Thursday, January 21, 2016

Cheap drugs - yeaaahh!!

We hear a lot these days about the "greed of big pharma" and how it pushes up drug prices.
Well, rather than taking the easy way and demonizing companies here's an opinion from someone not particularly qualified to give one (me!) on what could be done..

1) A tax holiday for repatriating offshore cash stashes under the condition that the money all be spend to increase R&D spending. A Merck manager once told me they had $13B stashed offshore. Lets get it back. Then think of ways of discouraging companies from doing it again (lower corporation tax rates?).

2) Banning marketing of prescription drugs. Isn't prescription drug advertising tantamount to recognizing that MDs don't know what they're doing? They should be up to date on the best treatments based on the scientific literature, rather than being swayed by rep visits and clamoring patients. I know marketing works for drug companies, but for something so technical plain, dumb ads seem wrong.

3) Allowing insurance companies and government entities to negotiate the costs of drugs.  Without this in place you are preventing market forces from working. This is what happens in other countries and certainly reduces prices there. Also, while we're at it, the purchase of prescription drugs from other countries (e.g. Canada) should be legalized.

4) Government initiatives to discourage companies ploughing profits into share buybacks. Here I am on slightly wobbly ground, not knowing an awful lot about this aspect of corporate economics, but it seems to me that many companies  spend a large portion of their earnings in  buying up their own shares. They do it to artificially drive up the value of the remaining shares, increasing their value to shareholders. Indeed, in 2015 about a trillion dollars of US company earnings was spent in this way. Money spent in share buybacks is not being invested in the future of the company. Short-termism kills pharma R&D.

5) Increasing federal R&D spending on drug discovery. This, of course, removes some financial R&D burden from pharma, but is necessary to counteract the short-termism in the industry. It is not anti-market, because pharma companies have the choice of doing this research themselves or buying expensive licenses from government-funded institutions later on. Of course, as I'm one of those who believes in  not increasing the overall tax burden on the country, that federal R&D money would have to come from somewhere. Hmm...At least some of it would be regained in the future, though,  through cheaper Medicare and Medicaid drug costs  and the availability of more effective medicines with fewer side-effects and hospital readmissions, reducing overall health care costs.

Cheap drugs - wayhayyy!

Sunday, January 3, 2016

Never mind the quality, feel the width.

Stuyvesant High School Logo
New York's specialized  Bronx and Stuyvesant high schools have an incredible history of excellence. For example, no fewer than 12 Nobel laureates have emerged from their ranks, as well as many Pulitzer prizewinners and business and political leaders. These kids are darned high achievers. However,  there appears to have been an initiative to 'dumb them down';  local Schools Superindendent Aderhold recently wrote a 16-page letter worrying that the constant pressure on students to achieve high grades risks leading to depression/suicides etc and suggesting, through some concrete measures, that the pedal should be taken off somewhat.  Mixed in with this are racial issues, such as  the observation that most of the students admitted to these elite schools are now Asian-American, the parents of whom seem to be firmly against reducing the pressure on students.

My first, knee-jerk  reaction to this story was my usual one - don't compromise the quality! I don't like to see excellence destroyed. If whites, hispanics, blacks etc are not making it into these schools then actions need to be taken for these kids at younger ages to increase their competitivity. However, one of the observations of Aderhold is something that I sympathize with: students and their parents appear to be obsessed with grades, at the expense of actually learning the material they are given. I know that when I was in high school I was also grade obsessed. You learn what is necessary to get the answer right on expected questions, rather than trying to really understand what the subject is about. Never mind the quality, feel the width. Hence, standardized testing systems  don't measure the depth of understanding a student has.

I don't have an easy answer for this one. What we had at Heidelberg University seemed the closest to perfection to me.  It was old-fashioned I think. Students were indeed placed under intense exam pressure, but with hour-long oral exams with two professors determining their degree grades. I found these oral exams perfect for testing understanding, because they were interactive. We profs could dig deeply into the comprehension of students. Personally, I would ask each student what their favorite topic was and try and get them to explain it to me. Even if I knew next-to-nothing about it myself I could tell if the student knew what they were talking about. And I personally wasn't that interested in how much a student knew, more in how deeply they conceptualized their favorite topic, and how they had thought about it. Of course, this kind of examining  is almost impossible to quantify and standardize. For that reason it has probably been dumped in Heidelberg by now.

[Oh, and yes, about the 'problem' of getting more non-Asians into these schools, the answer is to get those kids off their asses and working harder in middle school. Thought that was obvious?]