opinion : the death of google labs (especially health)

It is a sad day, as I found out that Google is shutting down at labs applications. I've long been a fan of this part of the company and it will be disappointing to see it go I am particularly annoyed that many good applications are going to simply stop existing, particularly Google health. It is a little bizarre when you log on and they tell you to “please switch your information to Microsoft”. Looking at their blogs, it appears that Google closed the project down because it did not get the number of users that they had intended. Google is being foolish here however, as Health never got popular because it was never really marketed properly , or at all for that matter. Many people in healthcare did not even know that it existed, including many of my colleagues. Had Google advertised it to all these people using its other services(gmail or search ads), I have no doubt that the health service would've spread.

Google has clearly not learned its lesson from the days of Google video. Google video was a service similar to YouTube (but technically superior) that Google did not do much marketing for either. As a result Google video was crushed in popularity by YouTube and Google was forced to spend billions of dollars to buy YouTube to compete in the segment that they had innovated in. This is a great example of how a company will suffer if it has many great engineers but not enough good business people to capitalize on their innovations. Google health is not the only labs application that has suffered in this regard. I'm sure that many more people would've used Google squares and several other innovative programs had Google pushed them on its regular users more aggressively.

The fact that Microsoft is going full speed ahead with their health portal also suggests this is a big area in the future. It is a matter of time before electronic medical records become common, and as patients become more interested in seeing in controlling their data, the appeal of health records applications will be huge. Google will learn its lesson when future versions of Microsoft Office are sold to doctors at marked up prices because they include health vault software, and will then be forced to buy some start up competitor to compete.

Now let's just hope that they do not get rid of Google Body - my current favorite Google application.

opinion : pharmaceutical R&D

This article published in slate summarizes a long running debate between the pharmaceutical industry and consumer advocates. while both sides make good points (drug development is high risk, but pharma industry estimates are certainly inflated), neither is making refference to any good data. I am not sure why this is the case - puplic companies are required to disclose there quarterly expenditures and most describe how many candidates are in the pipeline. It seems to me that a quick look at the annual reports would give exact numbers and allow for an informed argument about R&D costs vs profits. here is an example:

Pfizer

R&D expenditures (2009): $7.8 billion (http://www.pfizer.com/files/annualreport/2009/financial/financial2009.pdf)

drug dev projects: (sept 2010): 92 new drugs (http://www.pfizer.com/files/research/pipeline/2011_0228/pipeline_2011_0228.pdf)

avg spending per new drug product per yr: $84.8 million

multiplying the amount spent per yr x number of years that it takes to come to market (about 10) gives almost the number that the pharmaceutical industry claims it takes to develop each drug ($850 million by my estimate). activists claim that since only a few drugs actually come to market and much of the expenditure for R&D is on postmarketing licensing trials, these numbers are skewed however. While I concede that it is true that companies do not actually spend $850 million directly developing any one drug, it is reasonable to assign this value to the cost of bringing a drug to market based on company's actual R&D expenses.

full disclosure - i used to work in clinical trials for Sanofi-aventis

Great Article : Genius Idea of the week

This article states that Chavez wants to cut off oil deliveries to the US because he is pissed that that some capitalists (Exxon Mobil) had his assets frozen in a dispute over his freezing the assets of capitalists. The funny part is, that if Chavez succeeds in cutting off enough oil to actually cause a disruption in supply (not likely thanks to commodities markets), oil prices will sky rocket. This price increase, will then likely significantly increase Exxon Mobil's profits. That 'll Show em.

Great Article : The real way to Desegregate schools

Brown vs the board of ed. may have ended official race segregation, but as anyone who has lived in both a urban area and the suburbs knows, America's schools are still mostly segregated. Basically it goes Black-poor-inner city-underachieving vs White-wealthy-suburbs-average achieving. Educators have repeatedly tried to fix the last part (achievement) by mixing the first part (race). Whenever race is used discrimination occurs however (even if for good ends), and thanks to the recent decision by the supreme court, this is now illegal. A much better way to attack problem is this proposal, which uses financial status to discriminate. This is a fantastic idea, and as the article claims, it may even fix the race problem as a side effect. Note to Public school teachers, there is something new called capitalism, please look it up... 2 page report due Friday.

On a side note, I can think of two reasons why economic based affirmative action is a better idea than race based AA. First is because to succeed at just about anything requires money, and poor people don't have it, no matter what race they are (obviously). No matter what the NAACP thinks, it is not easy for a poor white person to get very far in life or go to a good school. This leads us to the second problem with race AA: rich minorities. My work in college admissions has given me experiences with minorities who have every advantage growing up, but are also entitled to more because they are underrepresented. While I have nothing against the parents of my peers who needed help during the civil rights era to get a good education, I don't believe for a second that any of my private school friends or people in this neighborhood need any special help to get into private colleges. Long story short, using race allows well-off minorities to take advantage of the system, usually at the expense of the poor minorities whose places they take. Today at work, I talked to a African American girl on the phone who was unhappy that the available apartments in Center City weren't "up to her standards". I was not amused because of the fact that I just had to move out of CC because I could not afford it (this girl also dismissed East Falls after I suggested it.) This girl had applied to a disadvantaged minority program at Drexel (DPMS) , clearly hoping to play the race card in admissions (the program requests but doesn't enforce the "poor" requirement and people frequently try to take advantage) Karma won this battle though, as our wealthy "disadvantaged" applicant got rejected from the minority program because her application missed the deadline. Can't wait to see how she likes being treated like everyone else...

Great Article : The decline of the US auto industry

As Toyota prepares to claim the title of the worlds largest car maker, this article from the BBC is a fascinating look at the decline of the big three American automakers. It is a sad story (for americans at least) of a spectacular fall and an important lesson for industrial giants everywhere. The British seem to blame it mostly on the vague force of "globalization", but i think it has to do with poor decisions, greedy near sighted American investors, and shoddy engineering as well. I have predicted the fall of GM for awhile now (although it looks at the moment that Ford is even more likely to go first), and when the post mortems are finally written, there will be a lot of blame to go around. The article also looks at the local human impact, which I suppose is also sad...

Good article : Global prosperity (or lack thereof)

This article is a great analysis of our current world, although I have a few quick thoughts:

1. I am not entirely convinced that the world can physically support a world where the BRIC countries consume as much as the US and Europe per capita. Serious tech improvements will be necessary, and major conflicts in those emerging countries could easily derail improvements, especially if poor workers revolt in China or the India -Pakistan conflict heats up.

2. The article claims only 50 mil. people will be added to 1st tier countries. This must not be counting immigration (there are a quarter that many Mexicans in the US alone). Not counting immigration in this type of analysis is a major oversight.

3. The author and his world bank friends seem to believe that money is the solution to all of the world's problems. Increasing African aid is not going to do anything unless those african recipients have the infrastructure and institutions to invest and distribute that money. Long story short, giving everyone in Somalia $100 (double the highest per-capita african aid) isn't going to fix anything (it will likely make the problem worse. Also, judging by the past effectiveness of the World Bank, It is clearly not the answer to the said lack of infrastructure.

Great article : poor getting poorer

While checking my email in the med library today, I stumbled across this report about how the rich get richer by making the poor poorer. This is a very well written article, with a huge amount of actual data and statistics, that doesn't take sides but presents both very clearly. Th answer to the question of "who is responsible?" (the greedy business men or the uneducated poor) is unequivocally both. Gluttony and sloth are both deadly sins. The good news however is that there is a relatively simple fix. First, pass laws that make loan disclosures simple graphically and standardized (think food labels). This should coincide with a public service media campaign to show people how to read them. Laws that tighten the usury rate laws (say standardizing rates for any length loan to a per year standard) and outlawing the issuing of credit beyond a certain percentage of a individuals yearly income would almost completely solve the problem. Maybe this subprime loan mess will finally make it happen.


Full disclosure: I made a fair amount of money last year when ECC sold its subprime unit to Bear Sterns.

Opinion : The cost of eating healthy

Dr Nunez, a brilliant womens health researcher, gave a great speech about health issues to my class today. There is one assertion in her lecture that I have to take issue with, however. This is the idea the the current economic incentive is for people to eat unhealthy foods, ie. fatty processed foods are cheaper than healthy items (fruits and veggies, etc).

This idea is pushed and reinforced by popular media, and especially retailers like Whole Foods, who clearly profit from it (generally by marking up prices on healthy items to increase their retail margin). This idea is also inferred based on epidemiological research showing that more poor people are overweight. (which is what I believe Dr. Nunez was referring to) Is it true though? Like so many other issues, the reality does not live up to the hype.

Take for instance my recent trip to the Reading Terminal market. A week's worth of fruits and veggies costs about $8. Apples were 59 cents /lb. , banannas were 39 cents/lb., and oranges were a quarter each. On the way out, I stopped to get a Philly cheese steak and some soda, total cost: $8.50. I was surprised that one unhealthy sandwich cost more than a week's worth of fruit. Also compare the fruit prices to red meat (2.99/lb and up), cheese (3.99/lb and up) and chocolate (8.99/lb and up). These prices are not much different from stores nearby such as Trader Joe's or Wegmans. Also at Trader Joes, fruit jerky bars at the counter (49 cents, I am eating one as I write this) are cheaper than chocolate bars (69 cents) . In Wegmans, the enriched wheat bread costs the same as the processed sugary white one. In Philadelphia at least, it seems to be much cheaper to eat a healthy diet of fruits and vegetables than junk foods. While certain types of healthy food (anything sold at whole foods) certainly costs a lot, Food prices and economics do not account for the reason that poor people have unhealthy diets.

Now I can't resist speculating on why poorer people would eat less healthy against their best interests. I suspect it has primarily to do with a lack of education among this demographic. When you don't know whats best for you, you will probably just take what tastes good. It may seem logical to pay more for foods that taste better, and if you are not concerned/educated about your health, you will make poor choices. Clearly advertising and fast food are contributing. I also suspect that there is a lack of access to healthy foods for poor individuals, as supermarkets tend to avoid impoverished areas (although both Trader Joes and the Wegmans near me border bad neighborhoods) It is easier to make bad choices when you are only faced with bad options.
A final reason for obesity among poor people may simply be a lack of self control. Quite frankly, if these people were more motivated and disciplined, they probably wouldn't be that poor in the first place. Of course public health researchers would never accept that reason because it shifts the blame to the people themselves, and for some reason, being poor alleviates personal responsibility...but that is another rant for another time....

Opinion : Hard work

Slate has an interesting article about how lower wage people have more free time then the wealthy. The author describes the problem in detail and makes jokes about solving closing the gap, but he never considers one of the most obvious reasons for the gap: The first thing that occurred to me is that the gap was caused by the fact that successful people generally work harder. I might even go as far as saying that this study proves that people who make less money do so because they are lazy, and therefore deserve their low incomes.

Opinion : Flirting with economics

I just finished reading the book Freakenomics, which has gotten me thinking of economics. Actually I always think in questions about numbers, I guess the book really has just inspired me to write about it. Anyway here are two examples, questions I had and the answers that I found:

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First, Congratulations to Exxon Mobil, (EM) who announced last week that they had another record profit (just over $40 Billion). With Gas prices always fluctuating, (supposedly to help the sellers to cope with crude oil price changes) I was wondering how much profit that is per gallon of gas that EM sells. I figure if that profit just is a few cents a gallon, then they are entitled to it. If the profit share is significant however, I have to wonder if the competitive forces are efficiently regulating the gas market.

To find how much Exxon Mobil makes on a gallon of gas, I looked at their 2005 financial and operating review. For the year 2005, EM made $36.13 billion in profit for all operations. To find out how many gallons of gas they sold, I looked at the downstream sales number for the US, which is 621,960,000 barrels. Using a conversion factor of 31.5 b/gal, that comes out to a grand total of 1.5917 e10 (~ 15 billion - holy crap) gallons of gas sold in 2005. Dividing their profit by sales, EM managed to make about $0.54 in profit for every gallon of gas they sold in the US.

Now I realize that it is not fair to compare the total profit to one small segment of a global vertically integrated company (only 52% of EM gas sales are in the US), but that does make me wonder if a 3 cent hike for any given week is really necessary.

Other interesting facts: Exxon Mobil sells an average of just over 1 million gallons (1004828) of gas per year at each gas station. It sells 38.6 gallons per year per capita.

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My next inquiry came from reading that John Edwards proposed to establish Universal healthcare by simply buying plans for people who do not have insurance and paying for it by raising taxes. He claimed it would only cost $120 billion. Now I would never trust a round number from a politician, but that got me wondering how much it would cost to simply buy everyone health insurance.

To figure out the actual amount, I went to a health insurance comparison site and shopped around. Without community payments, our current system gives different prices to different people, so I attempted to estimate a per-person cost based on an average of the lowest (approx. me) and the highest (male smoker, 60yo, chronic disease) rates for plans in the Philadelphia area (fairly representative and average for nationwide markets) To eliminate under-insurance, I picked the cheapest plan that had a reasonable deductible (<$1000) and no coinsurance. This leaves us with the HMO offered by Aetna, which costs an avg of $338.31 per month or $4,059.72 /yr. (range $113.62 - $563 /month) (HSA plans were 50% cheaper but carried huge deductibles and are therefore not practical for older individuals or those with chronic disease) It is claimed that there are 47 million un or under-insured people in this country (I have no idea how they got that number, lets just roll with it) which means that to simply buy them all insurance it would cost $1.90806 e11 (~$190 billion ). To extrapolate per capita, it would cost $1.217916 e12 (~$ 1.2 trillion) to pay for insurance for everyone at current rates.

Now Edward's guess wasn't that bad (poloticians use wider tolerances than engineers...) although my calculated price would skew upward a bit if the uninsured population had more chronic illnesses or lived in more expensive markets, both of which are very likely. It is worth noting though that this price is less then half or national defense budget or current deficit, and wouldn't represent much of a tax increase to cover. Unfortunately health care costs are rising at almost triple the rate of inflation, so I doubt this would be a sustainable plan for very long without other measures. Also it would tempt businesses to offload their employee benefits on the government...then again, that could be the market way to establish a single payer system...