Thursday, July 27, 2017

Inequality, Poverty, and Social Dysfunction

Keith Payne is a professor of psychology at the University of North Carolina whose specialty is the psychology of inequality and discrimination.  He has produced an interesting and enlightening book titled The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die.

It is well-known that within groups of members of a species there is a strong tendency to form a hierarchy.  This is seen in animal species where the hierarchy is clearly established and firm rules are enforced.  Position on this hierarchical ladder has important consequences.  The higher the position of a female the more likely she will get to mate with a powerful male.  Conversely, a male low on the ladder may have little or no opportunity to mate with any female.  Access to food might also be determined by position within this hierarchical ladder.  Consequently, animals will be adept at weighing their positions relative to those of others, and will be continually concerning themselves with issues of fairness in order to make sure they are treated appropriately.

Humans are animals evolved from species that do form hierarchical ladders, and it is likely that early human groups spent much of their time with the same status worries as our ape ancestors.  While humans have evolved their own unique properties over time, the tendency for human groups to form a hierarchy is still present.  All human assemblies tend to arrive at a leader or a leadership group and a bunch of followers.  While precise hierarchical levels tend to exist mainly in military organizations, all members of the assembly will be conscious of their status and concerned that they are treated fairly given their status.

Payne uses the symbol of a ladder on which people project their assumed positions to illustrate inequality and its consequences in human organizations.  He further concludes from psychological studies and from anthropological arguments that humans are wired to continuously monitor their environment for signs of status loss or status gain.  This activity is innate and usually takes place subconsciously.

“….no one ever mentions something that we know to be true, both from scientific studies and from simply being human: ‘I crave status’.”

“Others might not acknowledge that, but we can certainly see it in their behavior.  We can observe it in the clothes they buy, in the houses they choose to live in, and the gifts they give.  Above all we can perceive it in the constantly shifting standards for what counts as ‘enough.’  If you have ever received a raise, only to adapt to the new level of income in a few months and again begin to feel as though you were still living paycheck to paycheck as before, then you can experience it yourself.  As your accomplishments rise, so do your comparison standards.  Unlike the rigid column of numbers that make up a bank ledger, status is always a moving target, because it is defined by ongoing comparisons to others.”

When asked to assess their status by placing themselves on the rungs of a ladder, it becomes clear that people view their status in ways that are only slightly related to the presumed status markers of income, education and type of job.  Rather, presumed status seems to depend on how we compare ourselves to those we choose as peers.

“It is true that, on average, people with higher incomes, more education, and more prestigious jobs do rate themselves higher on the ladder.  But the effect is relatively small.  In a sample of, say, a thousand people, some will rate themselves at the top, others will rate themselves at the bottom, and many will be in between.  But only about 20 percent of their self-evaluation is based on income, education, and job status.”

“This surprisingly small relationship between traditional markers of status and how it is perceived subjectively means that there are a lot of people who are by objective standards affluent and yet rate themselves on the lower rungs.  Similarly, many people who are objectively poor rate themselves high up the ladder.”

Poor persons can feel comfortable with their status if their peers, to whom they compare themselves, are in similar situations.  On the other hand, a mere millionaire who lives in a world of multimillionaires can experience the stress normally associated with poverty.  That is an important concept to grasp.

“….inequality is not the same thing as poverty, although it can feel an awful lot like it….Inequality makes people feel poor and act poor, even when they’re not.  Inequality so mimics poverty in our minds that the United States of America, the richest and most unequal of countries, has a lot of features that better resemble a developing nation than a superpower.”

The health and longevity problems that are associated with poverty have been well documented.  What Payne is saying is that the same problems arise for people who are not objectively poor, but who merely feel poor because they suffer a status deficit.

“We have to take subjective perceptions of status seriously, because they reveal so much about people’s fates.  If you place yourself on a lower rung, then you are more likely in the coming years to suffer from depression, anxiety, and chronic pain.  The lower the rung you select, the more probable it is that you will make bad decisions and underperform at work.  The lower the rung you select, the more likely you are to believe in the supernatural and in conspiracy theories.  The lower the rung you select, the more prone you are to weight issues, diabetes, and heart problems.  The lower the rung you select, the fewer years you have left to live.”

“Let me be clear that I am not simply asserting that, if you are poor, then all of these things are more likely to happen to you.  I am stating, rather, that these things are more likely to happen to you if you feel poor, regardless of your actual income.”

That is a rather startling claim.  Most of Payne’s book is concerned with demonstrating that it is accurate.  We will cover only some of the data he uses to make his point.

In order to convince us that we are status conscious animals who respond to status threatening situations, Payne reminds us of what flying on commercial airliners is like.

“Airplanes are microcosms of our world and the everyday anxieties we encounter there.  We are thrown together with hundreds of strangers, forced into a level of intimacy ordinarily reserved for loved ones or professional colleagues.  We are crammed into a narrow metal tube, triggering our evolved fear of enclosed spaces.”

“But even more than the anxieties they provoke, there is another aspect of airplanes that makes them a notable microcosm of life.  Airplanes are the physical embodiment of a status hierarchy.  They are a social ladder made of aluminum and upholstery in which the rungs are represented by rows, by boarding groups, and by seating classes.”

The most glaring hierarchical aspect of flying is the presence of a first class section with big comfortable seats, free alcohol, and perhaps even warm food.  To emphasize the status differences, coach passengers must wait for first class to board and get comfortable.  They then must pass through the first-class section on the way to their cramped and crowded coach seats, taking in the obvious differences in accommodations.  A pair of psychologists, Katherine DeCelles and Michael Norton, analyzed data from millions of flights to see what factors might have played a role in triggering incidents of air rage where a passenger becomes unruly.

“As they discovered, the odds of an air rage incident were almost four times higher in the coach section of a plane with a first-class cabin than in a plane that did not have one.  Other factors mattered too, like flight delays.  But the presence of a first-class section raised the chances of a disturbance by the same amount as a nine-and-a-half-hour delay.”

“But about fifteen percent of flights board in the middle or at the back of the plane, which spares the coach passengers this gauntlet.  As predicted, air rage was about twice as likely on flights that boarded at the front….”

Perhaps it would be interesting to monitor your emotions the next time you trudge to your coach row through a first-class section where they may already be enjoying the first of their complimentary cocktails.  And if you are fortunate to be sitting in a first-class seat when the coach rabble pass through, how do you respond?  Do you make eye contact?  Do you smile?  Or do you look away content in the sensation that you have more important things to be concerned with than these people.

Among other effects of poverty is a state of elevated stress.  Excessive time spent in a state of stress is not something the human body was designed to withstand.  It can lead to deleterious health outcomes.  If Payne is correct, then people organized into well-defined status groups should show different levels of health outcomes.  It is well-known that poverty plays a role and mortality rates are higher among the poor.  Payne found an example of a well-defined status hierarchy where income differences persisted but where poverty was eliminated as an issue.

“We can see this pattern even more clearly in data from a massive study of more than ten thousand British Civil Service employees that has been in progress since the 1960s.  Her Majesty’s Civil Service has an exquisitely detailed hierarchy with dozens of clearly defined job grades from cabinet secretaries who report directly to the prime minister all the way down to entry-level clerical jobs.  Physician Michael Marmot has found that each rung down the ladder is associated with a shorter life span.”

“The pattern is strikingly linear, so that even the difference between the highest-status government officials and those just one rung below was linked to increased mortality.”

“….the subjects in this study all have decent government jobs and the salaries, health insurance, pensions, and other benefits that are associated with them.  If you thought that elevated mortality rates were only a function of the desperately poor being unable to meet their basic needs, this study would disprove that….”

Payne has claimed that subjective social comparisons can lead to risky behavior, a tendency to make bad decisions, and a shorter life span.  To elaborate on this point he discusses the recent findings of Ann Case and Angus Deaton who noticed that the mortality rate for some classes of whites has been increasing, in contrast to what is observed in minority populations in this country and for all citizens in other wealthy nations.

“Since the 1990s, the death rate for middle-aged white Americans has been rising.  The increase is concentrated among men and whites without a college degree.  The death rate for black Americans of the same age remains higher, but is trending slowly downward, like that of all other minority groups.”

“The wounds in this group seem to be largely self-inflicted….They are dying of cirrhosis of the liver, suicide, and a cycle of chronic pain and overdoses of opiates and painkillers.”

Payne asserts that the results can be explained by a combination of these risky behaviors and the stress associated with living in a state of “feeling poor.”

“The trend itself is striking because it speaks to the power of subjective social comparisons.  This demographic group is dying of violated expectations.  Although high school-educated whites make more money on average than similarly educated blacks, the whites expect more because of their history of privilege.  Widening income inequality and stagnant social mobility, Case and Deaton suggest, mean that this generation is likely to be the first in American history that is not more affluent than its parents.”

Humans spent most of their time on earth living in small groups struggling to exist.  There would be hierarchy in this society, but with little wealth the span of inequality would be small.  That could also mean that humans would have become sensitized to minor slights in their presumed status.  With the historical era in which agriculture allowed greater accumulations of wealth, inequality would have grown.  In our current era the gap between the wealthiest and the average person has become stupendously large.  Payne has argued that not only is inequality growth being driven by economic dynamics, but the response to growing inequality leads to destructive behaviors that actually contribute to even greater inequality.

Inequality breeds inequality?  If you weren’t worried about this issue before, perhaps now is the time to get on it.

Sunday, July 16, 2017

Drugs, Pharmacy Benefit Managers, and Perverse Incentives to Raise Prices

The United States spends more money on healthcare per capita than any other nation.  A little study leads to the conclusion that there is too much profit-taking in our system.  Who makes too much profit?  Everyone it seems.  The pricing of pharmaceutical medicines has received the most attention of late.  Just when one thinks the system of pricing can be explained by simple greed, one learns that nothing is simple in healthcare; it’s a collective system where components collaborate to ensure that profits get widely shared.

The most recent “stunning revelation” appeared in an article by Paul Barrett and Robert Langreth in Bloomberg BusinessweekThe Crazy Math Behind Drug Prices.  The presumed new villains in this case are the pharmacy benefit managers (PBMs) who are hired to act as intermediaries between institutional healthcare providers and drug companies in order to negotiate lower drug prices and save the providers money.  These PBMs also have leverage over the drug companies by having control over the list of drugs that are considered “preferred medications.”  If a company’s product does not make that list, then it will lose sales revenue—perhaps a lot.  What the PBMs do is not negotiate the list price of a drug, but the discount price that a given provider will pay for the drug.  The PBMs take a percentage of the savings to the providers as their profit.  People not in one of the provider’s plans will end up paying the full list price.  The insightful reader will have already become suspicious about this system.

The authors of the article use the example of David Hernandez to illustrate some issues associated with these practices.

“David Hernandez, a 44-year-old restaurant worker and Type 1 diabetic, didn’t have insurance from 2011 through 2014 and often couldn’t afford insulin—a workhorse drug whose list price has risen more than 270 percent over the past decade. As a result of his skimping on dosages, Hernandez in 2011 suffered permanent blindness in his left eye, and three years later he experienced kidney failure. He’s since received a lifesaving kidney transplant covered by Medicare and has drug coverage under a New Jersey program for the disabled. But Hernandez’s eligibility expires next January, at which time he’ll have to pay about $300 a month out of pocket for insulin. ‘I don’t really have that kind of money,’ he says.”

“That Hernandez is struggling to deal with big price hikes for insulin, a century-old medicine that for most of its history cost $15 a month or less, speaks volumes about America’s failing battle to control drug prices.”

Legal action has been initiated in Hernandez’s name by Steven Berman claiming that the interactions between the PBMs and the drug companies are causing the price of drugs to increase rather than decrease—not just for insulin but for many other drugs as well.

“Other plaintiffs’ law firms have followed in Berman’s wake, all of them alleging conspiracies in which the dominant insulin makers—Eli Lilly, Novo Nordisk, and Sanofi—continually raise list prices to curry favor with the largest PBMs: Express Scripts Holding, CVS Health, and OptumRx, a unit of UnitedHealth Group. The four cases pending in New Jersey, which are likely to be consolidated, constitute a threat of massive damages for Big Pharma—and could topple the branded-drug pricing system used in the U.S.”

“Federal prosecutors are also investigating relationships between PBMs and large drug companies. The U.S. Attorney’s Office in Manhattan has ordered Lilly, Novo, and Sanofi to turn over documents regarding those relationships.”

The authors use the history of the drug Humalog to illustrate a pricing system that is out of control.

“When Lilly introduced its diabetes medicine Humalog in 1996, it cost $21 a vial. Today the same vial lists for $275. Patients often use two vials a month. Annual insulin sales worldwide exceed $20 billion.”

Consider the perverse set of incentives operating in the negotiation between PBMs and drug companies.  If two companies have equivalent drugs and one is cheaper than the other, the PBM can make more money from dealing with the more expensive product.  The cheaper drug company recognizes this factor and concludes that it is in its best interest to raise the price of its drug to match or even exceed that of the competitor.  This type of competition can easily lead to competitors frequently raising prices in lockstep.

The drug companies have admitted that this profit motive on the part of PBMs is a real consideration.

“Speaking at an investment conference in June 2016, Lilly’s then-CEO John Lechleiter referred to ‘the weird way the payment system can work in this country.’ He asserted that ‘higher rebates can be an incentive for a payer [PBM] to stick with essentially a higher-priced product’.”

“Lars Fruergaard Jorgensen, CEO of Novo Nordisk A/S, the world’s biggest maker of insulin drugs, says list prices are meant to be only the starting point for rebate negotiations with PBMs. ‘It was never the intention that individual patients should end up paying the list price,’ he says.”

The PBM can use the higher price to provide greater discounts to the healthcare providers.  Consequently, the providers may not be too much bothered by this scam, but this is far from a victimless crime.  We end up with two prices for drugs: the inflated list prices and the negotiated discount prices.  The problem that arises is that people like Hernandez end up being required to pay the artificially high list price.  People without medical coverage, the least likely to be able to pay, will face the list price.  People with a healthcare plan but with a high deductible will be required to pay the full list price until the deductible is met.  The Medicare system is not allowed to negotiate prices with drug companies so the taxpayers are getting gouged, as well as the elderly who use a lot of medications.

The drug companies make out like the bandits they are.  They make a decent profit from the discounted rates they negotiate and make an outrageous profit from the poor souls who must try to pay the list price.

Those bringing the lawsuits have a clear picture of what is going on here.

“All of the lawsuits describe the relationships between drug companies and PBMs as unlawful ‘enterprises’ operating in violation of the Racketeer Influenced and Corrupt Organizations Act.”

Who could argue with that?

The interested reader might find the following articles informative:

Thursday, July 13, 2017

Sand: The World Is Running Out of It

It seems our most important assets are often the most common things around us.  Water is an example.  It seems to be plentiful, so we do not assign a high price to it, but we use so much of it that it’s becoming in short supply in many parts of the world.  There is another common product that appears abundant to us but is also becoming difficult to find because consumption has dramatically increased.  That product goes by the generic name of aggregate.  In this context, the term refers to components that are used as strengtheners in composite materials such as cement and asphalt.  Sand and gravel are the components of most use for construction applications.  So how could we be running out of sand when it appears to be available in enormous quantities?  Like water, most of it is in a form that cannot be used effectively.

In March 2014, the United Nations Environment Programme (UNEP) felt compelled to issue a warning to an unsuspecting world in a document titled Sand, rarer than one thinks

“Sand and gravel represent the highest volume of raw material used on earth after water. Their use greatly exceeds natural renewal rates. Moreover, the amount being mined is increasing exponentially, mainly as a result of rapid economic growth in Asia.”

The report laments the fact that while aggregate use is widespread, little data is available on quantities being consumed.  Cement is one item for which data is available and it is one of the most common uses.

“One way to estimate the global use of aggregates indirectly is through the production of cement for concrete (concrete is made with cement, water, sand and gravel). The production of cement is reported by 150 countries and reached 3.7 billion tonnes in 2012….For each tonne of cement, the building industry needs about six to seven times more tonnes of sand and gravel….Thus, the world’s use of aggregates for concrete can be estimated at 25.9 billion to 29.6 billion tonnes a year for 2012 alone. This represents enough concrete to build a wall 27 metres high by 27 metres wide around the equator.”

Sand is defined by its particle size not by its material type.  The surface character of a grain of sand determines whether or not it would be useful as a construction material.  Sand moved about in water tends to retain multiple sharp edges and is valuable; sand moved by air tends to be smooth and rounded and of no value. 

“Sand was until recently extracted in land quarries and riverbeds; however, a shift to marine and coastal aggregates mining has occurred due to the decline of inland resources. River and marine aggregates remain the main sources for building and land reclamation. For concrete, in-stream gravel requires less processing and produces high-quality material….while marine aggregate needs to be thoroughly washed to remove salt. If the sodium is not removed from marine aggregate, a structure built with it might collapse after few decades due to corrosion of its metal structures….Most sand from deserts cannot be used for concrete and land reclaiming, as the wind erosion process forms round grains that do not bind well.”

Sand was once readily available from land-based quarries, but so much of it was used to create buildings that sites for additional quarries were either covered up by structures or the residents of the nearby structures refused to allow a messy quarry to exist in their neighborhood.  Water-based sand became the target, a move that generated availability and environmental issues.

“Negative effects on the environment are unequivocal and are occurring around the world. The problem is now so serious that the existence of river ecosystems is threatened in a number of locations….Damage is more severe in small river catchments. The same applies to threats to benthic [ocean floor] ecosystems from marine extraction.”

David Owen took this concern over the sand supply and generated an interesting tale for The New Yorker.  It was titled The End of Sand in the paper version, and The World Is Running Out of Sand online.  He provides some background information.

“Aggregate is the main constituent of concrete (eighty per cent) and asphalt (ninety-four per cent), and it’s also the primary base material that concrete and asphalt are placed on during the building of roads, buildings, parking lots, runways, and many other structures. A report published in 2004 by the American Geological Institute said that a typical American house requires more than a hundred tons of sand, gravel, and crushed stone for the foundation, basement, garage, and driveway, and more than two hundred tons if you include its share of the street that runs in front of it. A mile-long section of a single lane of an American interstate highway requires thirty-eight thousand tons.”

The US has certainly used its share of this commodity, but consumption now is driven by rapid development in Asia.  China is building roads and structures at a phenomenal rate; India will soon have a greater population than China and will wish to undergo its own phase of rapid building creating ever more demand.

“Pascal Peduzzi, a Swiss scientist and the director of one of the U.N.’s environmental groups, told the BBC last May that China’s swift development had consumed more sand in the previous four years than the United States used in the past century. In India, commercially useful sand is now so scarce that markets for it are dominated by ‘sand mafias’—criminal enterprises that sell material taken illegally from rivers and other sources, sometimes killing to safeguard their deposits.”

Meanwhile, the US has moved on to using sand to address another problem, one that will only grow and drive even greater consumption over time.

“In the United States, the fastest-growing uses include the fortification of shorelines eroded by rising sea levels and more and more powerful ocean storms—efforts that, like many attempts to address environmental challenges, create environmental challenges of their own.”

Owen has travelled the world in order to provide us with some interesting tales of sand usage.  He begins his article by describing the rigorous specifications for the sand required for those beach volleyball competitions that have become so popular.

“Ordinary beach sand tends to be too firm for volleyball: when players dive into it, they break fingers, tear hamstrings, and suffer other impact injuries.”

It has been necessary to develop very specific requirements for the sand used in volleyball competitions.  Owen discusses the issue with Todd Knapton a sand expert who helped develop the specifications.

“The specifications govern the shape, size, and hardness of the sand grains, and they disallow silt, clay, dirt, and other fine particles, which not only stick to perspiring players but also fill voids between larger grains, making the playing surface firmer. The result is sand that drains so well that building castles with it would be impossible.”

“Beach-volleyball promoters all over the world have to submit one-kilogram samples to Knapton for approval, and his office now contains hundreds of specimens. (He also vets beach-soccer sand for FIFA.)”

Knapton and colleagues also create courts for events and must search for the appropriate kind of sand—a task that can be difficult.

“The company’s biggest recent challenge was the first European Games, which were held in Baku, Azerbaijan, in 2015. Baku has beaches—it’s on a peninsula on the western shore of the Caspian Sea—but the sand is barely suitable for sunbathing, much less for volleyball. Knapton’s crew searched the region and found a large deposit with the ideal mixture of particle sizes, in a family-owned mine in the Nur Mountains, in southern Turkey, eight hundred miles to the west.”

“The mine is within shelling distance of the Syrian border. Knapton had planned to transport the sand across central Syria, through Iraq, around Armenia, and into Azerbaijan from the northwest, in two convoys of more than two hundred and fifty trucks each. But geopolitics intervened….Instead, Knapton and his crew bagged the sand in one-and-a-half-ton fabric totes, trucked it west to Iskenderun, and craned it onto ships. “We did five vessels, five separate trips,” Knapton said. “The route went across the Mediterranean, up the Aegean, through the Bosporus, across the Black Sea, and into Sochi.” From there, they took the sand by rail through Russia and Georgia, around Armenia, and across Azerbaijan.”

Clearly it is a mistake to think of sand as merely sand.  To further emphasize that point Owen provides some interesting insights into what is involved in building things in the Middle East. 

Apparently golf courses are easy to shape in sand-rich Dubai because sand is easier to move and rearrange than a grassy field, but, surprisingly, the local sand is unacceptable for use in sand traps and imported sand must be used.

“One day, I played golf with an Australian who worked for a major real-estate developer. The course, like Dubai itself, had been built on empty desert, and I commented that creating fairways and greens in such a forbidding environment must be difficult. ‘No,’ the Australian said. ‘Deserts are easy, because you can shape the sand into anything you like.’ The difficult parts, paradoxically, are the areas that are supposed to be sand: deserts make lousy sand traps. The wind-blown grains are so rounded that golf balls sink into them, so the sand in the bunkers on Dubai’s many golf courses is imported.”

The plentiful desert sand seems to be good only for participating in sand storms.

“Unfortunately for Dubai’s builders and real-estate developers, desert sand is also unsuitable for construction and, indeed, for almost any human use. The grains don’t have enough fractured faces for concrete and asphalt, and they’re too small and round for water-filtration systems. The high-compression concrete used in Dubai’s Burj Khalifa, the world’s tallest structure, was made with sand imported from Australia. William Langer told me that other desert countries face similar shortages.”

Real estate in Dubai was so expensive that it decided to create more of it offshore.  In that case land had to be created using sand dredged up from the sea—a lot of it.

“Creating so much artificial land required enormous shipments of quarried stone, from across the Emirates, as well as hundreds of millions of tons of sand, which foreign contractors dredged from the floor of the Gulf and heaped into piles. According to a U.N. report, the dredging ‘exhausted all of the marine sand resources in Dubai,’ and also did extensive environmental damage. Seafloor dredging creates the undersea equivalent of choking sandstorms, killing organisms, destroying coral reefs and other habitats, and altering patterns of water circulation.”

Creating land to build upon by dredging of marine sand to is one aspect of a growing environmental problem.  Concerns about coastal sea incursion are generating a need for enormous amounts of sand to build protective berms.  The sand will, of course, have to be dredged from the sea.  A particularly vexing situation arises when people choose to live on fragile barrier islands.  These are islands of sand that accumulate due to the action of tides and waves offshore from the mainland coast.  Houses built on these islands might have excellent ocean views, but they are at constant risk of damage from storms and rising seawaters.

“Robert S. Young, a geology professor at Western Carolina University, in North Carolina, told me recently, ‘When people first settled this country, nobody built on the barrier islands. They were too stormy, and they weren’t good places to live.’ Today, however, many barrier islands are densely covered with houses—the biggest and the most expensive of which often have the greatest exposure to ocean storms, since they’re the ones with the best water views. The rapid growth in construction has been driven by lax land-use ordinances, below-market flood-insurance rates, the indomitability of the human spirit, and, mainly, the willingness of Congress to cover much of the cost when the inevitable occurs.  ‘The Feds have poured in money over and over,’ Young continued. ‘Folks will say to me, “Gosh, Robert, people must be crazy to rebuild their roads and homes again and again, after all the storms,” and my answer is ‘No, they’re making a perfectly rational economic decision. We’re the crazy ones, because we’re paying for it.’ ”

Congress would occasionally allocate funds for protecting homes by piling ridges of ocean sand along shorelines, but the effort always ended up being prohibitively expensive.  With the attempt to respond to Hurricane Sandy that suddenly changed.

“Congress responded to Sandy by passing the Disaster Relief Appropriations Act of 2013, also known as the Hurricane Sandy Supplemental bill. It allocated a little more than forty-nine billion dollars for a long list of relief efforts, including more than five billion for the Army Corps of Engineers. Much of the Corps’s money has been spent on dredging sand from the seafloor and piling it up on shorelines between oceanfront real estate and the water.”

This fiscal response reinforces a perverse logic.

“Building houses and creating artificial dunes to protect them are mutually reinforcing interventions, because the houses turn the dunes into necessities and the dunes make the houses seem rational.”

And there are the inevitable environmental consequences.

“As in Dubai, the seafloor suffers. Offshore sand dredging has been described as “submerged, open-pit strip mining.” It directly kills organisms that live or feed on the seafloor, including sea turtles, and it stirs up clouds of fine particles, which can suffocate fish by clogging their gills.”

The pure folly of the activity becomes clear when one realizes that building the artificial barriers is a never ending process.  Owen describes one effort to protect Long Beach Island located off the New Jersey coast.

“The island is a little more than twenty miles long, and for most of that length it’s no wider than two or three residential blocks. The crew I watched was working on a beach in Harvey Cedars, a town near the island’s northern end. Two red-hulled dredging ships were anchored offshore—one in federal waters, three miles out, the other much closer. The far ship vacuumed sand from the ocean floor, fifty feet down, and when its hold was full it switched places with the near ship, which had pumped its own load into a submerged steel pipe that ran all the way to the beach. As the far ship filled, its hull slowly sank from view; as the near ship emptied, its hull slowly rose.”

“The company’s dredges operate around the clock, seven days a week, all year long; they are expensive to run and leaving them idle is uneconomical. And the job is open-ended, since the artificial dune isn’t meant to be permanent: its purpose is to neutralize big waves by allowing them to consume it. The Corps expects to rebuild the entire system, from end to end, on a four-to-six-year cycle. The dredges I was watching were scheduled to move south, to Delaware, as soon as they’d finished on Long Beach Island, and then to begin working their way up the coast again. And then again, and then again after that—until either the money has run out or the ocean has risen too high to be held back by sand.”

Welcome to the Anthropocene where humans seem determined to plunder valuable resources until they are gone.  Perhaps a hope is harbored that some new technology will come to the rescue. 

More likely, suffering on a Biblical scale will ensue.

Thursday, July 6, 2017

Global Warming and the Holocaust’s Warning: It Can Happen Again

Global warming and its effects are often presented to us as predictions as to what is going to occur in the future.  Some number of decades in the future the sea will rise to such a level that coastal cities will be flooded and that will be terrible.  A focus on this relatively distant time allows us to avoid the effects of climate change that are already being manifested.  The world will not be sitting and waiting for that day to arrive.  Mass migrations and social and military conflicts will arise long before those cities become uninhabitable.  Two recent sources have elaborated on the difficulties to be faced long before ocean rise has us fleeing inland.

The first is a piece in the London Review of Books by Naomi Klein: Let Them Drown: The Violence of Othering in a Warming World.  Klein was invited to provide the annual Edward Said lecture in London in 2016.  This article is the text of that presentation.  Said (1935-2003) was the son of a Palastinian woman and an American army veteran who became an influential academic.  Perhaps his most important work, and the one most relevant here, was the book Orientalism (1978).  In it he described the way in which Western nations produced self-serving perceptions of cultures unlike their own.  These perceptions were in fact prejudices that were used to justify colonial or imperialistic actions on the part of the more powerful nation.  This act of creating a picture of a culture that serves the motives of those in power is what Klein refers to as “othering” in her title.  One begins by defining another group of people as “different,” a term that is just a step away from “unequal,” which is another step away from “sub-human.”  And once a group of people attain that status in the view of the powerful anything can be done to them: plunder their resources, make them slaves, murder them all….  Klein introduces us to “othering” and explains the relevance to global warming.

“He [Said] was, of course, a giant in the study of ‘othering’ – what is described in Orientalism as ‘disregarding, essentialising, denuding the humanity of another culture, people or geographical region’. And once the other has been firmly established, the ground is softened for any transgression: violent expulsion, land theft, occupation, invasion. Because the whole point of othering is that the other doesn’t have the same rights, the same humanity, as those making the distinction. What does this have to do with climate change? Perhaps everything.”

We have arrived at our sorry state because the powerful used othering to justify extracting carbon from peoples and regions where it existed.

“But for the past three decades, since the Intergovernmental Panel on Climate Change was created and climate negotiations began, this refusal to lower emissions has been accompanied with full awareness of the dangers. And this kind of recklessness would have been functionally impossible without institutional racism, even if only latent. It would have been impossible without Orientalism, without all the potent tools on offer that allow the powerful to discount the lives of the less powerful. These tools – of ranking the relative value of humans – are what allow the writing off of entire nations and ancient cultures. And they are what allowed for the digging up of all that carbon to begin with.”

The process of othering can also occur within a nation.

“And the thing about fossil fuels is that they are so inherently dirty and toxic that they require sacrificial people and places: people whose lungs and bodies can be sacrificed to work in the coal mines, people whose lands and water can be sacrificed to open-pit mining and oil spills. As recently as the 1970s, scientists advising the US government openly referred to certain parts of the country being designated ‘national sacrifice areas’. Think of the mountains of Appalachia, blasted off for coal mining – because so-called ‘mountain top removal’ coal mining is cheaper than digging holes underground. There must be theories of othering to justify sacrificing an entire geography – theories about the people who lived there being so poor and backward that their lives and culture don’t deserve protection.”

Klein discovered an interesting and instructive way of associating climate—and climate change—with political and social discord.  She attributes it to Wyal Weizman, an Israeli, who emphasized the need to appreciate the “aridity line,” which is the locus of points where rainfall begins to fall below the level necessary to grow cereal crops without resorting to irrigation (about 200 millimeters or 7.9 inches per year).  Weizman referred to this as The Conflict Shoreline in a 2015 publication.  Klein provides this plot of the current aridity line.

The red circles indicate areas in which drone strikes are occurring as a way of indicating how armed conflict and climate issues coincide.  It has been argued that the upheavals of the “Arab Spring” were generated by climate and associated food security issues.  To the extent that this is true, one must view the refugees that the ensuing struggles have generated as the first of many climate refugees.

“And now, with climate change, intensifying drought can have all kinds of impacts along this line. Weizman points out that the Syrian border city of Daraa falls directly on the aridity line. Daraa is where Syria’s deepest drought on record brought huge numbers of displaced farmers in the years leading up to the outbreak of Syria’s civil war, and it’s where the Syrian uprising broke out in 2011. Drought wasn’t the only factor in bringing tensions to a head. But the fact that 1.5 million people were internally displaced in Syria as a result of the drought clearly played a role. The connection between water and heat stress and conflict is a recurring, intensifying pattern all along the aridity line: all along it you see places marked by drought, water scarcity, scorching temperatures and military conflict – from Libya to Palestine, to some of the bloodiest battlefields in Afghanistan and Pakistan.”

“But Weizman also discovered what he calls an ‘astounding coincidence’. When you map the targets of Western drone strikes onto the region, you see that ‘many of these attacks – from South Waziristan through northern Yemen, Somalia, Mali, Iraq, Gaza and Libya – are directly on or close to the 200 mm aridity line.’ The red dots on the map above represent some of the areas where strikes have been concentrated. To me this is the most striking attempt yet to visualise the brutal landscape of the climate crisis.”

Climate and climate change are participating in the creation of refugees who flee the unrest and violence spawned by life near the aridity zone.  As the climate changes, the location of that aridity zone will change also, generating strife in other locations.  These refugees will become “the other” that must be dealt with.

“Just as bombs follow oil, and drones follow drought, so boats follow both: boats filled with refugees fleeing homes on the aridity line ravaged by war and drought. And the same capacity for dehumanising the other that justified the bombs and drones is now being trained on these migrants, casting their need for security as a threat to ours, their desperate flight as some sort of invading army. Tactics refined on the West Bank and in other occupation zones are now making their way to North America and Europe. In selling his wall on the border with Mexico, Donald Trump likes to say: ‘Ask Israel, the wall works.’ Camps are bulldozed in Calais, thousands of people drown in the Mediterranean, and the Australian government detains survivors of wars and despotic regimes in camps on the remote islands of Nauru and Manus.”

We have a picture of what climate and climate change are doing to generate political unrest and violence now.  As the globe continues to warm, climate changes will generate political and social unrest in more locations, and if history has any validity as a predictor of the future, it will not go well.  Klein uses the recent experience in England when extreme flooding occurred as an example.

“….the wealthiest people in the wealthiest countries in the world think they are going to be OK, that someone else is going to eat the biggest risks, that even when climate change turns up on their doorstep, they will be taken care of.”

“When they’re wrong things get even uglier. We had a vivid glimpse into that future when the floodwaters rose in England last December and January, inundating 16,000 homes. These communities weren’t only dealing with the wettest December on record. They were also coping with the fact that the government has waged a relentless attack on the public agencies, and the local councils, that are on the front lines of flood defence. So understandably, there were many who wanted to change the subject away from that failure. Why, they asked, is Britain spending so much money on refugees and foreign aid when it should be taking care of its own? ‘Never mind foreign aid,’ we read in the Daily Mail. ‘What about national aid?’ ‘Why,’ a Telegraph editorial demanded, ‘should British taxpayers continue to pay for flood defences abroad when the money is needed here?’”

“The point is that this could have been a moment to understand that we are all affected by climate change, and must take action together and in solidarity with one another. It wasn’t, because climate change isn’t just about things getting hotter and wetter: under our current economic and political model, it’s about things getting meaner and uglier.”

Timothy Snyder is one who also believes things are going to get “meaner and uglier” due to climate change.  His book, Black Earth: The Holocaust as History and Warning, provides a terribly distressing view of what humans are capable of when dealing with those they have defined as “the other.”  Snyder wishes to make two things clear: the Holocaust was more horrible than we thought, and mass murder on the scale of the Holocaust can happen again.

The close association of Auschwitz with the Holocaust is a convenient fraud used by both the Germans and the Russians for their separate purposes. For the Germans, it allows the picture of an impersonal killing factory run by a few men merely “following orders” to be responsible for the murders.  It also allows the fiction that many Germans were not aware of the killing of the Jews.  For the Russians, Auschwitz allowed them to erase from their history the fact that most of the Jews killed were technically Soviet citizens and that many of them were actually killed by other Soviet citizens.

“In the history of the Holocaust, Auschwitz was a place where the third technique of mass killing was developed, third in chronological order and also third in significance.  The most important technique, because it came first, because it killed the most Jews, and because it demonstrated that a Final Solution by mass killing was possible, was shooting over pits.  The next most important, and the next to be developed, was asphyxiation by the exhaust fumes of internal combustion engines.  At around the time that these carbon monoxide facilities were coming into use, in early 1942, the policy of murdering all Jews was extended from the occupied Soviet Union and occupied Poland to all lands that fell under German control.  Auschwitz became the major killing site for Jews in 1943 and 1944.”

“It is possible that some Germans did not know exactly what happened at Auschwitz.  It is not possible that many Germans did not know about the mass murder of Jews.  The mass murder of Jews was known and discussed in Germany, at least among family and friends, long before Auschwitz became a death facility.  In the East, where tens of thousands of Germans shot millions of Jews over hundreds of death pits over the course of three years, most people knew what was happening.  Hundreds of thousands of Germans witnessed killings, and millions of Germans on the eastern front knew about them.  During the war, wives and even children visited the killing sites; and soldiers and policemen and others wrote home to their families, sometimes with photographs, about the details.  German homes were enriched, millions of times over, by plunder from the murdered Jews, sent by post or brought back by soldiers and policemen on leave.”

The point of bringing this history up here is not to beat upon Germany because of what Germans had done at that particular time and place.  The crucial point is that we must recognize that the place and conditions in which Germans committed mass murder also induced many non-Germans to assist them.

“If the killing of 1941 involved locals, then perhaps it was a result of local antisemitism rather than German politics?  This is a popular way to explain the Holocaust without politics: as a historically predictable outburst of the barbarity of east Europeans.  This sort of explanation is reassuring, since it permits the thought that only peoples associated with extravagant antisemitism would indulge in disastrous violence.  This comforting and erroneous thought is a legacy of Nazi racism and colonialism.  The racist and colonial idea that the Holocaust began as an elemental explosion of primitive antisemitism arose as Nazi propaganda and apologetics.  The Germans wished to display the killing of Jews on the eastern front as the righteous anger of oppressed peoples against their supposed Jewish overlords.”

The circumstances of time and place were more important in generating massacres than antisemitism.  What Snyder’s description of the Holocaust tells us is that if humans are put in a position where they believe their lives or those of their families are at risk, and there is some sort of authority encouraging them, and there are others around them participating, many will be capable of cold-blooded murder.

When we think of the Holocaust we should not focus on the image of Auschwitz, but rather on an image of an individual looking into the face of a helpless man, woman, or child and pulling a trigger—perhaps repeating that act hundreds or thousands of times.  Most often the killing was of Jews, but the murderers were capable of killing whoever was brought before them.

“When the mass murder of Jews is limited to an exceptional place and treated as the result of impersonal procedures, then we need not confront the fact that people not very different from us murdered other people not very different from us at close quarters.”

And circumstances can be replicated.  How many times will the growing numbers of climate refugees be met with open arms?  Or will they more likely be met with hate and violence by people who view them as a threat to their way of life?

Snyder describes the basis of Hitler’s actions residing in a concern over food security for his German people.  The overall goal was to conquer the lands to Germany’s east, kill, transport to Siberia, or enslave the resident peoples, and allow the growing German population to take over the land and thrive.  Today, one of the main contributors to strife in Africa and the Middle East is concern over food security.  As global warming proceeds, these concerns will worsen and spread to other regions leading to greater social and political turmoil. 

“During the hot summer and droughts of 2008, fires in fields led major food suppliers to cease exports all together, and food riots broke out in Bolivia, Cameroon, Egypt, Haiti, Indonesia, the Ivory Coast, Mauritania, Mozambique, Senegal, Uzbekistan, and Yemen.  In 2010 the prices of agricultural commodities spiked again, leading to protests, revolutions, ethnic cleansing, and revolution in the Middle East.”

“Climate change as a local problem can produce local conflicts; climate change as a global crisis might generate the demand for global victims.  Over the past two decades, the continent of Africa has provided some indications of what these local conflicts will be like, and hints about how they might become global.  It is a continent of weak states.  In conditions of state collapse, droughts can bring hundreds of thousands of deaths from starvation, as in Somalia in 2010.  Climate change can also increase the likelihood that Africans will find ideological reasons to kill other Africans in times of apparent shortage.”

The genocide in Rwanda was the result of Hutus and Tutsis othering each other in a time of food crisis.

Food insecurity is already becoming a global problem that will ultimately require global solutions.

“Even as Africans themselves struggle for access to arable soil and potable water, their continent presents itself as the solution to the food security problems of Asians.  The combination of weak property rights, corrupt regimes, and one half of the world’s untilled soil has placed Africa at the center of Asian food security planning.  The United Arab Emirates and South Korea have tried to control large swathes of Sudan.  They have been joined by Japan, Qatar, and Saudi Arabia in consistent efforts to buy or lease agrarian terrain in Africa.  A South Korean company has tried to lease half of Madagascar.”

The Middle East might correctly be referred to as a disaster zone, but it pales in comparison to the coming situation in Bangladesh, a nation where most of the land will eventually be underwater.  Two-thirds of the country has an elevation of less than 17 feet.  It has already experienced frequent flooding from its many rivers and has also experienced some of the deadliest storms in history.  Life will not get better.  With a population of 160 million, climate change will produce many millions of refugees.  An examination of a map of the country makes clear that the only path out of Bangladesh is into India.  What is the current attitude of India towards immigrants entering from Bangladesh?  It built a wall in an attempt to keep them out, and it occasionally talks about rounding them all up and sending them back home.  Does this scenario sound familiar?  How would India respond if the immigrants were climate refugees and the number were not millions but tens of millions?  The movement of Muslims out of India to form Pakistan and Bangladesh was accompanied by incredible levels of violence.  How likely is it that the recombination of those populations would be peaceful?  How would the United States respond if climate change forced tens of millions of Mexicans to move north across the border?

If the situation becomes threatening enough, people with more power will likely use that power to protect themselves from people they will consider “the other.”  And the holocaust has taught us that it would not be difficult for such a confrontation to escalate to mass murder.

Snyder fears most the emergence of a power with colonial ambitions and the will and need to exert global influence over food issues.

“The future might hold the….most fearsome possibility: an interaction between local scarcity and a colonial power capable of extracting food while exporting global ideology.”

Who might be possible threats along this line?  Snyder suggests China because it will have severe food security issues as time goes on and may find it necessary to impose its will in order to survive intact.  A second possibility is Russia under the leadership of Vladimir Putin. Fossil fuel energy is by far Russia’s greatest product.  It is in its interest to encourage, or direct, the continued consumption of carbon emitting fuels as long as it can—no matter the consequences.

 Putin seems to be utilizing methods that would have been easily recognized by Hitler.  The othering has begun.

“President Vladimir Putin of Russia developed a foreign policy doctrine of ethnic war.  This argument from language to invasion, whether pressed in Czechoslovakia by Hitler or in Ukraine by Putin, undoes the logics of sovereignty and rights and prepares the ground for the destruction of states.  It transforms recognized polities into targets of willful aggression, and individuals into ethnic objects whose putative interests are determined from abroad.”

“Putin also placed himself at the head of the populist, fascist, and neo-Nazi forces in Europe.  While supporting politicians who blame global Jews for planetary problems and applying techniques of state destruction, Moscow generated a new global scapegoat—the homosexuals.  The new Russian idea of a ‘gay lobby’ responsible for the decadence of the world makes no more sense than the old Nazi idea of a ‘Jewish lobby’ responsible for the same, but such an ideology is now at large in the world.”

“Just as the purpose of the alliance with Hitler in 1939 was supposed to turn the most radical force in Europe against Europe itself, so Russian support of the European Far Right is meant to disrupt and disintegrate the most peaceful and prosperous order of the early twenty-first century—the European Union.”

It seems appropriate at this point to conclude by repeating Naomi Klein’s earlier warning.

“….climate change isn’t just about things getting hotter and wetter: under our current economic and political model, it’s about things getting meaner and uglier.”

The interested reader might find the following articles informative:

Saturday, July 1, 2017

The Promise and Cost of Precision Medicine: When Patients Become Gold Mines

One of the most exciting and significant developments in the field of medicine is the emergence of what has been referred to as “precision medicine,” or “personalized medicine,” or “targeted medicine.”  It has long been known that not all people respond to disease in the same way, and that not all people respond to treatment in the same way.  Given those facts, it would clearly by desirable to understand how an individual’s makeup, genetic or otherwise, affected both disease progression and response to treatment.  This approach has shown particular promise in the treatment of cancers where the patient’s genetic makeup can determine the particular course of the disease and the best means to treat it.  The Nature article Precision medicine: the foundation of future cancer therapeutics suggests an optimistic future for this approach.

“The concept and practice of precision medicine is a methodical and systematic movement aimed at defeating diseases such as cancer.  Cancer is a major focus of the precision medicine initiative and developments in precise and effective treatments could benefit many other chronic diseases. Precision oncology or precision medicine of cancer focuses on matching the most accurate and effective treatment to each individual cancer patient based on the genetic profile of the cancer and the individual. Because every single cancer patient exhibits a different genetic profile and the profile can change over time, more patients will benefit if therapeutic options can be tailored to that individual, thus avoiding the idea that ‘one-size-fits-all’ in terms of cancer treatment.”

The National Cancer Institute provides a description of Precision Medicine and a more detailed section on Targeted Therapy as well as a list of Targeted Cancer Therapies—drugs that have already been approved for use on cancer patients.

It is early in the development phase of these classes of drugs and it is not clear how successful they will ultimately be.  However, if this approach is fruitful, it is likely that healthcare will become much more expensive.  Drugs that can be sold to millions of people will tend to be cheaper than those that can be sold to tens of thousands.  This is not because of any efficiencies of scale nor does it have any relationship to the cost of drug development; it is because the market will only tolerate a finite amount of greed.  Drug companies realize that there are limits to what the country will pay.  Precision medicine will generate more and more drugs applicable to fewer and fewer patients.  The net result will be that drug companies will be able to claim high expenses coupled with life-saving benefits for a relatively few patients as justification for enormous prices for their products.

We already have in place a drug industry focused on providing specialized drugs for relatively small numbers of patients: orphan drugs.  An article in Bloomberg Businessweek by Benjamin Elgin, Doni Bloomfield, and Caroline Chen, When the Patient Is a Gold Mine: The Trouble With Rare-Disease Drugs, provides some insight into a business where practices can be rather unsettling.

Drug companies were once hesitant to devote resources to diseases that were rare and would offer few customers for any product they developed.  That changed when Congress passed legislation providing incentives for companies who would address this issue.

“To address neglected research areas, Congress in 1983 passed the Orphan Drug Act, which gave drugmakers federal grants, tax incentives, and seven years of marketing exclusivity for new rare-disease treatments (vs. three to five years of exclusivity for a more common new drug). In the ensuing 34 years, more than 600 orphan drugs have been approved in the U.S., compared with 10 in the decade before the law was passed.”

The incentives helped, but it was lax control of pricing that convinced drug companies that they could turn a low-demand product into a profit no matter how small the market.

“But government-protected monopolies, combined with desperate patients, led to today’s prices.  Genzyme Corp. started the trend in 1991 by charging $150,000 for a year’s supply of a drug for treating Gaucher disease, an ailment that weakens bones and internal organs. In 2016, Biogen Inc. began charging $750,000 for the first year of treatment with a drug called Spinraza, which targets a deadly muscle disease. ‘Many of these manufacturers have perceived it as essentially a blank check to price the drug where they think it’s reasonable,’ says Rena Conti, associate professor of health policy and economics at the University of Chicago.”

Orphan drugs went from being an afterthought to becoming a major component of the pharmaceutical industry.

“In the U.S., an orphan drug is defined as one that treats a disease affecting fewer than 200,000 people in the country. Orphan drugs accounted for a disproportionate share, 41 percent, of all medications brought to market in 2014, according to a study by Johns Hopkins University. Globally, sales of orphan drugs are expected almost to double, to $209 billion, by 2022, based on numbers gathered by Evaluate LTD., a life-sciences consulting company.”

“But orphan drugs have also caused a seismic shift in treatment costs. The average U.S. patient on an orphan drug last year relied on a $136,000 therapy, a figure that’s climbed 38 percent since 2010.”

The authors used the drug company Alexion as the subject of their story to illustrate what life was like for a producer of drugs with a relatively small market. Alexion produces Soliris which is useful in treating conditions that go by the acronyms PNH and aHUS

“….Alexion Pharmaceuticals Inc., the New Haven-based maker of Soliris—one of the world’s most expensive drugs, typically priced from $500,000 to $700,000 a year.”

Soliris is a very effective drug for the conditions it treats, but does that justify its lofty price?

“A fraction of a teaspoon of Soliris, administered in a single 35-minute treatment, costs more than $18,000, and patients might need 26 treatments a year for the rest of their lives. With this single drug accounting for almost all its revenue, Alexion has created enormous wealth out of an estimated 11,000 customers. It generated $3 billion in sales in 2016, and its $24 billion market valuation puts it on par with household names such as HP Inc., and Yum! Brands Inc.”

Alexion could be a profitable company even if it chose to lower its prices—or was forced to lower them.

To maximize its profit, a company in Alexion’s position must seek out potential patients with ailments most people haven’t heard of.  Mass media marketing would not be effective, but some traditional approaches can be.  Of course, doctors have to be encouraged to look for such diseases within their patient pools.  Supporting patient advocacy groups is helpful in getting drugs approved for use, but they are also valuable as a means of attracting potential customers.

There are other practices that seem to cross ethical lines.  The authors open their article by relating the experience of one physician who was struggling with a diagnosis and tried Soliris to see if it had an effect.  A null result was observed and treatment with the drug was stopped.  This doctor then received a call from an Alexion salesperson who proceeded to argue with the doctor about his treatment plan, and, of course, to claim that continuing with Soliris was the appropriate path.  Such a discussion might even have been beneficial, but in this case the doctor was taken aback by the aggressiveness of the salesperson, and was startled to learn that so much was known about the patient when no communication of data had taken place.

How did Alexion learn what this doctor was doing?  Patient data is supposed to be strictly confidential.  How did they gain access?  It was easy.  Laboratories doing the testing have begun to sell testing results to drug companies and others with an interest.  This process is legal as long as the name of the patient is not disclosed.

“Drug companies pressured labs for years for access to the testing data, but the labs pushed back, says Adam Tanner, a writer in residence at Harvard’s Institute for Quantitative Social Science and author of the book Our Bodies, Our Data. Around 2010, he says, the labs’ behavior changed. Seeking a way to fatten thinning profit margins and under the rationale of helping drug companies with research, labs began to sell blinded test results to data aggregators and drug companies.”

“Reps were instructed to urge doctors to send the tests to preferred “partner labs,” according to several former employees and internal documents. Unbeknown to patients and many of the doctors, several of these preferred labs have agreements with Alexion to provide it with a copy of the test results. These are ‘blinded’ to remove the patient’s name, so they don’t run afoul of medical privacy laws. But in some cases the lab provides everything else: a patient’s age, gender, and ZIP code, the hospital and doctor ordering the test, and a summary of the results. For Alexion sales reps, this gave a map to the doorsteps of otherwise hard-to-find patients.”

“When a result for PNH or aHUS came in to Alexion, the diagnostics team—about a half-dozen employees—passed the detailed information along to the sales staff, which descended on the doctor listed in the result. ‘It was like Normandy,’ says a former account rep who requested anonymity because he doesn’t want to harm his career.”

Alexion also maintained a team of nurses who were supposedly needed to assist in applying treatment regimens.  Instead of allowing these people to act as independent care givers whose allegiance was to the patient and her health, they were allied with the sales team and were expected to act in Alexion’s interest.

“A team of nurses sat alongside the sales staff. Pharmaceutical companies often employ trained medical personnel to help them manage complicated treatment regimens. But as licensed practitioners, in-house nurses are supposed to hold their patients’ interests ahead of their employers’ profits. To avoid conflicts, most drug companies keep a firewall between their nurses and their salespeople. At Alexion, the nurses reported directly to sales, and the pressure to lock in and keep customers was often heaped on them because they had the most access.”

“Several former employees described how, during weekly Friday sales meetings, managers gathered the sales staff and nurses to talk about their customers. If somebody had stopped taking Soliris, the managers would turn to the nurse assigned to that patient: What steps did you take to keep the patient on the drug? Have you told the patient he could get a potentially fatal blood clot if he stops? Did you steer the patient to a different doctor who might resume treatment? ‘It was your feet to the fire, sweat pouring down your back,’ says one former longtime company nurse, who requested anonymity because she feared retaliation from the company.”

Eventually Alexion’s practices got it into trouble.  The article goes into detail about the investigation by the police in Brazil over its methods.  The lead executives of the company left and Alexion is said to be revisiting the ethics of its practices.

How many Alexions are out there now?  Will the new focus on precision medicine produce a new batch of Alexions?  Time will tell, but past experience indicates that if there are no referees on the field all the players will do what is necessary to gain an advantage.

The practice of allowing drug companies to set their prices without constraint cannot go on forever.  The direction in which medicine is moving makes it more important than ever for some sort of pricing algorithm to be developed and applied.  We cannot afford to do otherwise.

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