The WSJ had a great front-page article [sub] about a company (owned by Hearst Corp.) called First DataBank that publishes prices lists for drugs and has apparently been responsible for some of the skyrocketing prices US consumers have faced for prescription drugs. It highlights the dangers of reliance on a system for pricing information that is not open/transparently based on true market forces. In this case the stakes are high: “Now a tentative legal settlement, reached quietly this week in a Boston court, could reduce annual U.S. drug costs by billions of dollars. An economist hired by the plaintiffs puts the savings in 2007 alone at $4 billion.”

The most amazing thing is how arbitrary the index and markups that this company charges are, and also how unsophisticated it all seems as well — “First DataBank had long said its prices reflected a survey of national wholesalers. But a manager at the publisher said in a deposition that from 2003 only one company, McKesson, participated in the survey. In the litigation, First DataBank also said that only two of its 225 employees were trained to collect and update pricing information.” and then — “Suddenly First DataBank started revising its [Average Wholesale Price]s so that the markup was almost always 25%. According to internal McKesson documents, by 2004 nearly 99% of drugs carried the larger 25% markup.”

Scary - I’d encourage reading the entire article if you are able - but part of the point here is also that many firms give the appearance of using sophisticated algorithms and methods in their business, but often these are undermined by poor methodologies at other points in their process, by laziness or by greed. We can and should not unfortunately assume that these organizations are going to get it right, and the bigger the stakes, the greater should be our due diligence and watchfulness.

Underestimated until now: were US mothers to get paid for all the work they do, they’d make a healthy $134k in salary. Of course it’s a somewhat spurious analysis, but certainly intuitively accurate and what a great piece of PR for Salary.com. Well done, Salary.com PR’ers.

Thanks to Jarvis for this map. I’ve always been in soda-land, it seems.

Had the pleasure of reading the actual report behind this press release from Advertising.com. What they are basically saying is, “show the people who clicked on your ad and didn’t convert, your ad again, and they’re more likely to convert than people who didn’t see your ad or click on it before.”

Yes, indeed they are! Sometimes the self-serving research put out by vendors is actually interesting (Advertising.com is punting its Leadback technology which lets you show another ad to someone in their network if they’ve previously clicked on your ad but haven’t converted) and sometimes makes a valid contribution, but in this case it’s a big waste of time. Naturally several online media outlets just regurgitate this stuff — come on guys, apply some critical thinking.

I have yet to see a compelling numerical argument for why health care costs are flying upwards. Perhaps I’ve missed it - quite possible given how busy I’ve been recently, sure - but I don’t feel like we’re hearing the complete story.

We see grocery workers in California striking because health care benefits are being eroded, but we don’t hear a cogent argument on what the reasons are, why has this come to prominence so much recently. A Krugman piece from the NYTimes in 1997 makes for interesting reading. The system we have is so bloated with administrative costs, and full of mis-aligned incentives (the combination of which many of us have seen after an expensive doctor’s visit or medical trip: the initial bill we receive, the “negotiated rate” the insurance company counters with, and the subsequent “adjustment” or “write off” that reconciles the two, minus of course our contribution).

Two other things to think about I’d love to learn more about:
* The impact of rising direct-to-consumer advertising costs (tripled between 1996 and 2001 to $2.6 billion (I had trouble finding any more recent information though I didn’t look super-hard)
* The extent to which insurance companies are passing on their poor performance in the markets to the average insurance buyer (employers and by extension, individuals)

This second point is very interesting - who are the fools who invested in the busted companies, funds and failures of the past few years? I don’t know the exact answers but I can guarantee, the same pain that hit holders of Enron shares hit these big institutional investors (e.g. insurance companies) really hard…. now there’s a story I want the papers to get to the bottom of…

Just saw a TV commercial (yes, it’s rare these days with Tivo) with crash-test dummies and an anti-drug message. Here’s the very compelling data they quoted:
In a roadside study, one third of reckless drivers who were tested for drugs tested positive for marijuana.

Of course this appears to say that marijuana causes reckless driving - but these data proves no such thing especially since it is confied to people who were TESTED only. Another example of fake data. It won’t be the first - stay tuned.