). And those burgers are certainly a little more expensive, but Danes seem OK with that:
“We Danes accept that a burger is expensive, but we also know that working conditions and wages are decent when we eat that burger,” said Soren Kaj Andersen, a University of Copenhagen professor who specializes in labor issues.
That U.S. Big Mac still taste as good to you? Mine seems to have some straw in it.

Friday, October 24, 2014

Still Waiting for Stronger Action

The numbers of states banning a particular type of guardrail has now grown to ten. In the event of a vehicular collision, the guardrail and its "redesigned" end terminal are supposed to slide along, cushioning the impact of the vehicle; instead, the ends are sometimes malfunctioning, effectively driving a spear into the vehicle itself. (I first wrote about this issue about ten days ago - original post, here.)

The issue is that redesigns are supposed to be tested and approved by the Federal Highway Administration before installation.... and they weren't. A Texas jury found that Trinity Industries, the guardrail manufacturer, had defrauded the government, and awarded $175 million (which, under federal law, will be tripled to $525 million; complete New York Times article on the jury findings, by Danielle Ivory and Aaron M. Kessler, here).

Ivory and Kessler reported on Tuesday (full story, here) that the Federal Highway Administration had finally ordered more testing on the guardrail design. Meanwhile, "At least 14 lawsuits blame the guardrails for five deaths and more injuries." The Trinity "ET-Plus" units have been installed in virtually every state.

Ivory reported today that there are now ten states that have banned the ET-Plus: Colorado, Hawaii, Massachusetts, Mississippi, Missouri, New Hampshire, Nevada, Oregon, Vermont, and Virginia.

I'd like to see my state added to that list. And could we hurry up on the testing please?

Tuesday, October 21, 2014

Happy Endings Can Happen!

...but it helps to have The New York Times watching.

Yesterday, I wrote about the woman who was essentially fired from her job for being pregnant (that's a simplification, but it's a long story, and if you want the details, you'll find them here). Her employer's move appeared to be a clear violation of a New York City ordinance protecting pregnant workers, but I was more taken aback by the simple lack of compassion and decency.

Today, it turns out that the woman is being offered her job back.

In a followup article, reporter Rachel Swarms writes that the woman - now unemployed for nearly three months - can return "immediately without loss of seniority and without fear of retaliation," in the warm and welcoming words of her employer's lawyers.

The lawyer, of course, is "not admitting that [the company] had violated any laws or fired Ms. Valencia," and that the health and safety of employees is "of utmost importance."

Why do I find that last statement a little hard to believe?