Small Science, Big Diseases

Interesting post about risk in the pharmaceutical industry. Both large and small companies have to manage risk in order to survive and thrive. This industry is full of risk and lots of failures. It’s how the organization manages that risk, minimizes its losses, and capitalizes on its winners that will show whether or not they survive.


There is grandeur in the small science emerging from a select group of the world’s laboratories. This small science is about to change how we tackle our most troublesome diseases.

Gene therapy. Immunotherapy. Nanomedicine. This is what the next few decades of medicine will look like. But it isn’t coming from big pharma. It’s coming from the little guys. Small pharmaceutical and biotechnology companies, once overlooked for both their risky science and questionable market share, are revolutionizing how the industry pursues new therapies. This shift in science comes as big pharma is falling stagnant. Last year, the bulk of profits made by big pharma came from drugs approved prior to 2001. If we look at the percent of big pharma’s profits from drugs created within the last five years, the picture is grim. On average, new therapies make up only 8.3% of their profits. The patents are running out and…

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Do workplace wellness programs produce the benefits they claim?

A post by Austin Frakt digging deeper into wellness programs looks at recent study by the RAND Corporation and PepsiCo on PepsiCo’s wellness program, Healthly Living.

In 2003, PepsiCo initiated what was to become their Healthy Living program, which included lifestyle management programs (weight, nutrition, and stress management, fitness, and smoking cession) and disease management components (targeting participants with asthma, coronary artery disease, atrial fibrillation, congestive heart failure, stroke, hyperlipidemia, hypertension, diabetes, low back pain, and chronic obstructive pulmonary disease).

After seven years, the average annual reduction in costs was $360 per participant. More interesting, however, is the decomposition of savings by program component, as shown in the chart (see above chart).

The chart shows that no savings can be attributed to the lifestyle management components of PepsiCo’s program. Disease management is where the action is. The authors also found that among disease management participants, those that also participated in the lifestyle management component “experienced significantly higher savings.”

The takeaway is a familiar story. When narrowly targeted wellness programs, like many other health interventions, can be beneficial–even cost saving (a rarity among health interventions). But, when more broadly implemented, they often are not. A focus on workers and dependents with specific diseases makes eminent sense. Not only are they the sickest–and in that sense deserving of greater focus–they are the most expensive to insure, offering a far greater opportunity for savings from disease and lifestyle management than a typical insured. A second lesson is that a long follow up time may be necessary to see benefits from a wellness program. Even a two-year study may not be sufficient.

Army medicine has been campaigning to affect a patient’s white space (the time they do not receive health care services) in order to help improve the health of Army medicine’s beneficiaries. They are focusing on lifestyle management type stuff, like eating healthy, excercising, and getting enough sleep (the Army’s Performance Triad). However, if health care costs are the new threat to the U.S. military, maybe we should look at the lesson PepsiCo provided us in regards to employer based wellness programs. Lifestyle management programs sound good, but the real savings looks like it comes from disease management programs. Granted we HEDIS metrics designed to help with some of the disease management tracking, but I think this needs to be incorporated into a more aggressive disease management program and coupled with a lifestyle management program. if we are only going to focus on one program, focus on managing the sickest of our population. It’s where the real cost savings lie.

Economic advisors

I posted recently about who’s advising the president on economic matters. Don Boudreaux posted a link on Cafe Hayek to a column he wrote for the Pittsburgh Tribune-Review on why he declined a nomination from George W. Bush to serve on the president’s Council of Economic Advisors.

My conscience prevents me from taking such a position. I don’t judge others who took, or will take, such a post. But I could not have done the job that the administration invited me to do. That job is principally not to give economic advice. That job, instead, is to give credibility to political maneuvers.

Sure, on matters that aren’t politically charged, a president might sincerely seek and follow the advice of an academic “expert.” But being the U.S. president is a political job. And the chief talent and ultimate goal of all expert politicians is to win votes. At the end of the day, it’s the far-too-rare successful politician who will do what is right if doing what is right differs from what is most popular.

In the 30 seconds that I spent envisioning myself on the Council of Economic Advisers, I saw myself ricocheting between offering advice in private that would be ignored and being asked to defend in public many policies that I believe to be wrongheaded or even immoral. Such a job repulses me.

Consider Jason Furman, a very good economist who is now chairman of President Obama’s Council of Economic Advisers. The Washington Post, in a glowing profile of Mr. Furman, reports that in January he told attendees at a public event that over the past half century, “the economy itself had done nothing for the poor: Only government dollars had.”

Of course, such a claim is precisely what a “progressive” politician such as Mr. Obama wants voters to believe. But we have solid evidence that Furman himself doesn’t believe this claim.

One of Furman’s well-known research papers is his 2005 article “Wal-Mart: A Progressive Success Story” ( He back then concluded that “(b)y acting in the interests of its shareholders, Wal-Mart has innovated and expanded competition, resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans.” In short, a major player in the private market had indeed done something — something wonderful — for Americans of modest means.

Can Furman’s 2005 conclusion be squared with his recent statement? Yes, but only with great effort. Perhaps he changed his mind or perhaps “the poor” he referred to last month somehow do not include anyone who shops at Wal-Mart.

The more plausible conclusion, however, is that, in political jobs, politics trumps truth.

The science and chemistry behind Sriracha


The chemistry of Sriracha.

Interesting video on the science of the versatile condiment, Sriracha.

Julie Beck’s posted an article in The Atlantic about the video.

Spicy peppers, like the red chili, contain two chemicals called capsaicin and dihydrocapsaicin, which affect our mouths’ TPRV1 receptor proteins. These receptors typically serve as a warning system when we eat something way too hot—more than 109 degrees Fahrenheit, the video says. Because capsaicin hits those receptors, too, we feel the “heat” of peppers in much the same way we would actual heat.

To counteract that, the body releases pain-killing endorphins (similar to a runner’s high), which is why spicy foods can make you feel happy, and at least part of why some fanatics grow and seek out peppers that are higher and higher on the Scoville scale, which measures chili pepper heat. (One contender for world’s hottest pepper averages around 1.5 million Scoville units. A regular jalapeño, for comparison, clocks in at about 4000.)

A couple of links

A blog post on Development Social Science in medical journals: diagnosis is caveat emptor. A highlight:

Aid Watch has complained before about shaky social science analysis or shaky numbers published in medical journals, which were then featured in major news stories. We questioned creative data on stillbirths, a study on health aid, and another on maternal mortality.

Just this week, yet another medical journal article got headlines for giving us the number of women raped in the DR Congo (standard headline: a rape a minute). The study applied country-wide a 2007 estimate of the rate of sexual violence in a small sample (of unknown and undiscussed bias). It did this using female population by province and age-cohort — in a country whose last census was in 1984. (Also see Jina Moore on this study.)

We are starting to wonder, why does dubious social science keep showing up in medical journals?

Remember, question the data, methods, and results. It is hard to overcome bias, we have to understand the biases others have and most importantly, understand ours.

A post from Mark Perry about competitition in the medical field. Who’d a-thunk it? A medical cartel doesn’t like competition? Takes a quick look at the rise of retail clinics, and the American Academy of Pediatrics response:

clinics are “an inappropriate source of primary care for pediatric patients, as they fragment medical care and are detrimental to the medical home concept of longitudinal and coordinated care.” Here’s more from the WSJ article:

“Retail health clinics that are popping up in drugstores and other outlets shouldn’t be used for children’s primary-care needs, the American Academy of Pediatrics said, arguing that such facilities don’t provide the continuity of care that pediatricians do. While retail clinics may be more convenient and less costly, the AAP said they are detrimental to the concept of a “medical home,” where patients have a personal physician who knows them well and coordinates all their care.”

So if you don’t like competition, you first play the “competency card,” and then you follow with the “fear card“:

“Some pediatric practices say they won’t see you if you go to a retail clinic,” said Ateev Mehrotra, a policy analyst at RAND Corp., who has studied the clinics for years. “And we’ve heard that some patents tell retail clinics, ‘Please don’t tell the pediatrician that I’m here.’ “

Another post from Carpe Diem. Charts of the day: a) Top ten 2014 Olympic medal winning countries and b) Top ten countries adjusted for population

Pretty interesting way to break down the medal count.

Using 3D printing for medical purposes. Surgeons reconstruct baby’s skull with 3D printing technology. Simply amazing.

Detroit Tigers introduce dynamic ticket pricing for 2014 season.

There is one week until Detroit Tigers’ individual game tickets go on sale at 10 a.m. on Saturday, March 1.

And new this season, the Tigers are introducing ‘dynamic ticket pricing,’ which will either increase or decrease prices due to the demand of the game.

As reported by the Free Press last week, the Tigers are planning to announce the ticket pricing system today.

“Dynamic pricing is based on consumer demand and generally affords fans who buy early to save more,” Duane McLean, executive vice president of business operations for the Tigers, said. “With dynamic pricing you could see the value of ticket prices increase and decrease based on demand. Season tickets are not affected by dynamic pricing and continue to offer the most significant savings whereas dynamic pricing more accurately prices tickets for individual games.”

Couple of thoughts. Will this increase the transactional cost to the Tigers because someone is having to determine the pricing for each home game? I see potential for a big upside. If the Tigers do well this year, they make increase their revenues by squeezing out the consumer surplus because they will be bringing ticket prices closer to what consumers would be willing to pay. If they don’t do so good, they will be bringing the ticket prices closer to what someone would be willing to pay. Instead of having open seats, they may be able to fill them with individuals who have a lower price point. I’m interested to see how it works for them.

Is this intimidation from a union?


A recent article from Michigan Capital Confidential about a hospital union. Several individuals decided to opt out of the union and here’s the union’s response to members exercising their right to opt out.

In response, the American Federation of State, County and Municipal Employees Local 1603 union posted his name on a list at the hospital to serve “notice” that he exercised his rights under state law and opted out of the union.

VanDenHeuvel and three other workers names were posted on a bulletin board in a public area near the hospital cafeteria. Michigan’s right-to-work law no longer requires workers to pay dues or fees to a union as a condition of employment.

Here’s the statement from the hospital’s administration.

The Hurley Medical Center released a statement saying it was not getting involved in union business.

“While Hurley Medical Center is always appropriately concerned with legal rights pertaining to workforce members and issues, the administration of Hurley Medical Center does not get involved in internal union business,” the statement read.

It sounds like this is happening at other workplaces with unions.

Unions from around the state have been posting the names of workers who opt out. The International Union of Operating Engineers Local 324 referred to 19 workers from across the state as “freeloaders” in its newsletter that it also published online.

A local affiliate of the Michigan Education Association in the Upper Peninsula did the same thing with 16 employees who opted out.

As leaders how should we respond to tactics these unions used? Should we be involved? Was what the union did justified? They used this public announcement as a way to prevent freeloading or shirking, but is this the best tactic to counter this problem? I doubt it. Public shaming and intimidation typically don’t produce the desired results organizations want.


Interesting article about Amazon and its impact on the book market.

Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review, and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business.

It wasn’t a love of books that led him to start an online bookstore. “It was totally based on the property of books as a product,” Shel Kaphan, Bezos’s former deputy, says. Books are easy to ship and hard to break, and there was a major distribution warehouse in Oregon. Crucially, there are far too many books, in and out of print, to sell even a fraction of them at a physical store. The vast selection made possible by the Internet gave Amazon its initial advantage, and a wedge into selling everything else. For Bezos to have seen a bookstore as a means to world domination at the beginning of the Internet age, when there was already a crisis of confidence in the publishing world, in a country not known for its book-crazy public, was a stroke of business genius.

I’m still searching for my billion dollar idea. Any suggestions?