Saturday, July 09, 2005

Pushing the envelope a bit too far.

From each according to ability, to each according to need...someone has apparently been asleep during the great failed experiment of the last fifty years.

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July 8, 2005
Maker of Heart Drug Intended for Blacks Bases Price on Patients' Wealth

By STEPHANIE SAUL
The company that recently broke new ground by winning federal approval for the first drug intended for African-Americans could now be entering new territory with a controversial pricing system for the medicine.

The maker, NitroMed, has set the price of its heart-failure drug BiDil at $1.80 a pill, significantly higher than what analysts had expected and nearly twice as much as some other heart-failure treatments. Depending on the dosage, that would make the cost of taking BiDil at least $5.40 and maybe as much as $10.80 a day.

The medication, a combination of two generic drugs, is planned for market introduction by Monday.

NitroMed says as many as 750,000 black Americans suffer from heart failure and are candidates for the drug. But the company has established an unusually generous charity program to go along with the drug's high price, meant to make it affordable to the 75,000 or so target patients the company estimates have no prescription drug insurance coverage.

Any patient without prescription drug coverage will be able to get BiDil for $25 a month. Poor patients without prescription drug coverage will get it free, the company said yesterday.

"We believe it's a mandate," said B. J. Jones, the marketing director for NitroMed, "that BiDil should be available for every black heart-failure patient."

But some critics view the drug as too expensive, particularly in view of the past public support of BiDil by black doctors' groups.

"I'm disappointed in the decision to price BiDil beyond the financial means of many patients who might benefit," said Dr. Steven Nissen, a Cleveland Clinic cardiologist who led a Food and Drug Administration advisory panel that approved the drug last month.

Dr. Gregg Bloche, a medical ethicist at Georgetown University Law Center, said the charity program was a way to blunt criticism about the drug's cost.

"It's a vent, a kind of steam vent, to protect you against pressure building up," Dr. Bloche said.

David Moskowitz, a financial analyst who has raised estimates of sales and profit for NitroMed as a result of the pricing structure, noted that NitroMed has built subsidies into its business model for BiDil. "I think that's appropriate," he said.

"It is like some welfare models, where some people are taxed and others benefit," he said. "One can look at it as pricing where the company will be subsidizing its patient assistance program with some of the dollars from private insurers and government programs."

Mr. Moskowitz had predicted that BiDil would cost only about $3 a day, based on the costs of heart-failure treatments currently on the market: Coreg by Glaxo Smith Kline and Inspra by Pfizer. At $1.80 a pill, however, the cost will be substantially higher. BiDil is to be taken at least three times a day. Some patients will take two pills three times a day.

The higher pricing strategy for the drug, which the company said it would fully explain in an investor conference next week, has led other analysts to revise their sales estimates for BiDil, with many forecasting higher revenues than before.

Pacific Growth Equities, which has an investment banking relationship with NitroMed, raised its annual sales estimate to $450 million to $500 million, up from $300 million previously, according to Liana Moussatos, an analyst.

In a report to investors on Tuesday, Mr. Moskowitz noted that a NitroMed statement last Friday announcing the $1.80-a-pill price was released in concert with a statement endorsing the company's prescription assistance program from a Washington-based organization called the National Minority Health Month Foundation Minority Coalition for Prescription Drug Assistance.

NitroMed has aggressively solicited the support of black physicians and politicians in promoting BiDil, which the Food and Drug Administration approved last month as the first drug for use by one race. Its approval followed a research study of 1,050 black patients, called the African-American Heart-Failure Trial, which showed it reduced mortality by 43 percent over 18 months.

Mr. Jones, the NitroMed marketing executive, said the company wanted its prescription assistance program to be "industry leading" based on the results of that clinical trial.

While all major drug companies have prescription assistance programs, Mr. Jones said that NitroMed's program was more generous than the industry standard. Generally, he said, the programs set a threshold of twice the poverty level.

NitroMed's program will provide free BiDil to anyone whose income falls below three times the poverty level, according to Mr. Jones. The company will take the added step of providing the drugs for $25 a month to anyone who does not have insurance, even those whose incomes are higher.

The $25 plan is for those who "unfortunately, so often, fall through the cracks," Mr. Jones said, "the quote, unquote working poor, with enough to keep food on the table but not enough to get the appropriate insurance."

Dr. Nissen and Dr. Jonathan Sackner-Bernstein, another cardiologist who served on the F.D.A. advisory panel that recommended BiDil's approval, raised concerns that not all the eligible patients would end up participating in the prescription assistance program.

"I'm skeptical about these plans," said Dr. Sackner-Bernstein, a heart-failure specialist at North Shore University Hospital in Manhasset, N.Y. "Since they require doctors to send in forms, they don't work as well as they are supposed to."

NitroMed also runs another risk by pricing the drug high. BiDil is a combination of two generic drugs, hydralazine and isosorbide dinitrate. While the generics are not available in the exact doses contained in a BiDil pill, some doctors are willing to experiment with higher and lower doses or split generic pills to achieve similar results.

"The way I'd look at it, those individual components, if purchased generically, cost under 25 cents a tablet," said Dr. James E. Hartert, the chief medical officer for Prime Therapeutics, a prescription drug insurance program in St. Paul. "That's a big difference from $1.80."

Dr. Hartert said his company had not yet determined whether BiDil would be included on its formulary - the list of drugs its insurance will cover.

But Dr. Nissen said the cost considerations could drive many physicians to use the generic drugs, even though the combination is more convenient.

"It's just not worth spending an extra $100 a month to avoid taking a few additional pills," Dr. Nissen said.

Copyright 2005 The New York Times Company

Self-explanatory.

Why Do You Work So Hard?
Is it maybe time to quit your safe job and follow your path and infuriate the establishment?
By Mark Morford, SF Gate Columnist
Friday, July 8, 2005

There remains this enormous and wicked sociocultural myth. It is this: Hard work is all there is.

Work hard and the world respects you. Work hard and you can have anything you want. Work really extra super hard and do nothing else but work and ignore your family and spend 14 hours a day at the office and make 300 grand a year that you never have time to spend, sublimate your soul to the corporate machine and enjoy a profound drinking problem and sporadic impotence and a nice 8BR mini-mansion you never spend any time in, and you and your shiny BMW 740i will get into heaven.

This is the American Puritan work ethos, still alive and screaming and sucking the world dry. Work is the answer. Work is also the question. Work is the one thing really worth doing and if you're not working you're either a slacker or a leech, unless you're a victim of BushCo's budget-reamed America and you've been laid off, and therefore it's OK because that means you're out there every day pounding the pavement looking for work and honing your resume and if you're not, well, what the hell is wrong with you?

Call it "the cafe question." Any given weekday you can stroll by any given coffee shop in the city and see dozens of people milling about, casually sipping and eating and reading and it's freakin' noon on a Tuesday and you're like, wait, don't these people work? Don't they have jobs? They can't all be students and trust-fund babies and cocktail waitresses and drummers in struggling rock bands who live at home with their moms.

Of course, they're not. Not all of them, anyway. Some are creative types. Some are corporate rejects. Some are recovering cube slaves now dedicated full time to working on their paintings. Some are world travelers who left their well-paying gigs months ago to cruise around Vietnam on a motorcycle before returning to start an import-export business in rare hookahs. And we look at them and go, What is wrong with these people?

It's a bitter duality: We scowl at those who decide to chuck it all and who choose to explore something radical and new and independent, something more attuned with their passions, even as we secretly envy them and even as our inner voices scream and applaud and throw confetti.

Our culture allows almost no room for creative breaks. There is little tolerance for seeking out a different kind of "work" that doesn't somehow involve cubicles and widening butts and sour middle managers monitoring your e-mail and checking your Web site logs to see if you've wasted a precious 37 seconds of company time browsing blowfish.com or reading up on the gay marriage apocalypse.

We are at once infuriated by and enamored with the idea that some people can just up and quit their jobs or take a leave of absence or take out a loan to go back to school, how they can give up certain "mandatory" lifestyle accoutrements in order to dive back into some seemingly random creative/emotional/spiritual endeavor that has nothing to do with paying taxes or the buying of products or the boosting of the GNP. It just seems so ... un-American. But it is so, so needed.

Case in point No. 1: I have this sister. She is deep in medical school right now, studying to be a naturopathic doctor at Bastyr University just outside Seattle, the toughest school of its kind in the nation, and the most difficult to get into, especially if you've had no formal medical training beforehand, as my sister hadn't.

She got in. She bucked all expectation and thwarted the temptation to quit and take a well-paying corporate job and she endured the incredibly brutal first year and rose to the top of her class. Oh and by the way, she did it all when she was over 40. With almost no money. While going through an ugly, debt-ridden divorce.

Oh you're so lucky that you have the means to do that, we think. I'd love to do that but I can't because I have too many a) bills b) babies c) doubts, we insist. We always think such lives are for others and never for ourselves, something people with huge chunks of cash reserves or huge hunks of time or huge gobs of wildly ambitious talent can do. It is never for us.

And truly, this mind-set is the national plague, a fate worse than death.

And while it must be acknowledged that there are plenty who are in such dire financial or emotional circumstances that they simply cannot bring change, no matter how much they might wish it, you still always gotta ask: How much is legit, and how much is an excuse born of fear?

The powers that be absolutely rely on our lethargy, our rampant doubts, the attitude that says that it's just too difficult or too impracticable to break away. After all, to quit a bland but stable job, to follow your own path implies breaking the rules and asking hard questions and dissing the status quo. And they absolutely cannot have that.

Case in point No. 2: I have a young and rather brilliant S.O., a specialist in goddesses and mystics and world religions, who is right now working on a book, a raw funky spirituality "anti-guide" for younger women. She took a six-month leave of absence from a very decent, reliable, friendly administrative job so as to focus on the creation of this project.

And while she has no trust fund, she does have the "luxury" of small parental loans to help her through, though it hardly matters: Giving up her respectable gig was insanely stressful and wracked with doubt. Leave a honest job? Give up paid health care? Have no reliable source of income for months on end? Trade calm stability for risk and random chance? No way, most people say. And of course, it was the absolute best choice she could've made. Time instantly became more fluid and meaningful. Mental clutter vanished. Possibility grinned.

Case in point No. 3: Not long ago, the CEO of one of the largest and most powerful international real estate firms in the nation quit his job. Stepped down. Not, as you might imagine, for retirement and not to play more golf and not to travel the world staying only in Four Seasons suites, but to work on rebuilding his relationship with his estranged wife.

My insider source tells me it was one of the most touching, and unexpected, and incredibly rare corporate memos they had ever seen. No one -- I mean no one in this culture is supposed to quit a job like that just for, what again? Love? Relationship? It's simply not done. But of course, it absolutely should be.

We are designed, weaned, trained from Day 1 to be productive members of society. And we are heavily guilted into believing that must involve some sort of droning repetitive pod-like dress-coded work for a larger corporate cause, a consumerist mechanism, a nice happy conglomerate.

But the truth is, God, the divine true spirit loves nothing more than to see you unhinge and take risk and invite regular, messy, dangerous upheaval. This is exactly the energy that thwarts the demons of stagnation and conservative rot and violent sanctimonious bloody Mel Gibson-y religion, one that would have all our work be aimed at continuously patching up our incessant potholes of ugly congenital guilt, as opposed to contributing to the ongoing orgiastic evolution of spirit.

It is not for everyone. It implies incredibly difficult choices and arranging your life in certain ways and giving up certain luxuries and many, many people seemed locked down and immovable and all done with exploring new options in life, far too deeply entrenched in debts and family obligations and work to ever see such unique light again. Maybe you know such people. Maybe you are such people.

But then again, maybe not. This is the other huge truism we so easily forget: There is always room. There are always choices we can begin to make, changes we can begin to invite, rules we can work to upset, angles of penetration we can try to explore. And if that's not worth trying, well, what is?

URL: http://sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2005/07/08/notes070805.DTL

©2005 SF Gate

Now you do have to make everyone happy all of the time.

Because that one disgruntled person now truly can destroy you.

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How blogs damage brands

By Larissa Bannister
2,107 words
8 July 2005
Campaign
24
English
(c) Campaign, a Haymarket publication www.haymarketgroup.com, for more information visit www.brandrepublic.com or email info@brandrepublic.com
Blogging threatens to smother brands in an avalanche of negative coverage. But it is also a powerful new tool with which brands and agencies can fight back.

Customers no longer retain any loyalty to products and the 'brand' has run out of juice - that's according to Kevin Roberts, the worldwide chief executive of Saatchi & Saatchi. And people don't respond to sales pitches from products anymore; instead, they want personal, instantaneous connections.

So imagine if there was a new marketing tool that allowed your clients to connect one-on-one with consumers, get immediate feedback and respond to them before they decide to turn their backs on a product. Wouldn't you be advising them to use it?

The tool does exist, and it's called a blog. Kevin Roberts has his own at www.saatchikevin.com , as does Bob Lutz, the vice-chairman of General Motors. Last year, Bill Gates told a conference of business leaders that blogging could be a better way to communicate than e-mail, and has since been rumoured to be planning to start his own web diary.

If he does, he'll be joining a huge community of bloggers who regularly post about their lives. The internet now hosts more than 12 million, and the number is growing by 40,000 every day. Essentially, blogs are web diaries that contain comment, opinion and sometimes audio or video clips.

The majority exist in isolation, rarely (if ever) read, but the best of them link through to vast communities who are interested in the same things as they are. It's like talking to thousands of like-minded people all at once.

Many bloggers write about brands and companies - some of this coverage is positive, much of it less so (see box) - and some of the feedback from consumers is bad enough to make marketers' hair stand on end. Forres-ter Research says young consumers in particular are influenced by blogs, and predicts that within five years they will be 'a key component of corporate communication strategies'.

At the moment, UK companies are proving slow to take advantage. According to a survey from the blog monitoring business Market Sentinel, not a single FTSE 100 company currently runs its own blog. But the volume of negative comments being made about brands is starting to make marketers sit up and take notice.

'If you search for a brand on Google, you'll find that a lot of the top spots are dominated by unauthorised and often negative blogs,' Mark Rogers, the chief executive of Market Sentinel, says. The company has just produced a report showing that of the top 50 UK grocery brands, 40 per cent have problems with detractors' comments appearing high up on Google searches for the brand name. 'If the brands are blogging themselves, they can react to criticism and suggest solutions to the problem,' he explains.

Blogs perform particularly well on search engines because they are frequently updated and use RSS (Really Simple Software), which makes tracking new posts easy. Corporate websites, on the other hand, rarely change their content and, as a result, sometimes do not appear at the top of a search for a brand name.

It's not just small specialists and public relations companies that offer blogging advice to marketers. Carat Interactive recently launched its own blogging division in the US and is planning to do the same in the UK in a couple of weeks' time.

Wayne Bickerton, the head of partnerships and emerging media at Diffiniti (formerly Carat Interactive UK), argues that agencies are best- placed to provide clients with advice and consultancy on blogs because they are involved in the overall communications strategy that brand blogs should fit into. 'We would never sell blogs on their own, they are just one part of what a company should consider doing,' he says.

There are three areas in which agencies can help clients use blogs, he adds: advertising, monitoring and creation. Advertising on blogs is straightforward enough and, though they remain a niche medium, some are already taking bookings from the likes of Nike and Absolut Vodka.

Blog monitoring - searching for and tracking a particular brand name - is equally self-explanatory but presents a 'unique' opportunity, according to Bickerton. 'Research is key to the communication process and companies invest heavily in it, but this is a completely new way to find out what people think of your brand,' he says. 'It's even possible to spot new trends in what consumers want early enough to do something about it.'

The creation of a brand blog is the most complicated area to master.

In this, as in other areas, the UK lags behind the US, where companies such as Microsoft, General Motors and Boeing run successful corporate blogs.

GM used its blog to counter claims that it was planning to ditch its Pontiac and Buick brands, while the Microsoft blogger Robert Scoble - one of about 1,500 Microsoft employees with a regular blog - has almost single-handedly managed to dispel the company's reputation as a monopolist among its all-important audience of software developers. Scoble talks a lot about industry issues, rather than just the company, and is credible because he writes about what he likes - something that he has admitted can make Microsoft's PR department want to 'whack' him.

As Scoble's popularity has proved, the key to success is to be honest and steer clear of corporate-speak. Blogs should therefore be monitored, rather than pre-screened. The problem with this is the company's lack of control over what is published - cue reeling horror from corporate communications departments.

But there are ways to avoid leaking secrets or falling foul of libel laws. Clients should ensure content guidelines are in place from the start, Justin Hunt, the managing director of the blogs consultancy Itsblogs, says. That means no blogging about new products before they are released or about sensitive company information, especially for listed companies.

'A blog needs some form of moderation but if content is too moderated, it will drive people away,' Bickerton adds. 'Companies need to realise that negative feedback is OK - Piaggio USA is running a blog for Vespa scooters and has said it will not remove negative comments from consumers.'

Whatever you do, don't fake it - blogs that are just ad campaigns in disguise tend to backfire and alienate the audience they were trying to reach. McDonald's felt the weight of bloggers' disapproval last year when it launched a fake blog that claimed to be written by a customer who had found a French fry shaped like the head of Abraham Lincoln. As one blogger wrote: 'What's the point? No-one in their right mind would believe the blog is real. So while it is not deceptive, it still stinks. The site is so very camp to begin with; the fake blog is simply trying too hard.'

That said, the easiest way for a brand to learn how to get involved in blogging is to start small, perhaps by using a blog to support an ad campaign, as the games company Eidos did for the launch of Championship Manager 5.

The game has a large number of unofficial websites dedicated to it, according to Mark Iremonger, the managing director of Unit9, the digital agency behind the campaign. 'We wanted the official site to be the best online community for people who play Championship Manager,' he says. 'It was the first time a major (UK) brand had used blogging and we integrated it so that people could own their own page on the website. If you allow a community to create content, that's an extremely powerful way to communicate with an audience.'

The popularity of the blog even made monitoring easier, he adds, because users tended to self-regulate. Frequent users were given access privileges so they could monitor what was being written and remove anything libellous or otherwise contrary to guidelines set up for the site.

'The sensible approach to blogging is to start with a pilot and promote it on the main website. We're also getting enquiries from people wanting to use blogs to support specific campaigns,' Hunt says. 'Traditional websites have started to look like museums, whereas blogs are dynamic. They have fresh content every day, which keeps people coming back. They will not necessarily replace websites but they are complementary and within five years, most companies will have both.'

THE BEST ADVERTISING BLOGS

Wieden & Kennedy London's blog at http://wklondon.typepad.com/ is filled with tantalising titbits about agency life and nights out. 'Many lagers were drunk, a few samosas were thrown at Tony Wallace's head, Mick Bailey amazed us with his mastery of magic and Rebecca demonstrated that she could smoke a fag with her foot,' one recent post says.

www.adscam.typepad.com is an outrageous mix of insults and observations about the industry from the US creative consultant George Parker.

www.ad-rag.com tracks gossip, news and dud ads from around the world.

Kevin Roberts, the chief executive of Saatchi & Saatchi, has his own blog at www.saatchikevin.com , where he answers questions. Asked whether he dreamed last night, he replied: 'Yes, sex and business - perfect!'

WHAT BLOGS SAY ABOUT ...

MCDONALD'S

- About a recent ad campaign

'Are those McDonald's ads getting on your nerves too? The ones where it's 99p and with the penny change you can get your hands on a Hawaiian island, or in the latest one, Neuschwanstein Castle (where they filmed Chitty Chitty Bang Bang!). I mean, McDonald's is supposed to sell fast food ... and they obviously seem to think that the way to sell it is to persuade you that fast food = posh holiday. Hmm. Not convinced.'

- After McDonald's set up a fake blog to promote a spoof French fry shaped like Abraham Lincoln

'Fake blogs fly in the face of why blogs were created in the first place, to create an honest, direct dialogue with customers. It shows a clear misunderstanding of the medium and will pay off with tons of negative buzz online for our fake fry friends.'

- On a blog written by McDonald's employees

'I'm sorry but I'm NOT FUCKING LOVIN' IT anymore.'

TESCO

- A blogger commenting on Tesco's decision to move magazines such as Zoo and Nuts to the top shelf

'Tesco isn't censoring the magazines at all, but by changing their position on their newsstands ... they could damage the magazines' sales. Tesco is effectively saying to the publishers of these magazines: 'If you want your titles to look like porn, we'll treat them like porn.''

NIKE

- Positive blogging on its new range of sustainable footwear

'A few months ago, I highlighted Nike's re-use-a-shoe programme as a good example of the company using service initiatives to up its social responsibility cachet after the sweatshop debacle of the 90s. And now they've come up with something that does this on the product front as well - Nike Considered ... I like to think that Nike's drive towards 'sustainable product innovation' comes out of a genuine desire to make a difference ... But even if it is a marketing scam, it's one that will be seen by a lot of people. And if it changes their perspective on sustainability, all well and good.'

VOLKSWAGEN

- On the 'Singin' in the Rain' ad

'For Volkswagen, much is riding on the Golf finding the status it once had. But doing that takes more than a bit of fancy dancing.'

NATWEST

- On the bank's mortgage services

'We were supposed to exchange contracts on Tuesday for selling our flat and buying our new house ... but yet again NatWest have failed to provide a mortgage offer on time.'

WALKERS

- A Planet Veggie campaign resulted in Walkers changing the recipe of its cheese and onion crisps to make them vegetarian

From a consumer: 'I recently noticed that many of the vegetarian-sounding Walkers Sensations flavours contain animal products. My vegetarian boyfriend has been caught out by this as he didn't read the packaging carefully enough. Walkers obviously aren't bothered about making flavours suitable for vegetarians.'

From Walkers: 'The Walkers cheese and onion crisps has been changed and is now suitable for a vegetarian diet. Please see the back of the pack for the label suitable for vegetarians.'

Would you invest in this enterprise?

They neglected to account for the most important asset of all--human capital.

Compassion consistently clouds our judgment in deciding when to abandon a social endeavor. It is often claimed that it makes us uniquely human. On the contrary--reason makes us uniquely human. Compassion is what may ultimately be our undoing.

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'Brain drain' puts Africa's hospitals on the critical list: Rich nations are taking the poverty-stricken continent's scarce medical staff, says Andrew Jack.

By ANDREW JACK
849 words
7 July 2005
Financial Times
London Ed1
Page 20
English
(c) 2005 The Financial Times Limited. All rights reserved.

The recently completed district hospital in Thyolo in southern Malawi would not look out of place in a more developed country except for one thing - a chronic shortage of medical staff.

The building - built with the support of the European Union - houses just 40 overworked nurses and eight clinical staff. It has no full-time doctor.

In the whole of Malawi, a country of 12m people, there are just 100 doctors and 2,000 nurses.

Malawi, one of the world's poorest countries, has always struggled to train the medical staff it needs. But now its plight has been exacerbated by a brain drain as staff are lured abroad by the prospect of higher pay in developed countries.

As the leaders of the Group of Eight industrialised nations meet in Gleneagles, Scotland, this week to discuss African poverty, Malawi's struggle to provide basic healthcare for its people offers a stark reminder to the world's richest countries that they contribute to the problems that many African nations face.

"Taking people away to other health services is killing our people," says Dr Hetherwick Ntabe, Malawi's health minister. He sees little hope of any solution in the near term.

Dr Atta Gbary, the World Health Organisation's Africa adviser on human resources in health, estimates that 23,000 of the best trained medical staff leave Africa each year for the developed world. He says that there are just 800,000 medical staff in the whole of Africa.

Given that the cost of training a specialist doctor in Africa is estimated by the United Nations to be about Dollars 100,000, the exodus represents a Dollars 500m annual subsidy from Africa to wealthy nations. In the UK last year there were more than 10,200 African-trained doctors.

Dr Ntabe believes Malawi should "bond" its medical staff, ensuring they serve several years in the local system once they have completed their training. He also wants foreign governments that hire Malawi's medical staff to pay compensation for the cost of training doctors and nurses to replace them.

The brain drain, says Dr Gbary, means the vacancy rate for nurses and doctors in Malawi is so high that even when donors offer funds "it is impossible to use them because the people are simply not there to work".

Some hospitals have resorted to hiring local staff out of retirement in a bid to make up the shortfalls.

But the lure of higher pay in the developed world is not the only reason behind the brain drain. With nearly 15 per cent of Malawi's adult population infected with HIV, many medical staff have themselves become ill with Aids or died.

The Aids epidemic has added to the burden on those who remain, which in turn has encouraged many in Malawi's state health sector to seek higher paid work and better conditions in private and non-governmental organisations - or even in different professions.

"It becomes frustrating working for the state," says Dr Roderick Narikungari, who quit after 10 years to join Medecins sans Frontie`res in Malawi. "There was a lack of resources . .. but I was being moved away from treatment into administration." He says many of his colleagues have left for richer neighbours such as Botswana as well as the UK.

Robin Broadhead, head of the College of Medicine in Blantyre, Malawi, says: "The brain drain is a sheer disgrace. But you can't expect to keep doctors here in artificial slavery."

Desperate government officials are now hunting for scapegoats. In particular, western academic institutions are being accused of luring talent away from treatment to research.

"Our people are rushing (to the institutions) where they are paid a lot more, do a lot less, sitting and filling out research forms," says Dr Ntabe. "It's ridiculous."

Such views now threaten a groundbreaking clinical trial planned by the University of North Carolina to test whether the Aids drug tenofovir can be used as a prophylactic. The trial is supported by the non-government group Family Health International.

Dr Francis Martinson, UNC's programme officer in Malawi, rejects such claims. "The government is always searching to blame everyone apart from itself. Most people have left the system because they don't like it."

He argues that UNC, which employs 70 medical staff in Malawi on salaries up to twice state levels, ensures nearly all spend substantial time on clinical work. It has also helped to fund facilities.

Ironically, while the WHO argues that Africa needs another 1m medical staff to meet basic health goals, it has recruited several of Malawi's top doctors. Others have gone into national politics and government, such as Dr Ntabe himself.

For now, Dr Ntabe and his colleagues see no obvious cure for the brain drain. Africa's efforts to improve healthcare will, it seems, continue to suffer.

The man who refuted absolutism.

Too bad no one seems to be paying attention. Do we judge someone based on the merits of their ideas, or by that which they wrought through those who blindly followed them?

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THE GREATEST THINKER IN THE WORLD ... EVER

Although he lacked the soundbites of Marx and the attitude of Sartre, David Hume should be recognised as the finest philosopher of all time

By Julian Baggini

PEOPLE of Scotland, it is more than your patriotic duty to help crown your 18th century countryman, David Hume, as the greatest philosopher of all time. For once, naked nationalism and good rational sense both lead us to same conclusion: among all great thinkers, Hume reigns supreme. And, lest misplaced patriotisim is suspected, I say this as someone who is no more Scottish than the Duke of Edinburgh.

Radio 4’s In Our Time programme is currently conducting a poll to determine the world’s greatest philosopher, and although its presenter, Melvyn Bragg, has let it slip that Marx is the early leader, inside sources tell me Hume is hot on his heels. So there is still time to win the day for Scotland’s finest mind.

That Hume is even a contender is testimony to the strength of his philosophy and the intelligence of the voters, since he lacks all the necessary requisites of a popular hero. Marx has the advantage of some seriously memorable soundbites: “Religion is the opiate of the masses”; “From each according to his abilities, to each according to his needs”, and “Either this man is dead or my watch has stopped.”(Admittedly, that last one is by Groucho, not Karl.) Hume’s most famous quotes, in contrast, are completely baffling to the uninitiated. There is wisdom in his saying: “Tis not contrary to reason to prefer the destruction of the whole world to the scratching of my finger.” But you’d be forgiven for not spotting it.

Jean-Paul Sartre reaps the benefits of his cool image. Whether historically accurate or not, there is a definite romance to the Left Bank cafés, the Gauloise cigarettes, the black polonecks and all that intense talk of despair and freedom. Hume, on the other hand, played billiards in drawing rooms and loved his mum.

The mystique of Kierkegaard and Camus is heightened by their young and tragic deaths. Hume passed away aged 65 of intestinal cancer, cheerful and in good humour. That’s really no way to start a posthumous personality cult.

Indeed, the average person in the street knows little more about the man – except, perhaps, that “David Hume could out-consume Schopenhauer and Hegel”, as the Monty Python song insisted.

And yet Hume has endured, hailed by many as the greatest British philosopher. Can we go further and say he is the greatest philosopher, full stop? I think we can, not least because Hume’s whole approach to philosophy is needed even more now than it was in his time.

Hume was born in Edinburgh in 1711, in the infancy of both the Enlightenment and the union of Scotland and England into Great Britain. Scottish philosophy was being transformed by the success of science, which was based not on abstract theory, but empirical observation of how the world actually works. Suddenly, the theoretical speculations of Continental thinkers such as Descartes and Spinoza seemed hopelessly detached from the real world they sought to explain. Philosophy had to be made natural, its reasoning rooted in experience.

Hume was just one of many who helped take philosophy along this new path. However, it was also a deeply uncertain one in which the threat of scepticism was ever present. Gone were the dreams of Plato and Descartes of a philosophy beyond doubt. In its place came the need to learn how to live with doubt without being consumed by it. Hume’s unique genius was to show how this could be done.

Hume practised what he preached. Although when in the midst of his philosophical deliberations he was often perturbed by their sceptical implications, these worries soon dissolved when he rejoined human company and had a game of billiards. This may seem shallow, but it is in fact a mature recognition that those who claim to be nihilists are just posturing: nobody really believes in nothing.

The lessons he taught are desperately relevant today, when certainty is only found in religious fundamentalism, yet uncertainty risks a descent into postmodern relativism and intellectual anarchy. In this climate, how do we resolve ethical disputes such as those that rage over stem-cell research, euthanasia and civil liberties versus civic security? How can we trust science when it gets so many things wrong? How do we resolve the great ideological clashes of East and West when there are no unquestionable fundamentals upon which to build agreement? What we need is a Humean approach to provide the intellectual ballast necessary to stay afloat in a sea of uncertainty.

Consider the question of ethical values. Hume agreed with moral sceptics on several key points. He did not believe it was possible to establish absolute moral values . Religion could certainly not provide these, for there is simply no way we can trust the authority of religious texts or leaders. Nothing can be true or false because a religion says it is, but only because we have good reasons to believe it is true or false.

In a world in which there are so many different religions and denominations, all claiming different things, Hume’s scepticism seems wiser than ever. If we are to accept the guidance of one religion over an other, we need reasons. “Trust me, I’m a cleric” is not a good one, not least because for every bishop saying that homosexuality is perfectly acceptable, there is another claiming that sodomites will burn in hell for their sins.

Nor can moral values be established by pure reason. Hume referred to the kinds of truths which could be proven by rationality alone as “matters concerning the relation of ideas”, once again demonstrating his uncanny knack of failing to coin a catchy phrase. One example is mathematics. It is because of what the numbers and symbols mean that two plus two must equal four. Similarly, you don’t need to conduct a survey of bachelors to know that they are all unmarried men.

Hume thought it obvious that moral matters do not fall into this category. You cannot know that Asbos are an unacceptable limit on civil liberties just by attending to what those words mean. Nor can you resolve a dispute between those who think a war is justified and those who do not, simply by determining the meanings of the terms “justified” and “war”. Moral debate is not like mathematics, and so disagreements cannot be resolved by pure theory.

So neither religion nor reason can establish moral certainties. Does that mean we are then condemned to a kind of moral free-for-all, in which what is right for you may not be right for me, and nobody is entitled to criticise anyone else’s ethics? Some find this view surprisingly attractive, since it is supremely tolerant. But when push comes to shove we know that absolute toleration is abhorrent. The killings in Darfur are not alright for the Sudanese victims. Anti-war protesters do not think the invasion of Iraq was right for Bush and Blair and wrong for them – they think the war was just wrong.

Fortunately, Hume’s view does not lead us to moral anarchy. Besides religion and pure reason, there is another route to knowledge. Questions concerning matters of fact are settled by looking at how the world actually works. So, if you want to know at what temperature water boils, you have to conduct experiments to find out. Sitting in your armchair contemplating the meaning of “water” and “boil” will not help.

Crucially, however, matters of fact are never proven beyond all possible doubt. You have to accept that science is less than certain, but that, nonetheless, it is more reliable than, say, superstition. Whereas previous philosophers demanded certainty, Hume tried to grade degrees of uncertainty.

Clearly, however, moral principles are much less certain than the laws of physics. Right and wrong cannot be observed and measured like energy or mass. Rather, the facts of morality are to be observed in human feeling and compassion. When we say that torture is wrong, for example, we are not identifying a feature of torture itself, but expressing something of our reaction to it. What is more, these feelings are somehow natural for human beings. Empathy is a human universal, and this is what enables people to agree about what is good and bad. Feelings may be affected by upbringing, society and reasoning, but are not simply products of any one of these. Hence the curious phrase: “Tis not contrary to reason to prefer the destruction of the whole world to the scratching of my finger.” In other words, it is not rational argument that makes us recoil from the idea of destroying the whole world, but human fellow feeling.

Hume’s strategy for resolving today’s moral dilemmas would be to start by showing how we cannot accept any absolute principles dictated by religious leaders. Then he would show how any moral principles held to be self-evident or proven are no such thing. Purged of all bogus absolutes, we would then begin the process of identifying the common humane impulses that morally motivate us and using our reason to negotiate our way through the contradictions and complexities that emerge. This is pretty much how modern ethics committees proceed. They cannot make their starting points absolutes, since not everyone will agree with them. Rather, they need to build from what unites us.

Hume’s genius was his ability to combine a ruthless intellect that revealed the limitations of our understanding with the wisdom to see we can move forward with the meagre intellectual resources available to us. That’s why Hume is above fashion and doesn’t need a dramatic life, a romantic death or clever slogans in order to endure. A vote for Hume is a vote for the only philosopher who is able to defeat the scepticism of our time without dogmatism.

Vote for the greatest philosopher at bbc.co.uk/radio4/history/inourtime Julian Baggini’s latest book, The Pig That Wants To Be Eaten And 99 Other Thought Experiments, is published next month by Granta. He appears at the Edinburgh International Book Festival on August 23

It is all right to go ahead and cry.

About the precipitous decline of intellectual fortitude in literature, that is.

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Literary bonbons

LAURIE MUCHNICK

June 26, 2005

Do you read chick lit? It's become such a bookstore staple that it's hard to believe it didn't even exist a decade ago. British journalist Helen Fielding is widely credited with having invented the genre with "Bridget Jones' Diary," which was published in 1996. That book was such a sensation that women writers stopped trying to emulate Jackie Collins' and Judith Krantz's over-the-top romantic confections and started writing stories about neurotic single women trying to have a cool career, lose a few pounds and find a man.

(By the way, what's Judith Krantz up to? She hasn't made an appearance on bookstore shelves since her memoir, "Sex and Shopping: The Confessions of a Nice Jewish Girl," came out in 2000, and her most recent novel, "The Jewels of Tessa Kent," was published in 1998. I think it's time for a comeback - especially since she's being used as a role model again. One of the most hotly anticipated books of this summer is an ultra-glamorous Hollywood novel called "Adored," by Tilly Bagshawe, who says she was trying to recapture the dishy, escapist fun of a Krantz novel. When "Adored" is published in July, we'll see if that's what people want to read these days; if it sells, I sure hope Judith Krantz has her computer warmed up.)

Getting back to the history of chick lit: After "Bridget Jones" hit it big, American publishers began looking for their own version of the "neurotic single woman looking for love" novel. Candace Bushnell's "Sex and the City" came out in 1996, about the same time as "Bridget Jones," but it didn't become a cultural phenomenon until the TV series started two years later. Since it takes a long time to write and publish a book, trends can take a while to blossom, and it wasn't until 1998 that American chick-lit novels began to appear. There was "Animal Husbandry" by Laura Zigman, and then, in 1999, there was "The Girls' Guide to Hunting and Fishing," by Melissa Bank. I can't remember if the term "chick lit" was in use by then, but I do remember Bank being promoted as the more literary version of Helen Fielding.

Why worry about all this now? Because Melissa Bank has just published her second book, "The Wonder Spot," and it's kicking up a storm of name-calling among women writers who do and do not embrace the chick-lit label. Curtis Sittenfeld, author of "Prep," wrote a scathing review in The New York Times Book Review which started off: "To suggest that another woman's ostensibly literary novel is chick lit feels catty, not unlike calling another woman a slut - doesn't the term basically bring down all of us?" But she doesn't let that stop her, going on to say that "The Wonder Spot" is, indeed, chick lit, because "its appeal relies so much on how closely readers relate to its protagonist," Sophie Applebaum, an upper-middle-class Everywoman who spends her time looking for love or even a job that she likes (and is good at).

I didn't disagree with Sittenfeld's negative assessment of "The Wonder Spot" - I didn't like it either, and even though I could certainly identify with Sophie I found the book incredibly boring - but I was troubled by her harping on the chick-lit theme. Novelist Jennifer Weiner, author of fun, unabashedly commercial novels including "Good in Bed" and "In Her Shoes" (soon to be a movie starring Cameron Diaz), brilliantly analyzed Sittenfeld's entire review on her blog, Snarkspot (jenniferweiner .blogspot.com). Weiner thinks (and I agree) that book reviews are at least as much about the reviewer as about the book being reviewed, and in this case, she thinks Sittenfeld is worried about her own place in the literary pantheon. Her book bears blurbs from Dave Eggers, Thisbe Nissen, Matthew Klam and other well-respected young writers, but as Weiner points out, if you look at her entry on Amazon.com, you'll see that one of the other books bought by the same people who bought "Prep" was "Bergdorf Blondes" - not exactly high culture.

So what's the moral of the story? There's good chick lit and bad chick lit, just as there's good literary fiction and bad literary fiction - and maybe these labels are useless, anyway. I can hardly count the number of times I've read reviews that say, basically, "This book is chick lit, but never mind, read it anyway, it's great!" I wrote something like that myself, last summer, when I raved about Sarah Dunn's first novel, "The Big Love," which has just come out in paperback and which I would recommend in a heartbeat. The plot is nothing unusual - girl loses boy, girl has fling with cute boss, girl gets boy back and has to decide what to do with him - but the narrator's voice is so engaging that it lifts the book right out of the run-of-the-mill and into the perfect-reads category.

I think there's been a brilliant by-product of the chick-lit tidal wave, and it's that smart, well-educated young writers who probably read Jonathan Franzen and Alice Munro in their spare time have embraced the idea that books can be enjoyable and intelligent at the same time. (Not that Franzen and Munro aren't enjoyable, but you know what I mean. They're not exactly light reading.) And this realization hasn't been limited to women writers, either. Think of Nick Hornby or Tom Perrotta, who write books that might have been called "lad lit" if that spinoff label hadn't been such a dud with the reading public. Other chick-lit spin-offs now include "mommy lit," including "I Don't Know How She Does It" by Allison Pearson and "Little Earthquakes" by Jennifer Weiner; and "worker lit," which began with "The Nanny Diaries" and continues with this summer's sharp "Twins of Tribeca," by former Miramax publicist Rachel Pine. There are even chick-lit mysteries; I've devoured the Bailey Weggins books by Cosmopolitan editor in chief Kate White, and am currently enjoying "Fashion Victim," by Sam Baker, the editor of Cosmo's U.K. edition. (Though it seems kind of weird to have the top editors of sister magazines writing such similar books, I say the more the merrier.)

Of course there are bad chick-lit novels, just as there are bad literary novels - I won't mention names. But as far as I'm concerned, every balanced reading diet requires a few bonbons, and I'm glad there are plenty of literary chocolates on the shelves to choose from.

Copyright 2005 Newsday Inc.

Everything is more risky than it seems.

It may be more dangerous to think you understand rather than knowing that you don't understand at all.

The question is never whether you are right...but rather, exactly how wrong you are.

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Brainstorm

How the Finance Gurus Get Risk All Wrong

BENOIT MANDELBROT; NASSIM NICHOLAS TALEB
1,348 words
11 July 2005
Fortune
U.S. Edition
English
© 2005 Time Incorporated. Provided by ProQuest Information and Learning. All Rights Reserved.

Your money is at risk. No matter what you've put it in--stocks, bonds, derivatives, hedge funds, houses, annuities, even mattresses - -there's always the chance that you could lose it or miss out on a bigger opportunity somewhere else. Anyone who would tell you otherwise is either a fool or a huckster. Then there are those who do warn of risk but package it into a simple numerical measure that seems to put it within manageable bounds. They're even more dangerous.

Your mutual fund's annual report, for example, may contain a measure of risk (usually something called beta). It would indeed be useful to know just how risky your fund is, but this number won't tell you. Nor will any of the other quantities spewed out by the pseudoscience of finance: standard deviation, the Sharpe ratio, variance, correlation, alpha, value at risk, even the Black-Scholes option-pricing model.

The problem with all these measures is that they are built upon the statistical device known as the bell curve. This means they disregard big market moves: They focus on the grass and miss out on the (gigantic) trees. Rare and unpredictably large deviations like the collapse of Enron's stock price in 2001 or the spectacular rise of Cisco's in the 1990s have a dramatic impact on long-term returns - -but "risk" and "variance" disregard them.

The professors who live by the bell curve adopted it for mathematical convenience, not realism. It asserts that when you measure the world, the numbers that result hover around the mediocre; big departures from the mean are so rare that their effect is negligible. This focus on averages works well with everyday physical variables such as height and weight, but not when it comes to finance. One can disregard the odds of a person's being miles tall or tons heavy, but similarly excessive observations can never be ruled out in economic life. The German mark's move from four per dollar to four trillion per dollar after World War I should have taught economists to beware the bell curve.

Today Google grabs much Internet traffic, and Microsoft represents the bulk of PC software sales. Out of a million submitted manuscripts, a handful account for the bulk of book sales. One percent of the U.S. population earns close to 90 times what the bottom 20% does, and half the capitalization of the stock market (close to 10,000 companies) is in fewer than 100 corporations.

In other words, we live in a world of winner-take-all extreme concentration. Similarly, a very small number of days accounts for the bulk of stock market movements: Just ten trading days can represent half the returns of a decade.

The economic world is driven primarily by random jumps. Yet the common tools of finance were designed for random walks in which the market always moves in baby steps. Despite increasing empirical evidence that concentration and jumps better characterize market reality, the reliance on the random walk, the bell-shaped curve, and their spawn of alphas and betas is accelerating, widening a tragic gap between reality and the standard tools of financial measurement.

It was in the third century of our era that the skeptical philosopher and physician Sextus attacked blind reliance on dogmas; his stance earned him the name Sextus Empiricus (Sextus the Empirical). Depressingly, medicine took 13 centuries to follow his recommendations, become empirical, and integrate surgeons' observations of the human body. The same resistance to reality characterizes finance. The inapplicability of the bell curve has long been established, yet close to 100,000 MBA students a year in the U.S. alone are taught to use it to understand financial markets. For those who teach finance, a number seems better than no number-- even if it's wrong.

To blow up an academic dogma, empirical observations do not suffice. A better theory is needed, and one exists: the fractal theory of risk, ruin, and return. In this approach, concentration and random jumps are not belated fudges but the point of departure. The term "fractal" was coined in the 1970s by one of the authors of this piece to describe the many phenomena of nature in which small parts resemble the whole: The veins in leaves look like branches; branches look like miniature trees; rocks look like miniature mountains.

Similar patterns can be found in economic data, and the parts often relate to the whole according to what's called a power law. Such a law was first found to apply to the distribution of wealth: If there are about one-fourth as many people with a net worth of more than $200 million as there are with a net worth of more than $100 million, then there will also be about one-fourth as many with $2 billion as with $1 billion. This key property makes the computations easy; no computer is needed to divide by four.

In market terms, a power-law distribution implies that the likelihood of a daily or weekly drop exceeding 20% can be predicted from the frequency of drops exceeding 10%, and that the same ratio applies to a 10% vs. a 5% drop. In bell-curve finance, the chance of big drops is vanishingly small and is thus ignored. The 1987 stock market crash was, according to such models, something that could happen only once in several billion billion years. In power-law finance, big drops--while certainly less likely than small ones-- remain a real and calculable possibility.

Another aspect of the real world tackled by fractal finance is that markets keep the memory of past moves, particularly of volatile days, and act according to such memory. Volatility breeds volatility; it comes in clusters and lumps. This is not an impossibly difficult or obscure framework for understanding markets. In fact, it accords better with intuition and observed reality than the bell-curve finance that still dominates the discourse of both academics and many market players.

Fractal finance, alas, has not yet earned a place in the MBA curriculum. Until that happy day, what is a person with money at stake to do? First, diversify as broadly as you can--far more than the supposed experts tell you now. This isn't just a matter of avoiding losses: Long-run market returns are dominated by a small number of investments, hence the risk of missing them must be mitigated by investing as broadly as possible. Passive indexing is far more effective than active selection--but you need to go well beyond an S&P 500 fund to do yourself much good. And wherever you put your money, understand that conventional measures of risk severely underestimate potential losses --and gains. For better or worse, your exposure is larger than you think.

BENOIT MANDELBROT is Sterling Professor of Mathematical Sciences at Yale University and is the pioneer of fractal geometry. With Richard L. Hudson, he wrote The (Mis)Behavior of Markets.NASSIM NICHOLAS TALEB, a veteran derivatives trader and Dean's Professor in the Sciences of Uncertainty at the University of Massachusetts at Amherst, is the author of Fooled by Randomness.

The future of access.

Notice how all the smart money has already begun to invest. And late to market does not matter...there will be no switching costs. In fact, this may officially signal the end of the traditional landline business, as cellular/wireless and VOIP over power lines become standard operating procedure.

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Powerline Promise --- By William Alpert

971 words
11 July 2005
Barron's
21
English
(c) 2005 Dow Jones & Company, Inc.

Within a few years, everyone will be trying to sell every kind of communication service. Cable, phone, satellite and wireless firms will offer voice, data and television. That's made it hard to predict where market share and pricing will settle out. But prediction got even harder last week, when Google, Goldman Sachs and Hearst joined in a $100 million funding of yet another broadband technology. It's broadband-over-powerline, which runs on existing electric powerlines.

The three big backers are putting their money into Current Communications Group, a Germantown, Md.-based private firm started up by John Malone's Liberty Media (L) and the Berkmans, a family of successful investors in broadcast and cellular.

Everywhere you look these days, it seems there's another broadband technology. I count six: cable, phone, satellite, cellular, powerline and . . . one fine day, WiMax. Sounds great for consumers, but won't all those rivals beat each others' brains out?

It's not as bad as it looks, suggests Current Communications chairman Bill Berkman. Some of those seeming rivals will prove complementary, remedying each others' shortcomings. Here's another clue for you all: Wireless will need backhaul.

Current has offered broadband service since last year to the powerline customers of Cincinnati, Ohio utility Cinergy (CIN). Subscribers get Internet phone service and Web-surfing at speeds comparable to a cable modem or the phone companies' Digital Subscriber Line.

But unlike cable or DSL, the powerline broadband service offers fast downloads and uploads. And the modems plug into any power outlet in the house. The new money should allow Current to expand its broadband-over-powerline service into new territories, in deals with other electrical utilities.

There will be competition. Even in markets with just cable and DSL, there's already discounting by the likes of SBC Communications (SBC) -- a fact noted by the Federal Communications Commission's chairman Kevin J. Martin on Thursday, when the commission reported that high-speed Internet subscriptions rose 34% in the U.S. last year, to about 38 million lines.

Cable television operators like Comcast (CMCSA) are selling phone service. Phone companies like Verizon Communications (VZ) and SBC Communications are laying fiberoptic lines, to offer high-definition television. New satellites launched by DirecTV Group (DTV) over the next couple of years will carry thousands of high-def channels. Third-generation-technology upgrades this year by Verizon Wireless, Sprint (FON) and Cingular Wireless will broadcast television and music.

And that's just the incumbent technologies. Sometime in 2006 or 2007, new networks will blanket cities with broadband service using the wireless technologies of Wi-Fi and WiMax.

So far, the broadband-over-powerline technology used by Current Communications has appeared in scattered test runs at utilities like Houston-based CenterPoint Energy (CNP) (the regulated spinoff of Reliant Energy), Hawaiian Electric Industries (HE) and Boise's Idacorp (IDA). The leading pure plays in broadband-over-powerline are private companies like Current and the Ocala, Fla.-based Intellon, which makes chips used in Current Communication's modems and in the widely-retailed devices that use the HomePlug standard to make your house's wiring into a home computer network.

Because Current is privately held, chairman Bill Berkman won't say how many subscribers it's signed up in Cinergy's territory.

The number may not be large. At its analyst meeting last month, Cincinnati Bell (CBB) told analysts that Current's powerline service has taken "neglible" market share. The FCC tally released last week reported a nationwide increase of only 96,000 subscribers last year, in the category that includes both powerline and fiberoptic broadband, to a Dec. 2004 total of about 700,000. By comparison, cable firms added about 5 million subscribers to surpass 21 million, while phone firms added 4 million DSL subscribers to reach about 14 million.

A few things should step up the competition from Berkman's powerline alternative. First, there's the 100 million bucks from Goldman, Hearst and Google (GOOG). With its investment last week, Google said that broadband-over-powerline would help promote universal access to the Internet. Berkman's captive-equipment supplier, Current Technologies, is preparing to ship gear that incorporates new chips from Intellon that will allow 10 million bits-per-second service -- more than triple the current speed offered by cable and phone rivals.

As for the competitive battle-royal, Berkman's not worried. He hints that satellite TV and WiMax would be natural complements to powerline technology. His view is shared by Scott Cleland, head of the Washington-based communications gurus, the Precursor Group. Echostar Communications (DISH) has gained subscribers through a marketing alliance with SBC.

But after the telcos turn on their fiberoptics, they'll no longer need DBS allies for a television package. Powerline services, like Current, would then be perfect partners: the satellite firms would supply television and the powerline firms would supply broadband and telephone service. "It's a marriage of necessity," says Cleland.

But WiMax will be an even better fit, suggests Current's Berkman. WiMax and Wi-Fi networks will need to blanket a metropolitan area with antennae, then backhaul the communications traffic from all those antennae. A utility's poles are perfect antenna perches, and backhauling will be well-served by the robust uploads of broadband-over-powerline. So subscribers would get wireless-phone and computing service around town, with a big wired pipe to their homes.

"We think that Wimax is enormously our friend," says Berkman.

He may have reason for that belief. I wouldn't be surprised if Current announces some cross-technology partnerships in the not-too-distant future.

The Bay Area continues to evolve.

Arie de Geus once spoke of the living company. The Bay Area has become a living region, in which living companies and industries behave as the functional equivalent of cells and organs in addition to their functions unto themselves.

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Heading for the 'Frisco Bay --- By Steve Bergsman

824 words
11 July 2005
Barron's
28
English
(c) 2005 Dow Jones & Company, Inc.

Earlier this year, Sirna Therapeutics announced it was moving its corporate headquarters from Boulder, Colo., to San Francisco -- one more in the long line of biotechnology firms to put down roots in the region. From a real-estate perspective, homegrown and transplanted companies together have transformed the fabled Bay area into the largest biotech community in the country, occupying 16 million square feet. And demand for laboratory space, from San Francisco to Palo Alto, shows no sign of slowing, as the proximity of Genentech and first-rate universities beckons other research firms.

The biotech land rush offers the first ray of hope in a long while for a region decimated by the bursting of the technology bubble in 2000. Office-vacancy rates in greater San Francisco remain high, at about 14.5%, while the vacancy rate in industrial buildings is 5.8%. Laboratory vacancies, on the other hand, are scarce, at only 4% of existing capacity. And prices, which fell from a 2000 peak of $5 per square foot per month to a trough of $1.75 to $2.50, are on the rise again. "By year end prices will be in the high $3 range," says Dino Perazzo, first vice president and director of CB Richard Ellis's life-sciences group for the western U.S. "A year from now, they could be over $4 per square foot."

While some biotech companies are signing leases for office and industrial space -- Tercica (ticker: TRCA) earlier this year took 28,278 square feet in South San Francisco's Hitachi building -- most are seeking new facilities or existing structures that have been repurposed by developers to meet their highly specialized needs. Wareham Development, for example, is building about 100,000 square feet of lab space in the Bay area, and has entitlements for 225,000 square feet in Emeryville and 125,000 square feet in Berkeley, says Rich Robbins, a principal with the San Rafael, Calif., firm.

The Bay area's biotech boom has been fueled, in large part, by industry giant Genentech (ticker: DNA), which is famous for spinning out new companies that set up shop nearby. Connetics (CNCT), in Palo Alto, Tularik, in South San Francisco, and VaxGen (VXGN.PK) in Brisbane, Calif., are all Genentech offspring. Genentech itself committed late last year to lease 780,000 square feet of space in South San Francisco, in a deal that could be worth as much as $540 million through 2020. This marks the largest lease deal in the history of the Bay area, and comes "on top of several hundred thousand square feet the company already leases in the area," says Ed Grammens, of Newmark Pacific.

Biotech clusters -- such as those in the Bay area, the Cambridge/Boston axis and to some extent the fast-growing San Diego life-sciences sector -- generally develop around academic centers, with which they usually share research. In San Francisco's case, Stanford University and the University of California at Berkeley dominate, but the University of California at San Francisco, a graduate institution, is coming on strong. Its 43-acre life-sciences campus at Mission Bay is fast becoming the focal point for much of the biotech research in the region.

Indeed, Sirna Therapeutics (RNAI) found space adjacent to the Mission Bay campus, in an economic enterprise zone that offers exemptions on city wage and sales taxes. "We're starting with a pilot operation in about 5,000 square feet, which will enable us to get our feet wet," says CFO Martin Schmieg.

Not surprisingly, San Francisco also has been a draw for Alexandria Real Estate Equities (ARE), a Pasadena-based real-estate investment trust with a specialty in life sciences. Since last fall, the company has completed three deals with Catellus Commercial Development for parcels of land that wrap around the UCSF life-sciences campus. In the latest deal, earlier this year, Alexandria picked up 705,000 square feet for $32 million, bringing its total Bay area portfolio to 2.1 million square feet. The REIT, which boasts above-average growth in funds from operations, trades for about 74 and yields 4.4%. Bear Stearns analyst Ross Smotrich rates the stock Outperform.

Perhaps nothing confirms San Francisco's status as a biotech mecca more than a decision made in early May by the overseers of the California Institute for Regenerative Medicine to locate the headquarters of the state's new stem-cell research program in the city. True, San Francisco beat Los Angeles, San Diego and other locales partly by offering generous concessions. But this new prize all but guarantees a continued influx of life-sciences firms, and a fresh shot in the arm for the area's economy.

Friday, July 08, 2005

Interesting experiment in participatory journalism.

how long before traditional values dissolve in china ?

chinese have deep-rooted values that have many positive dimensions. now that western invasion has begun, when will the values dissolve and mimic the west. a telling analogy is the deterioration of US values after WWII over the next 50 years. primary drivers, not widely recognized, was the proliferation of communication and transportation infrastructures. why? values are inculcated, enforced, and obeyed best in a tribal social structure. kin altruism in the basis of behavior that optimizes fitness among all social organisms living in close proximty, according to hamilton's inclusive fitness hypothesis. proliferation of transportation enables social mobility but destroys tribal structures such that the majority of people end up living among unrelated kin. kin altruism is no longer the optimal strategy, yet hard-wired behavioral responses retain the legacy biases towards kin altruism. this legacy bias can easily be exploited by mechanisms, such as illegitimate signals, that distort the underlying biology. proliferation of communication (including media) amplified the reach of illegitimate signals into wider audiences, even to places where kin tribal strucuters had not been destroyed by transportation. after the greatest road-building boom in history since the roman times, the US, which laid down tens of millions of miles of asphalt, inadvertantly opened the spigot on social mobility. people went to out of state schools and even moved and settled down in distant parts of the country. the proliferation of media is well chronicled elsewhere.

so what will happen to china now that modernization is encroaching a staid country? the most noticeable part of the current boom is the road construction boom, which is highly visible throughout the country. china is also heavily investing in communication infrastructure. will china go the way of the US currently, and Rome before their fall? the deepness of the cultural homogeny probably will slow the descent of values, but the descent is inevitable. the greatest challenge for china during their emancipation of communism and their embracing of capitalism will be managing through the transition from behavioral structures based on tribal altruism to reciprocal altruism among strangers. this will be difficult without top-down, clear-thinking governance. since the governance itself is a cultural institution, it must maintain elements of the traditional values to be able to think clearly and protect public interests. below is a WSJ article that gives one some hope, at least for now. the chinese govt is cracking down on illegitimate signalling:




July 8, 2005

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China DemandsConcrete ProofOf Ad Claims
By JONATHAN CHENG Staff Reporter of THE WALL STREET JOURNALJuly 8, 2005; Page B1
To the consternation of marketers and the delight of consumer groups, government officials in China are cracking down on advertising claims.
For years, multinational advertisers had a fairly free hand in China, where regulatory oversight has been less stringent than in developed markets. But recent government actions against consumer-products giant Procter & Gamble Co. indicate a stricter approach.
Television commercials and packaging for four of the Cincinnati-based company's household products, including Pantene shampoo, were banned or placed under investigation last month by authorities in Zhejiang province and Beijing municipality after the company failed to cite the source of its claims -- that Pantene makes hair 10 times stronger, for instance.
P&G stands behind the claims, as do its advertisers, including WPP Group's Grey Worldwide in China, the ad agency that produced the Pantene commercial. "Everything we put on the air is researched and it's true," says Daisy Ching, P&G's brand manager at Grey.
Wang Gang, a Zhejiang official, says an investigation continues and may include a visit to P&G's offices in Guangzhou.
Consumers -- and the groups that zealously protect their interests -- are slowly becoming a force to reckon with in China. In April, P&G paid a $24,000 fine to the Administration of Industry and Commerce in Nanchang after Lu Ping, an insurance agent there, complained that the company's $100 SK-II skin cream wasn't the "miracle water" it claimed to be. Ms. Lu says the product not only failed to make her skin look 12 years younger in 28 days, as its brochures suggested it would, but also caused itchiness and pain.
"I will never believe in any ads anymore," Ms. Lu says.
After a flurry of bad press and inquiries by local officials, P&G withdrew cosmetics-counter brochures carrying the claim. P&G admits the "12 years younger" claim came from the best of its results, and was "an incomplete representation of facts."
The two cases have sent shockwaves through China's booming ad industry as authorities start to vigorously enforce a 1995 law that stipulates statistical claims and quotations "should be true and accurate, with the sources clearly indicated." In April, 11 ministries and committees of the central government joined forces to launch a crackdown on "false and illegal ads," with a focus on cosmetic, beauty, health and pharmaceutical products. Figures from Nielsen Media Research show that such advertising made up about a quarter of all ad spending in China last year.
An official at the State Administration of Industry and Commerce called the crackdown "one of the most important works the State Council will implement this year."
Such ambitious government campaigns in China often go in fits and starts. But in going after a company as large and well-established as P&G, officials are sending a message to the personal-care industry, says Darren Yao, a senior planner at Omnicom Group's TBWA ad agency. "The government punishing P&G can be a very symbolic warning to all the other companies in this industry," he says.
Lydia Price, a professor of marketing at Shanghai's China Europe International Business School, explains the timing by pointing to the expanding role of quasigovernmental consumer associations and aggressive local news media. Wang Qianhu, a director of the China Consumers' Association, says that China will treat foreign and domestic companies alike.
Unaccustomed to such scrutiny in China, advertisers are nevertheless resigned to the change -- the market is too big and promising to quit. P&G, an early entrant after the country opened to foreign business in the 1980s, today counts China as its sixth-largest market. P&G spent $2.5 billion on advertising there last year, according to published rate-card figures, making it the single biggest advertiser in China's $18.9 billion industry, which experts predict will become the world's second-largest, after the U.S., by the end of the decade.
Ad regulation varies widely by country. In the U.S., the Federal Trade Commission has final say over advertising claims, but disputes rarely get to that level. In actual practice, claims are typically scrutinized by competitors and consumer groups, which can then file a complaint with industry's self-regulating body.
In more extreme cases, a competitor can seek a court injunction, such as the one that Energizer Holdings Inc., maker of Schick razors, sought last month against Gillette Co. (which P&G is in the process of buying) for claims that Gillette's M3Power razor could "extend or lengthen hair" and thus slice it more effectively. A federal judge in Connecticut ordered Gillette to remove the claim from its packaging.
A similar system prevails in Japan, while in Europe, most countries combine industry self-regulation with strong government legislation and, in some cases, preclearance of commercials.
But in China, an activist consumer culture is relatively new. "The happenings in the last couple of months have been a good learning experience for us and other multinationals," says Stevie Wong, general manager of P&G's skin-care products in China.
The nuances of navigating China's marketplace have frustrated a number of advertisers besides P&G recently. Just last month, McDonald's Corp. apologized after officials in Xi'an and other cities banned a spot showing a Chinese customer kneeling and begging a store manager for a discount, an image that many Chinese saw as insulting and undignified.
With the P&G controversy, however, the government's concern goes beyond the delivery to contest the claims themselves. "Consumers in China are awake now and want to know the truth, whether it's an international or local brand," says China chief executive Pully Chau of Publicis Groupe's Saatchi & Saatchi.
Internet chat rooms are one example of that vigilance.
"Is it possible that the hair can be 10 times stronger?" read one response to the Pantene ad ban, posted on the People's Daily Web site. "So-called authorized information can be bought by money." Another posting read: "Be alert to those ads which cheat consumers under the banner of 'scientific.' "
Advertisers say they are already cautious about claims they make in China. "Even if we can actually make hair 20 times stronger, we wouldn't make that claim," says Grey's Ms. Ching. "We never push it to the limit. We're very, very careful." But a marketing executive for another multinational brand in China says overstating claims has been standard industry practice.
"Some companies make more aggressive claims in this part of the world," the executive says, adding that companies are now likely to be more careful about what they put in their advertising.
"Before, it tended to be that there was a regulation or a rule that nobody followed, and it was OK to run across the border. And now the government is coming back to stick to that line."
--Geoffrey A. Fowler, Ivy Zhang and Sarah Ellison contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com1
URL for this article:http://online.wsj.com/article/0,,SB112076503123579854,00.html
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Thursday, July 07, 2005

No one...or nothing...can anticipate everything.

Cut down
A blade, a bottle opener and a file, the classic Swiss army knife is supposed to prepare its owner for any eventuality. As Luke Harding reports, however, there was one thing its makers weren't quite ready for - September 11.

Luke Harding
Tuesday July 5, 2005
Guardian

As the jihadi terrorists flew two hijacked planes into the Twin Towers on September 11, Carl Elsener was at home. Like everyone else, he watched the TV footage with a mixture of horror and shock. It was only a few days later he realised that the attacks were bad news for his business. Very bad news. "We never thought about this. It just didn't occur to us," he says. "We always thought things might take a turn for the worse if crime went up. But not this."

Elsener is the great-grandson of Karl Elsener, the man who, in 1884, invented the Swiss army knife. At a time when Switzerland was one of Europe's poorest countries, Elsener wanted to create jobs. He decided to build a knife factory. Soon, he was turning out knives for Switzerland's famously non-combative army.

Over the past century, the Elsener family has transformed the Swiss army knife into an iconic global brand, beloved by American soldiers, small boys and stoical British campers struggling to open tins of baked beans. It became one of the 20th century's most successful products - until 9/11. Almost overnight, the business collapsed.

"It was an absolute catastrophe for us," Elsener says. "Until then our knives had sold very well both in duty free shops and on board planes. Most airlines sold them, including British Airways. Then suddenly this distribution was closed. It was zero. The merchandise came back to us. This was really very hard." Under new airline regulations, passengers could no longer carry the Swiss army knife in their hand luggage. Those who didn't comply had their knives confiscated - and they weren't returned at the other end.

The effects were sudden, and devastating. Sales of Swiss army knives dropped by 40% almost immediately. Finally, in April, Wenger SA - the only other Swiss firm allowed to produce Swiss army knives - went bust. Elsener's company, Victorinox, named after the mother of the founding Elsener, decided to rescue its rival, buying it for an undisclosed sum.

Despite 9/11 it would be an exaggeration to talk about the knife's demise, however. The Elseners are still manufacturing 34,000 Swiss army knives a day in the tiny village of Ibach. The setting, in the Swiss canton of Schwyz, is idyllic. There are shimmering mountains, a turquoise lake, and green pastures dotted with cherry trees. In a nearby alpine restaurant Swiss pensioners play cards overlooking a snow-covered glacier. The local tourist board has even devised a name for the area, 50km south of Zurich - "Swiss knife valley".

At least the firm's original client - the Swiss army - is still ordering knives. On my way to Victorinox, I bump into two Swiss army recruits heading back to barracks after a weekend off. Do they have a Swiss army knife? "I use mine every day," Roland Zehnder, 20, from Solothurn, explains proudly, producing the silver knife from his khaki trousers. The standard-issue knife given to every Swiss soldier has the famous red Swiss flag badging and four functions: a bottle and can opener, a file, and a blade.

"It's good for opening cans," Roland says, before demonstrating how he uses the knife to adjust the sight on his Sturmgewehr 90 rifle. "You have to turn it like this." Isn't it slightly embarrassing being in an army that never actually does any fighting, I wonder? "It's true that Switzerland didn't fight in the first or the second world war," Roland says. "In fact, I can't remember our last battle. But Swiss troops do take part in UN peacekeeping missions. We are currently in Afghanistan, Kosovo and South Korea."

As if things weren't bad enough for the Elseners in the post-9/11 climate, they have also had to cope with another threat - China. Over the past 10 years, Chinese firms have churned out thousands of cheap copies of the Swiss army knife, seemingly indistinguishable from the real thing. (On closer inspection, the Chinese fakes are clearly inferior, with none of the satisfying "clicks" that distinguish the Swiss original. Victorinox boasts that its precision-made springs are indestructible.) Now the Swiss firm is fighting back. Last month it registered the deep red colour of its Swiss army knives as a patent. It has recently tipped off Chinese officials, who have staged raids for the first time on illegal factories.

Victorinox has also introduced a host of new products - a kids' Swiss army knife; a blade-free air-travel version; and - most successfully- one with a USB port that allows you to link your knife up to your computer. "We are not giving up," says the firm's spokesman Hans Schorno. "We are going to fight."

But globalisation worries the Elseners, whose founding philosophy is one of old-fashioned paternalism. In the past 75 years the firm hasn't sacked anybody. Its 920 employees receive generous wages - and are even given time off to perform Alexander technique stretching exercises in front of their steel-bashing machines. Though the factory is heavily automated, some products are still partly assembled by hand.

Elsener, 47, is a self-effacing man who drives a Peugeot 306 ("My parents taught me a certain modesty. We are a Catholic family. I get satisfaction from doing a job I enjoy. I don't need a Ferrari"). He points out that the Swiss army knife wouldn't be very, well, Swiss if he exported production to Canton, as other manufacturers have done. He admits, however, that the quality of rival Chinese knives is improving. "We have spent 100 years perfecting our product. And they just come along and rip it off. It isn't very nice," he complains meekly.

It is perhaps appropriate that the Victorinox factory sits just underneath a mountain range known as Mythos. The firm is keen to promote the legendary virtues of the knife - which has been used to save children from sinking cars, repair the space shuttle, and deliver foals. A German doctor last week sent the firm gruesome photos showing how he used a multi-tool knife to cut off the leg of a tsunami victim in Sri Lanka. He would have preferred a saw, he said, but there wasn't one available. The aesthetics of the Swiss army knife, meanwhile, remain just as pleasing as ever.

The firm's most important market is the United States, closely followed by Germany, Switzerland and Britain. The knife's enduring popularity in the US can be explained by the fact that after the second world war, US soldiers bought the knives from army surplus stores and took them home. Several US presidents (Johnson, Reagan and Bush Sr) have commissioned personalised versions of the pocket knife, complete with their signatures. And the Museum of Modern Art in New York has even added one to its design collection. Elsener, whose father, grandfather, great-grandfather and five-year-old son are all called Carl, says he is convinced the Swiss army knife has a future. In a world in which terrorism and globalisation exist, people still need to chop things up, he notes. "We will have challenges like 9/11. We can get through it. The Swiss army knife is still a very useful product for many, many people. If you look at human history people have been using knifes for a long time. It's gone on since the stone age. I'm confident it's not going to stop now."

He who casts.

June 8, 2005
At Pfizer, the Isolation Increases for a Whistle-Blower

By ALEX BERENSON

No man is an island. But Peter Rost is getting close.

Dr. Rost, a vice president for marketing at Pfizer with a history of
corporate whistle-blowing, has for the last year publicly criticized
the pharmaceutical industry over the price of drugs. Along the way,
Dr. Rost has become increasingly isolated at Pfizer, the world's
largest drug company.

First, his employees stopped reporting to him. Then his supervisors
stopped returning his calls and now he does not know whom to report
to. His secretary left, he said, and he was moved to an office near
Pfizer's security department at a company building in Peapack, N.J.
The latest blow came Monday, the morning after Dr. Rost, 46, appeared
on a segment of "60 Minutes" on CBS about drug prices - a follow-up
to his news conference on the subject last year with members of
Congress and to the opinion pieces he has written for The New York
Times and other newspapers. Ready, as always, to put in a full day at
the office, Dr. Rost turned on his computer Monday and tried for the
first time in almost two weeks to log into his Pfizer e-mail account.

Access denied.

Because his corporate cellphone also was suddenly not working, Dr.
Rost was reduced to using his Hotmail account to send e-mail messages
to reporters to report his electronic exile.

"This is like being in some kind of corporate twilight zone," Dr.
Rost said in an interview yesterday. "I guess everybody's waiting for
me to get fired."

Paul Fitzgerald, a spokesman for Pfizer, said that the company had
not deliberately disconnected Dr. Rost's e-mail and cellphone
service. "There have been cases, through a change of vendor, where
some employees have lost service for a period of time," Mr.
Fitzgerald said.

Beyond that, Mr. Fitzgerald said that he could not comment on Dr.
Rost's work at Pfizer.

But he said that Pfizer had not changed Dr. Rost's responsibilities
since April 2003, when Pfizer bought Pharmacia & Upjohn, where Dr.
Rost formerly worked. At the time of that acquisition, Dr. Rost
supervised Pharmacia's marketing of a growth hormone called genotropin.

Mr. Fitzgerald characterized Dr. Rost's new office as nice, a
description Dr. Rost did not dispute.

"He does still work at Pfizer," Mr. Fitzgerald said. "We continue to
employ him." By yesterday afternoon, after a reporter's inquiries
with the company, Dr. Rost reported that his e-mail account was
working again.

"Now I'm going to check if I can actually get in and get the name of
my supervisor," he wrote in an e-mail message. "That should be fun."

Dr. Rost first received public attention last August, after his
positive review of a book critical of the drug industry appeared on
Amazon.com. The next month, in his news conference, he called for
passage of legislation to allow imports of low-priced drugs from
other countries.

"Every day we delay, Americans die because they cannot afford life-
saving drugs," he said.

Pfizer responded at the time by saying that "Dr. Rost has no
qualifications to speak on importation."

Management specialists said that Pfizer and Dr. Rost had
irreconcilable differences and called for a speedy divorce.

"In defense of Pfizer, I don't think I would want him representing me
in the marketplace," said John Putzier, president of FirStep, a human
resources consulting firm based in Prospect, Pa.

Dr. Rost's comments are not in Pfizer's interests, Mr. Putzier said.
As a result, it may be legal for Pfizer to fire him. But a firing
might make Pfizer appear vindictive or give him more publicity, Mr.
Putzier said.

Dr. Rost may have additional protection against being fired. In its
most recent annual report, Pfizer disclosed that the Justice
Department had opened an investigation into its marketing of
genotropin, the growth hormone Dr. Rost was responsible for selling
at Pharmacia.

Dr. Rost said he could not confirm or deny whether he was involved in
that investigation. But if he is, he may be protected by federal laws
shielding whistle-blowers from retaliation.

Mr. Fitzgerald, the Pfizer spokesman, declined to comment on the
investigation. Pfizer is "really between a rock and a hard place,"
said Mr. Putzier, the consultant. "He's a loose cannon, but he's a
strategic loose cannon."

Pfizer became Dr. Rost's employer when it bought Pharmacia in 2002
for $63 billion. Dr. Rost had worked at Wyeth, another drug maker,
until 2001 - the year he sued Wyeth in New Jersey state court,
contending that the company had retaliated against him after he
uncovered its practice of underpaying taxes to foreign governments.
Dr. Rost and Wyeth settled the suit in December 2003; terms were not
disclosed.

Susan L. Annunzio, chief executive of the Hudson Highland Center for
High Performance, a management consulting firm in Chicago, said
Pfizer had evidently decided that firing Dr. Rost would cause more
problems than it would solve.

"Companies are in a dilemma," she said, "because they don't want bad
publicity, and they want to get the person to leave on his own."

Dr. Rost said that he did not enjoy being unable to work
productively, but that he could not quit without another job to
replace his current annual compensation of more than $600,000."I have
a family to support. There haven't been that many job offers coming
through lately."

"I'm about to reach my four-year anniversary," Dr. Rost said. "In
another year, I'll be fully vested in the pension plan."

Copyright 2005 The New York Times Company

Wednesday, July 06, 2005

Living in a glass house and throwing stones.

From Amazon.com

MEA CULPA BY A BIG PHARMA CEO, July 5, 2005
Reviewer: Peter Rost (Short Hills, NJ United States) - See all my reviews

Pfizer's CEO, Dr. Hank McKinnell has written an astonishing book in which he admits that he doesn't always believe in what he's saying [11], that drugs from Canadian pharmacies are safe [69] and that high US drug prices have nothing to do with past R&D expenses [46]. He also writes that "perhaps pharmaceuticals represent too low a percentage of total healthcare spending" [45] and he calls for "price controls to be lifted" around the world [64], because "It is time for Canadians and others to pay their fair share." [65]. He also calls for a doubling of drug patent life [185] which would result in a drastic reduction of new, low-priced generic drugs.

Dr. McKinnell starts his book with the surprising confession that he doesn't always believe in what he's saying. "They listened to my logic, but I could tell they weren't convinced, and to tell you the truth, I wasn't either." [11]

He also doesn't shy away from embarrassing facts, "Branded drug prices are anywhere from 25-100 percent more expensive in the United States." [50] He even admits, "Drugs from Canadian pharmacies are as safe as drugs from pharmacies in the United States." [69]

But his impressive mea culpa doesn't stop there. He slams everyone who makes a connection between drug prices and R&D. "It's a fallacy to suggest that our industry, or any industry, prices a product to recapture the R&D budget spent in development." [46]

Finally, in an astonishing intellectual somersault, Dr. McKinnell claims that "price controls always make prices higher in the long run." [64] And since he wants to give people lower drug prices, by eliminating price controls, he writes, "Starting with pharmaceuticals, I call for price controls to be lifted in Canada and elsewhere." [64]

Dr. McKinnell ends his book with a wonderful quote by Gandhi, for those who desire change. "First they ignore you. Then they laugh at you. Then they fight you. Then you win." [193] Dr. McKinnell just doesn't realize that he has become "them."

Dr. Peter Rost is a Vice President of Marketing at Pfizer. The views expressed here are his own opinions.

[ ]: Page number in "A Call to Action."

Tuesday, July 05, 2005

Insurers: the new watchdogs?

July 6, 2005
When F.D.A. Says Yes, but Insurers Say No

By BARNABY J. FEDER
Medical device makers devote years and millions of dollars to winning regulatory approval for new products. But all that work does not necessarily produce the kind of data that persuades insurers to pay for the products once they hit the market.

Take what has happened since the Food and Drug Administration gave Johnson & Johnson clearance last fall to sell an implantable spinal disk called the Charité (shar-ee-TAY).

The initial reaction was just what the company had hoped. The few surgeons trained during clinical trials to implant the disk were peppered with calls from would-be patients who had been putting off the hazards of spinal fusion for years in the hope of getting a new disk. Hundreds of surgeons signed up for Johnson's three-day sessions to learn how to perform the demanding procedure.

Eight months later, though, most private insurers still refuse to cover the cost of the procedure, which is generally $30,000 to $45,000 for a single disk. And while Medicare does provide some coverage, its reimbursement level for hospitals is far less than the cost of the disk, which Johnson lists at $11,500 but sells at discounts of as much as 20 percent to its high-volume customers.

The insurers, including the government, say that they need to see more clinical studies documenting the disk's durability and performance for various types of patients.

The data that Johnson provided to the Food and Drug Administration to win approval to sell the disk followed patients for just two years after the implant. Insurers say that young and middle-aged adults make up such a large percentage of the patients getting the disk that they need to know more about how it will wear over decades and the health impact on patients when it fails.

Laboratory tests submitted to the F.D.A. suggested that the disk can last 80 years. But critics say that conclusion does not square with the condition of some disks retrieved from ailing European patients or with X-rays showing relatively rapid deterioration of the disks in some patients.

"The lab tests do not represent what happens in the body," said Dr. Steven Kurtz, a biomechanics expert who has analyzed wear and tear in five failed Charité disks for Exponent, a consulting firm. "Some patients might go 20 years or more with no problems but I wouldn't advise anyone to count on more than 10. And some could be less."

Johnson and supporters of the disk say that nearly all the problems to date have been in cases where the wrong size disk was used or the disk was not properly centered.

The F.D.A. required Johnson to show that the Charité matched spinal fusion in terms of safety and pain relief over the two-year study period. But as insurers saw it, that just meant that the device was no better than spinal fusion. And many insurers consider the fusion surgery to be overprescribed and of little long-term value.

Moreover, some insurers and doctors said, the form of spinal fusion surgery adopted in the late 1990's as the point of comparison in the clinical trials no longer represents the state of the art in fusion surgery.

"Charité needs to show substantial improvement in the patients' quality of life and clinical outcomes," said Michael Chee, a spokesman for Blue Cross Blue Shield of California, a unit of WellPoint that is one of many large Blue Cross insurers that has denied coverage for Charité.

The insurers' resistance has already cost Johnson hundreds of implant sales, according to analysts like Robin R. Young, a consultant and orthopedics newsletter publisher in Wayne, Pa.

Mr. Young said that the number of disks implanted in the United States since last October - about 1,500 - was 25 percent lower than what he had projected through the end of May. And some surgeons said such figures understated the challenge.

"About 80 percent of my patients who could be candidates for the disk aren't covered for it by their insurance," said Dr. Scott G. Tromanhauser of the Boston Spine Group.

Some patients end up feeling forced into spinal fusion surgery, however reluctant they may be.

"It's very depressing," said John Lech, a computer programmer for the Wachovia Corporation in Winston-Salem, N.C., whose back pain restricted him to working at home. Mr. Lech, 38, said he had sought coverage, beginning last November, to have the lowest disk in his back replaced.

He said he gave up hope after a May 2 hearing in which Wachovia's work benefits committee accepted the recommendation of United Health Care, the bank's insurer, that the procedure not be reimbursed. Mr. Lech underwent spinal fusion on May 17.

But that was a step that Andy Sethi of Duncanville, Tex., could not bear to take. Last winter after Aetna turned down his second appeal, Mr. Sethi, a 28-year-old registered nurse, said he borrowed $40,000 on three credit cards and $30,000 from friends and relatives to cover all the costs associated with an operation. In January, at the Texas Back Institute in Dallas, he received two Charité disks.

Mr. Sethi said that he was back at work within two months. At about the same time Aetna became one of the first national insurers to begin covering disk implants. But it was too late for Mr. Sethi, who said in a recent interview that he would be filing for bankruptcy protection this month to clear his debts.

The insurance issues surrounding the artificial disk are hardly unique. Insurers are also taking a cautious stance toward a treatment that is used as an alternative to neck surgery as a way of clearing blockages in the carotid arteries leading to the brain; Guidant is the domestic pioneer in the alternative treatment, which involves balloon angioplasty and stents inserted via a catheter.

Doctors have been criticizing both Medicare and private insurers for restricting the classes of heart patients the insurers deem eligible to receive implanted heart rhythm management devices from companies like Medtronic, St. Jude Medical and Guidant.

Such insurance battles can take years to play out. Seven years after Oratec Interventions, based in Menlo Park, Calif., gained F.D.A. clearance to sell a device that treats back disk pain by heating damaged tissue through a catheter, the device continues to be categorized as experimental and not reimbursable by most insurers. Oratec sold itself to Smith & Nephew in 2002.

Johnson is so large and diversified that delays in gaining insurance coverage for a new product are less burdensome than they would be for a start-up.

Still, during a conference call on April 19 to discuss first-quarter earnings, Johnson found it necessary to reassure analysts that it was confident most insurers would eventually follow the lead of companies that have already decided to pay for the disk implant. Those include Aetna, Kaiser Permanente and Horizon Blue Cross Blue Shield.

Johnson is hoping to gain more support after the publication on July 15 of two articles on the F.D.A. trial data in Spine, a peer-reviewed medical journal. "We expect that will lead to a new round of policy reviews," said John Argiro, director of reimbursement for DePuy Spine, the Johnson subsidiary that makes the disk.

Mr. Young, the orthopedics consultant, said that failure to gain traction with major insurers could force Johnson to cut its prices and eventually lead analysts to reduce sharply their estimates of the potential artificial disk market.

At the time the disk was approved, analysts said that Johnson's revenue from Charité sales this year could be as much as $100 million and that the total market for such disks from Johnson and others could top $1 billion by 2010.

The insurance picture could become more complicated if, as expected, the F.D.A. gives Synthes of Switzerland clearance to sell its Pro-Disc by the end of this year. Maverick from Medtronic and FlexiCore from Stryker may also reach the domestic market in the next few years. These and other companies are also developing artificial disks for the upper, or cervical, spine that could be implanted with a much simpler operation.

Some insurance industry critics say that the industry moves slowly because insurers profit from delaying decisions to cover new technology. "Insurers don't really care about the science as long as the answer comes out that they don't have to pay for it," said Dr. John Peloza, a Dallas spine surgeon. He describes Charité as flawed in its design, but says he worries that the same arguments the insurers use to deny coverage will be extended to other disks that receive regulatory approval.

Device makers are not so cynical about the insurers - in public at least - but part of their argument for coverage invariably includes claims that their new technology saves insurers' money.

Although the disks themselves cost more than the cages, screws and bone-growth promoters used in fusion, disk patients tend to leave the hospital sooner and recover fully in half of the three or four months common for fusion patients.

Some research suggests that disk patients also retain more range of motion, and that the artificial disk is less likely than fusion to accelerate the deterioration of adjacent disks.

So far, though, while Johnson and rival disk makers have plenty of individual success stories based on more than 20 years of sales in Europe, they have no compelling long-term research studies to support their cost comparisons.


Copyright 2005 The New York Times Company